External debt of Haiti

Sticker in Port-au-Prince demanding repayment from the French government

Haiti’s legacy of debt began shortly after gaining independence from France in 1804. In 1825, France, with warships at the ready, demanded Haiti compensate France for its loss of slaves and its slave colony. In exchange for French recognition of Haiti as a sovereign republic, France demanded payment of 150 million francs. In 1838, France agreed to reduce the debt to 90 million francs to be paid over a period of 30 years to compensate former plantation owners who had lost their property.[1] The modern equivalent of $21 billion was paid from Haiti to France.[2]

The transfer of wealth from Haiti to the French government and from Haiti to the various banks that financed the Independence Debt is well established. Detailed claims, submitted by former slave owners for compensation, including the monetary value of the “lost” slaves, and which formed the basis for the French government’s demands have been documented.

Likewise, the terms of the 1825 Ordinance and accounts of its negotiation have survived.

The French government finally acknowledged the payment of 90,000,000F in 1893. It took until 1947 for Haiti to finally pay off all the associated interest of the debt.[3] The story of the first payment - 24,000,000 gold francs – being transported across Paris, from the vaults of Ternaux Gandolphe et Cie to the coffers of the French Treasury was recorded in detail. Historians have traced loan documents from the time of the 1825 Ordinance, through the various refinancing efforts, to the final remittance to National City Bank in 1947.[4]

From 1957 to 1986 Haiti was ruled by the corrupt and oppressive Duvalier family. Loans incurred during this period alone were estimated to account for approximately 40% of Haiti's debt in 2000, before debt relief was granted. These funds were used to strengthen the Duvaliers' control over Haiti and for various fraudulent schemes. Large amounts were simply stolen by the Duvaliers.

Initiatives to cancel Haiti's debt

Jubilee USA, Jubilee Debt Campaign (UK)[5] and others, called for the immediate cancellation of Haiti's debt to multilateral institutions, including the World Bank, International Monetary Fund (IMF), and the Inter-American Development Bank, based on the argument that this debt is unjust (under a legal term called odious debt) and that Haiti could better use the funds going towards debt service for education, health care, and basic infrastructure.[6]

The Haiti Debt Cancellation Resolution[7] had 66 co-sponsors in the U.S. House of Representatives as of February 2008.

Several organizations in the U.S. issued action alerts around the Haiti Debt Cancellation Resolution, and a Congressional letter to the U.S. Treasury,[8] including Jubilee USA, the Institute for Justice & Democracy in Haiti and Pax Christi USA.

Debt cancellation

Haiti had a total external debt of $1.8 billion at its peak.[9][10] In April, Haiti was added to the World Bank and IMF's highly indebted poor country initiative (HIPC) following the election of new president René Préval. In September 2009, following a program of economic and social reforms, Haiti met the requirements for completion of the HIPC program, qualifying it for cancellation of its external debt obligations. This cut the face value of the debt by $757 million[11] and future debt service (including interest) by $1.2 billion.[12]

Haiti's largest creditor, the Inter-American Development Bank (IDB), was part of the debt relief initiative, but the initiative only canceled loans made before 2005, and the IDB has lent more since. Haiti's debt to the IDB amounts to approximately half a billion dollars with debt service payments projected by the IMF to increase in the following years. The U.S. government has been paying this debt service on Haiti's behalf since before the quake.[13]

With the devastating effects of the early 2010 earthquake in Haiti there came renewed calls for a further debt cancellation from civil society groups. In light of the tragedy and new borrowing that lifted Haiti's debts back to $1.25 billion, groups such as the Jubilee Debt Campaign called for this debt to be dropped. Furthermore, during the aftermath emergency money was offered to the Haitian government from the IMF in the form of loans. Civil society groups protested the offer of loans and not grants for such an already heavily indebted country trying to cope with such destruction. Some have argued, however, that because Haiti's annual debt service payments are so low ($9 million a year, net of the debt service paid on Haiti's behalf by the U.S. government), canceling the debt would do little to help the country recover from the earthquake, and should not be a priority for activism.[11]

Agence France Press reported on 26 January 2010 that President Hugo Chavez of Venezuela said that Petrocaribe, Venezuela's cut-rate regional energy alliance, will forgive Haiti's debt. Haiti's debt with Venezuela is $295 million, about one-quarter of its foreign debt of $1.25 billion, according to International Monetary Fund figures.[12]

On 28 May 2010, the World Bank announced it had waived Haiti's remaining debts to the bank.[14] The value of the waiver was $36 million.[15]

See also

References

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