Haiti Support Group press release - 2 July 2009
Like when a wrongly-convicted prisoner is released after years of incarceration, there can only be mixed feelings about yesterday's announcement of the cancellation of US$1.2 billion of Haiti's US$1.9 billion debt. Yes, it is good news that over 60% of Haiti's debt has been cancelled under the terms of the HIPC. But, on the other hand, it is a scandal that it took so long for the international finance institutions (IFIs) to take this step. Just think what could have been done with the money wasted on debt repayments over the last years? Part of the debt that has now been cancelled was composed of loans made to the Duvalier regimes in the 1960s, 70s and 80s. These loans were never used to develop the country and much of the amount was stolen by the Duvaliers and their clique. It remains an outrage that the Haitian people had to continue paying interest on these amounts until June 2009!
The HIPC debt cancellation announced by the IMF and World Bank is good news indeed, but what about those wasted years when the debt was being repaid and Haiti's economy went from bad to worse?
The debt cancellation means that the US$1m per week that the Haitian people have until now been paying to service the debt can instead be used for other purposes. The HSG would hope that this would mean more state support for national production for national consumption. However all the indications are that - under heavy pressure from the IFIs - the Haitian government will instead pursue a development strategy based on the deeply-flawed garment assembly export sector. Without ever providing a convincing argument, the IFIs have been pushing for decades for this sector to be the motor of Haiti's economic development. Despite the fact that this sector exists in a virtual vacuum with only minimal impact on the wider Haitian economy, only a few months ago UN secretary-general Ban Ki-moon and British economist Paul Collier made yet another proposal for international aid to fund garment assembly production in new Free Trade Zones.
Indeed, Corinne Delechat, IMF mission chief for Haiti, commenting on the debt cancellation, told Reuters that Haiti is a 'land of opportunity if you're an entrepreneur and an investor," adding, "It is a golden moment for Haiti to start investing in export capacity, particularly in textiles."
It looks like the IFIs' interventions will result in the HIPC debt cancellation being a matter of Haiti taking one step forward, while their focus on garment assembly for export will take the country two steps back.
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