Haiti Debt Relief Conditions Add Injustice to Injury
Current Debt
Over half of Haiti’s $1.4 billion current debt is for loans granted to Haiti’s past dictatorships. These loans were misappropriated to finance lavish lifestyles and brutally oppressive holds on power. These thefts were widely reported, yet the loans continued.
Because of this odious debt (collected by illegitimate means and/or used for illegal purposes, repression, or crimes against humanity), Haiti has been forced to pay $631 million in payments to creditors since 1991. In 2005-06, Haiti’s health budget of $25 million was less than half the amount spent on debt service payments.
These financial institutions recognize the injustice of Haiti’s debt, and have, in principle, already agreed to cancel it. However, under the process proposed, Haiti must wait at least three years before cancellation, during which it will be forced to divert $270 million to debt payments and implement painful economic changes.
Problems with HIPC
Currently, a program for debt relief exists to aid the world’s poorest countries. Unfortunately, the conditions of the program will likely worsen living conditions for the majority of Haitians. The Heavily Indebted Poor Countries Initiative (HIPC) set up through the World Bank and IMF calls for the reduction of external debt through write-offs by official donors. The HIPC initiative has been met with criticism for not helping the countries it is supposed to help, while helping those it was not meant to.
The World Bank and IMF have even admitted that HIPC is backfiring in some cases. After stepping down from his position in 1999, the former Chief Economist and Vice-President of the World Bank, Joseph Stiglitz, acknowledged that, “The policy of imposing conditions on countries seeking economic aid had failed.”
Though a finalized list of the conditions to be imposed on Haiti is not yet available, a look at its Interim-Poverty Reduction Strategy Paper (I-PRSP) shows that the preliminary conditions set for Haiti are similar to the conditions set for many of the other 30 countries who have entered HIPC. In it’s 2006 report entitled, “Cut the Strings!” the Jubilee Debt Campaign made several key observations regarding the countries currently going through HIPC, including:
*Privatization is frequently forced through by debt conditions, often with disastrous consequences
*Inflexible and excessively burdensome conditions are causing appalling delays in delivering urgently-needed debt cancellation. More than half the countries still going through HIPC in September 2006 entered the scheme more than five years ago.
* The seven countries going through HIPC that entered more than one year ago have, since entering, given $1.5 billion in debt payments to donor countries. All but one have had to spend more on debt service than on health.
*Most countries going through HIPC have had debt relief suspended since they entered because of failure to meet IMF economic targets which leading economists consider misguided, unnecessary and frequently harmful.
Specifically, Haiti’s I-PRSP indicates that some of the reforms to be made include:
*Revising investment and tax laws in order to spur private sector development. (According to Eurodad, for many other HIPCs, this has translated into corporate tax breaks which have not spurred increases in private investment or job creation, nor generated significant revenues).
* Modernizing the Central Government. This includes, “rationalizing employment and the salary policy in the public sector.” (According to Eurodad, in Honduras, this has meant large layoffs and wage ceilings for public sector employees, which in turn has generated significant social unrest).
* Improving monetary policy framework and policy instruments to reduce inflation.This translates to countries being allowed to spend less, even though such spending would go to areas such as education or health care. (According to the Jubilee Debt Campaign, the IMF refused to allow Zambia to employ more healthcare workers even when the Canadian government offered to pay for these workers for five years – because to do so would have meant exceeding IMF spending ceilings).
Problems with HIPC in HAITI
The mandated reduction of social spending makes health care and education luxuries that the majority of Haitians cannot afford. Monthly fees for one child’s schooling cost a parent’s full week’s wages if they are employed and making minimum wage. The General Hospital is in crisis, and the only primary care clinics in Port-au-Prince are privately-run and charge for services. As a result, the many Haitians that fall sick because of lack of access to clean water, who could easily be cured with a visit to a doctor and antibiotics, die of easily preventable diseases.
The neoliberal policies imposed on Haiti have made the country one of the most open markets in the world. The results for the majority of Haitians are again negative. Subsidized U.S. agriculture floods Haiti’s markets and undermines its citizens’ ability to grow their own crops. Instead of rice being an export and widely-grown crop as it once was, Haiti now imports $200 million of rice per year.
Privatization of nationalized industries demanded by financial institutions has lowered government revenue and caused increased unemployment. The World Bank’s own research pointed out that privatization is not the answer to the corruption blamed for Haiti’s instability. Aside from the concern of public-sector employees losing their jobs, privatization means higher prices for essential services already in disrepair, or scaling back of services in “less-profitable” areas. Consequently, the rural and urban poor of Haiti may find themselves without the few services they do possess.
It is clear that these policies have not helped Haiti’s economy. By all measures, Haiti’s indices of human development have seen a decline over the last two decades. After adjusting for inflation, Haiti’s economy has shrunk an average of 1.9% per year for the past 25 years. In addition to requiring millions more in debt payment for questionable loans, the HIPC process proposed is too slow and involves many painful conditions.
After undergoing three decades of mandated policy reforms, there is little three more years can change. Debt cancellation for Haiti should be immediate and unconditional.
Debt is a trap and every enlightened person knows it.
It is up to the Haitian Government to find out that owing 1.4 billions and paying 631 millions is like paying half of the debt in interest.
Sometimes we need to go against the grain and make our brain work in the other direction.
There is a Haitian saying that goes: "Whether you call the owl "ugly" it will hate you You call it "beautiful" it will eat you, so why not call it "ugly" at once and wait for the sentence".
Haiti would be better off if there were thinking people at the helms of the country.
They're all "Beggars" asking for the pieces of the bread that falls off the table. The table can be set for anyone who has a brain and a sens of non-selfishness.
1.4 billions is peanuts compare to the value of the land called Haiti. Does anyone
in Haiti knows the meaning of the word "leverage". Where are the economist and the know it all....KIND.
"Nobody will give you anything unless you claim it" and force it down your throat. There someone would have to kill you to retrieve it. If they can..... We all know they can't.
Haiti and its Government must stop to be Stupid and Ignorant about their true potentials.............
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Posted by: Fritz Tibois | October 29, 2008 at 01:29 PM
Its is big setback to the debt relief and persons like me will face the music.
it should be take back as early as possible.
Bad conditions
Posted by: Harry Bhasker | May 16, 2008 at 01:23 AM