GENEVA (4 February 2010) – The UN Independent Expert on foreign debt and human rights, Cephas Lumina, called Thursday for an immediate cancellation of Haiti’s debt with multilateral creditors, and the provision of unconditional grant-aid, “not new loans whatever the degree of concessionality.”
The UN expert welcomed the recent announcement by the Paris Club - an informal group of 19 creditor countries - that its members would cancel the US$214 million debt owed to them by Haiti. However, he warned that “the decision is insufficient to assure the country’s sustainable recovery effort, given that the bulk of its external debt is owed to multilateral creditors.”
Haiti currently owes about US$890 million to international creditors. Approximately 70 per cent of its total external debt is owed to multilateral creditors, mainly the Inter-American Development Bank (41 per cent) and the World Bank (27 per cent).
“What is required is an immediate moratorium on debt service, as UNCTAD and others have recently argued,” said Mr. Lumina, who has been mandated by the UN Human Rights Council to monitor the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights.
“In addition,” he stressed, “Haiti’s remaining multilateral debt must be unconditionally cancelled as a matter of extreme urgency in order to afford the country the necessary fiscal space as it recovers from the recent devastating earthquake and moves towards reconstruction.”
Grant-aid, not new loans
Mr. Lumina warned that the IMF was ignoring its own advice by the recent approval of a ‘highly concessional’ and ‘interest-free’ loan of US$114 million to Haiti, repayment of which is due after a five-and-a-half year ‘grace period.’ The IMF loan is an augmentation of Haiti’s existing $178 million programme under the Extended Credit Facility.
“What Haiti needs is urgent, unconditional grant-aid, not new loans - whatever the degree of concessionality - as well as guaranteed local ownership of the national policy agenda. A new build-up of unsustainable debt must be avoided,” Mr. Lumina said, noting that independent assessments indicate that it will take at least ten years for the country to recover from the devastating earthquake.
“The extension of Haiti’s loan programme in circumstances where the IMF acknowledges the country’s high risk of debt distress, and particularly in view of the fact that the country’s economy has collapsed and its debt service capacity is non-existent, runs counter to the IMF’s own advice and is profoundly inappropriate,” the UN expert said.
In July 2009, the IMF stated that Haiti’s risk of debt distress would remain high even after debt relief and that therefore ‘new borrowing policies must remain cautious’.
“It is unrealistic to expect that the people of Haiti can muster the resources to start servicing this debt in five years’ time. It is also inappropriate to make Haiti pay back its emergency assistance,” the Independent Expert said. “Haitians have already endured much suffering - as a consequence of repression, lack of ownership of the national policy agenda, poverty, natural disasters and unsustainable debt levels - for much of their history as an independent nation.”
Mr. Cephas Lumina was appointed Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights by the United Nations Human Rights Council in 2008. He is independent from any government or organization and serves in his individual capacity. The mandate covers all countries.