February 05, 2010

After Gillibrand Called For Debt Relief For Haiti, Treasury Announces It Will Press For Action At This Weekend’s G7

Haiti Faces $429 Million of External Debt to InterAmerican Development Bank, Other Debt Obligations

Washington, DC – At the urging of U.S. Senator Kirsten Gillibrand, U.S. Treasury Secretary Timothy Geithner will announce U.S. support for a debt moratorium for Haiti at this weekend’s meeting of G7 Finance Ministers and Central Bank Governors to help remove some of Haiti’s heavy financial burdens as it struggles to recover from a devastating set of earthquakes.

Currently, Haiti faces approximately $429 million of external debt to the InterAmerian Development Bank (IDB), as well as other debt obligations to the International Monetary Fund (IMF) and bilateral debt to Venezuela and Taiwan -- totaling almost $900 million. While the U.S. has established a trust fund to help service Haiti’s debt, this only addressed a fraction of the country’s total outstanding external debt. Since outstanding debt owed to the IDB is by far the largest amount, Senator Gillibrand believes that the proposed IDB moratorium would go a long way to lessen the financial burden on Haiti during this time of extreme suffering.

In a January 25 letter to Secretary Geithner, Senator Gillibrand wrote, “In my view, Haiti's limited resources should be directed at recovery, not repayment for the foreseeable future.  As an influential member of the IDB board, the United States should take leadership and propose an immediate moratorium on Haiti’s debt service payments to the IDB.  During the moratorium, it is also critical that interest not accrue.”

Debt moratoriums have previously been instated during times of crisis. In 1998, the Paris Club agreed to a moratorium on debt service payments from Nicaragua and Honduras in the wake of Hurricane Mitch, and then again in 2005 for Sri Lanka, Indonesia, and the Seychelles because of the devastating effects of the tsunami. 

Senator Gillibrand’s full letter is attached.