Washington, D.C.--Congressman Eliot Engel, Chairman of the House Western Hemisphere Subcommittee, joined several House colleagues in asking Treasury Secretary Timothy Geithner to press the World Bank, International Monetary Fund, and the Inter-American Development Bank to cancel Haiti’s debts in the aftermath of the earthquake that devastated the country on January 12.

Rep. Engel said, “We cannot be so callous as to demand payment from a country that cannot feed or house its people in the wake of this awful tragedy. This is the right and proper thing to do.”

“Haiti cannot even afford to help its own people with reconstruction and development efforts, while also saddled with the debts owed to international financial institutions. Even before the earthquake, debt service payments to these institutions were a tremendous burden that interfered with the ability of the Haitian Government to meet the needs of its people,” Engel added.

The letter urged Secretary Geithner to use the vote of the United States on the Executive Boards of the international financial institutions to support the cancellation of all debts owed by Haiti. The letter also calls for additional assistance to Haiti in the form of grants, not loans, so that the country does not accumulate additional debt.

In June 2009, Haiti had $1.2 billion in debt cancelled when it reached the completion point in the Heavily Indebted Poor Countries (HIPC) Initiative. But even after this relief, Haiti still owed $709 million to multilateral financial institutions.

The letter was initiated by Rep. Maxine Waters (D-CA) and also signed by Reps. Ros-Lehtinen (R-FL), Lee (D-CA), Payne (D-NJ), among others.

The text of the letter follows:

February 2, 2010

The Honorable Timothy Geithner
Secretary of the Treasury

Dear Secretary Geithner:

We are certain that you share our concern for the people of Haiti in the aftermath of the devastating earthquake that occurred on January 12, 2010.

We are writing today to urge you to support three specific actions that should be a part of the international community’s response to this terrible tragedy: (1) the complete cancellation of all remaining debts owed by Haiti to multilateral financial institutions, (2) the suspension of Haiti’s debt service payments to these institutions until such time as the debts are canceled, and (3) the provision of additional assistance to Haiti in the form of grants so that the country does not accumulate additional debts.

As you know, in June of 2009, Haiti secured $1.2 billion in debt cancellation from its major creditors when it reached the completion point in the Heavily Indebted Poor Countries (HIPC) Initiative. This was a critical step forward. But even after this relief, Haiti still owes a total of $709 million in debts to multilateral financial institutions, including $447 million to the Inter-American Development Bank (IDB), $165 million to the International Monetary Fund (IMF), $39 million to the World Bank, and $58 million to the International Fund for Agricultural Development (IFAD).

We welcome recent statements from officials at the multilateral financial institutions of their intentions to consider cancellation of Haiti’s remaining debts. We urge you to use the voice and vote of the United States on the Executive Boards of these institutions to secure cancellation of all of Haiti’s remaining multilateral debts. While arrangements are worked out for cancellation, we urge you to support a moratorium on debt service payments from Haiti to these institutions, without the accrual of interest.

We also welcome the pledges of additional financial assistance from international governments and multilateral financial institutions, as it is critical that all available resources be delivered to Haiti as quickly as possible. However, we urge that all assistance be in the form of grants instead of new loans.

Specifically, we strongly urge you to work to ensure that the $100 million loan offered to Haiti by the IMF be provided on terms comparable to a grant and without onerous conditions. We are encouraged by IMF Managing Director Dominique Strauss-Kahn’s recent statement that the IMF intends to work to cancel all of Haiti’s debts including this new loan. We urge you to work with the IMF and the other multilateral financial institutions to make this happen.

Debt cancellation will allow the Government of Haiti to use its meager resources for essential humanitarian relief, reconstruction and development efforts. We thank you for your consideration of our views on this critical issue.

Sincerely,

cc: Dominique Strauss-Kahn, Managing Director of the IMF
Mr. Robert B. Zoellick, President of the World Bank
Mr. Luis Alberto Moreno, President of the IDB
Mr. Kanayo F. Nwanze, President of IFAD