Is the IMF backtracking on Haiti?
The oil tycoon J. Paul Getty once said: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” What if you owe the International Monetary Fund $100 million? Without proper oversight and public pressure, that could be Haiti’s problem.
Amidst the outpouring of support for Haiti, one offer of assistance was met with suspicion by many debt cancellation advocates. The IMF announced an emergency $100 million loan to Haiti to aid in earthquake recovery and reconstruction. While funding for recovery and reconstruction is sorely needed, loans that create additional debt (rather than grants, which do not have to be repaid) are an unacceptable response to this humanitarian disaster.
For the IMF to send a credit card offer to Haiti while citizens around the world dug into their own pockets struck many observers as tone deaf at best and predatory at worst. Perhaps sensing a backlash, IMF managing director Dominique Strauss-Kaun clarified that the IMF would work to cancel all of Haiti’s debt to the Fund — the emergency $100 million loan as well as $165 million in existing debt. “The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan,” Straus-Khan said on January 20. “If we succeed — and I’m sure we will succeed — even this loan will turn out to be finally a grant, because all the debt will have been deleted. And that’s the very important thing for Haiti now.”
However, in subsequent statements Strauss-Khan seems to be hedging on his full-throated call for debt cancellation. While he wields considerable influence as managing director, the real power to cancel Haiti’s debt lies with the IMF Board of Governors, including the United States. Writing on Huffington Post on January 22, Strauss-Khan delivered an early candidate for Understatement of the Year, noting that “there will be a need to reassess Haiti’s debt situation in light of the catastrophic damage to its economy.”
From “sure we will succeed” in canceling Haiti’s debt to “need to reassess Haiti’s debt situation” in 48 hours is not a reassuring sign that new IMF loans will not create new debt.
Thankfully, congressional leaders are not taking the IMF at its word (whichever word that happens to be). Rep. Maxine Waters (D-CA) in the House, and Senators Chris Dodd (D-CT) and Richard Lugar (R-IL) in the Senate announced their intention to introduce legislation requiring the U.S. to use its considerable influence to ensure all of Haiti’s debt is canceled.
Unsustainable and unjust debt repayments are an integral part of Haiti’s impoverished history. Loans that create additional debt would compound an already tragic situation and divert resources that are desperately needed to rebuild a shattered country. Ask your member of Congress to support efforts to cancel all of Haiti’s debt.