By: Tom Ricker - HaitiAnalysis.com

The Inter-American Development Bank board of governors announced on March 16, 2007 that it would cancel the debts of Nicaragua, Bolivia, Honduras, Guyana, and Haiti. The debt cancellation is to cover all debts accrued prior to December of 2004, and is retroactive to January 1, 2007 (meaning interest accrued since the beginning of the year on this debt will not need to be paid.) This is a total of $3.5 billion in debt cancellation for all five countries, $4.2 billion if one tabulates the interest that would have been paid as well. This was great news for all the countries involved...except Haiti. Haiti, by far the most impoverished of the five countries, must wait at least three years before it realizes this cancellation.

Why? The Inter-American Development Bank has conditioned its debt relief for Haiti on the country’s successful completion of the Heavily Indebted Poor Country Initiative (HIPC). Haiti has been in HIPC for 10 months, but just reached the first marker (or “decision point”) in November. Completion of HIPC is a minimum of three years away. The other four countries involved have completed the HIPC process, and should see debt cancellation immediately. It is important to note that the HIPC process was established by the International Monetary Fund and the World Bank; the IDB is under no obligation to tie its debt cancellation to HIPC.

In theory HIPC is supposed to commit governments to reform measures ensuring that debt savings are targeted to poverty reduction, transparency and good governance. Yet, the lending practices of these institutions have not historically aligned with these goals and are actually biased against Haiti’s popularly elected governments. Of the roughly $600 million that Haiti supposedly owes the IDB, only 43% was actually disbursed to an elected government.

The IDB and Haiti’s democratic governments

Roughly half of Haiti’s current debt burden - from all sources - was accrued before 1990 elections ushered in the first democratically elected leader in Haiti. President Jean Bertrand Aristide took office on February 7, 1991 only to be ousted in a coup on September 30th of that year.

Multilateral donors in general were not favorable to Aristide. The World Bank approved $37 million in new loans to the Aristide government; $30 million of this was approved 6 days before the coup. The same World Bank had distributed $256 million in loans to the government of Jean Claude Duvalier, and another $158 million to the series of military rulers that governed Haiti between Duvalier’s departure in February of 1986, and Aristide’s election.

The IDB did little better, approving a paltry $12 million in loans to the new democracy in Haiti during its short-lived 7 months, after approving $110 million in loans to the military junta that ruled Haiti prior to the elections, including $55 million in 1990 alone.

When Aristide re-took his presidential office in 1994, the response of lenders was initially generous – but with strings. The World Bank issued $153 million in 1995 and 1996 combined. The IDB approved nearly $190 million in loans during 1995, and an additional $82 million in 1996. There the well ran dry. When Aristide and his successor Rene Preval (1996-2001) balked at some of the conditions attached to new loans, particularly those involving privatization of some state industries, lenders, led by the U.S. government’s Agency for International Development, simply stopped providing assistance.

The World Bank would not issue a new loan to Haiti until 2005, and then to an “interim” government appointed by the Bush administration following a second coup d’etat against Aristide. The IDB, though it would approve new loans in 1997 and 1998, disbursed little between 1998 and the February 2004 coup –and then, only late in 2003 after Aristide had drained the foreign reserves of the country the previous July to pay arrears to Haiti’s creditors.

This de facto aid embargo is often portrayed as a response to an election “controversy” in 2000 concerning the distribution of seats in seven senate races. It is important to note that this happened five months before the presidential election in November that year, and thus well before Aristide was sworn into office for a second term. In reality, under pressure from the U.S. government, the international donor community was simply deepening a policy that had been in place since 1996 – namely, not to broker any compromise with popularly elected governments in Haiti that blocked neo-liberal reform efforts. The policy was a clear violation of IDB rules –whose charter requires that disbursement decisions not be made for political purposes.

After withholding millions in assistance to an elected government, the IDB approved $200 million in new loans in November of 2003 – most of which would not be disbursed until after the coup in February in 2004. The IDB then approved an additional $215 million during 2005 alone to an un-elected interim authority. Comparatively, since Rene Preval took office in May of 2006 following an overwhelming electoral victory, the IDB has promised only $85 million in new loans, and has yet to disburse any of it.

Given the lukewarm affection the IDB has demonstrated for Haiti’s democracy, it seems seriously wrong to now demand that Haiti wait an additional three years for debt cancellation under the guise of promoting good governance.

What does waiting three more years for debt cancellation mean?

Haiti will pay $270 million more in total debt service between now and the fiscal year ending in 2010; $120 million of this will go to the IDB. Ironically, because Haiti borrows from the IDB “fund for special operations” – the concessional lending arm of the IDB that grants ten-year waivers on payments of principal – most of these payments will be to service the outstanding debts of Duvalier and the generals that ruled Haiti until 1990.

In the meantime, the most recent World Health Report (2006) estimated that Haiti’s government spends $10 per capita on health – or $83 million a year. (The U.S. government spends $2,500 per capita on health.) With this budget, Haiti has 25 doctors, 11 nurses, and 1 dentist per 100,000 people. Only 24% of women are accompanied by a trained health provider during childbirth and only 18% of births happen in a health facility. Haiti has the highest HIV/AIDs infection rate and the lowest coverage of potable water in the Western Hemisphere. The low levels of public expenditures on health also means that services nearly always require a fee – which puts even the most basic healthcare out of reach of the majority of Haitians.

As a result, between now and the end of fiscal year 2010 in Haiti 90-100,000 children will die before reaching the age of 11 months and another 30-40,000 will die before reaching the age of 5 years. Haiti’s under-five mortality rate is 1500% higher than the United States.’ Based on the number of live births in the United States each year a comparable under-five mortality rate would translate into 1.5-1.8 million children dying over the same period of time. Would we sit by and watch that happen?

Approximately 6,000 women will die during childbirth in Haiti between now and October 2010. In the United States, with 35 times the population, the total number of deaths will likely be less than 2,000. At the same maternal mortality rate as Haiti, nearly 100,000 women would die in the United States during childbirth over a comparable period. Could we sit by and watch that happen?

Only 6 percent of Haiti’s population is over 60, compared to 16 percent in the United States. Haiti’s life expectancy is 53 years and falling.

Would $120 million change all of this? Probably not. But an increase in public expenditures on health service of $30-40 million a year would make a huge difference NOW. Haiti could almost double the number of doctors in the public sector, reduce or even eliminate fees on basic services, expand vaccination programs or other priorities. If the World Bank and bi-lateral creditors were to follow suit, and cancel Haiti’s debts immediately, this could be done while also increasing expenditures on education and extending credits to small farmers to begin to address the collapse of Haiti’s rural economy.

Making Haiti wait three to four years literally means thousands of more people will die from preventable health problems and/or lack of access to services. How could this possibly be regarded as a “good governance” outcome? It is time for the IDB to finally stand with Haiti’s democratically elected government. It would simply be criminal to make Haiti wait another day for debt cancellation.

Representative Maxine Waters (D-CA) introduced House Resolution 241 in March this year. This resolution would direct the President to use the influence of the U.S. government in the IDB and World Bank to insure that Haiti’s debt is cancelled immediately – not three years from now. While this may be a small step, it is an important one and all should be encouraged to touch base with their members of Congress to ask them to co-sponsor this resolution.