External Debt of Haiti - Debt Cancellation

Debt Cancellation

Haiti had a total external debt of $1.8 billion at its peak. 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 and future debt service (including interest) by $1.2 billion.

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.

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.

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.

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