The IMF and Civil Society
IMF Support for Haiti
February 2, 2010
The IMF is deeply committed to the international response to the Haitian earthquake. The emergency loan, which carries highly concessional terms, will help restore financial services and pay for urgent imports.
In a rapid response to Haiti’s needs in the aftermath of the recent earthquake, the IMF Executive Board approved an additional $102 million for the devastated country, taking the total to be disbursed to $114 million.
The January 27 decision will give the Haitian government immediate funds to help restore basic financial services and begin to rebuild the country.
The decision from the IMF means the authorities can get cash circulating in the economy so that people can buy food and employees can be paid. The funds will also help Haiti pay for urgently needed imports.
The emergency IMF assistance carries highly concessional terms. It is interest free until 2012 and repayments of principal are only due after a 5 1/2-year grace period. The financing is not subject to any additional policy conditions.
“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. 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,” the IMF Managing Director Dominique Strauss-Kahn said.
IMF First Deputy Managing Director John Lipsky said recently that “an important aspect of our work as we move forward will be to consult and seek the views of a broad set of observers, who will bring varied perspectives and valuable insights to the process.”
The IMF and other financial organizations delivered about $1.2 billion of debt relief to Haiti in June 2009. That was a major step. The World Bank and Inter-American Development Bank have in the past six months delivered almost $900 million in additional debt relief under the Multilateral Debt Relief Initiative. Other institutions are considering further relief.
Explaining why the IMF was providing a loan to Haiti rather than an outright grant, Strauss-Kahn said that the IMF wanted to act quickly and it has no immediate way to make a grant. “And so, the question was: were we going to do nothing—or give a loan? We decided to give a loan—but a zero-interest loan, with a long grace period”, Strauss-Kahn added.
The IMF also took part in an international donors conference alongside world leaders including Haitian Prime Minister Jean-Max Bellerive, and other international organizations and aid groups in Montreal on January 25, to lay the foundations for Haiti’s recovery. Strauss-Kahn has proposed a type of Marshall Plan as part of the international effort to support the Haitian authorities rebuild the country.
IMF Staff Supported Haiti’s Relief Efforts
The Fund Community Relations and Civic Program and the Fund Haitian staff quickly organized a Haiti Disaster Relief Drive immediately after the earthquake. The response by all staff was overwhelming and extremely generous and a 100-percent matching grant for employees and retirees was approved by management.
The preliminary figures as of February 1 indicate that Fund staff, retirees, and families donated a total of $138,499, making the IMF contribution to the relief efforts a total of $276,998. All the collected funds will be directed to Haiti through the American Red Cross, which is already on the ground providing support with its own staff.