Press Release No. 10/17

Press Release No. 10/17
January 27, 2010

The Executive Board of the International Monetary Fund today completed the sixth and final review under Haiti’s Extended Credit Facility and approved an SDR 65.5 million (equivalent to about US$102 million) augmentation to the facility, that will help Haiti cope with the aftermath of the massive and disastrous earthquake that struck the country on January 12, 2010. With the approval of this additional financing, a total of US$114 million will be disbursed by the end of this week, constituting the largest amount made available so far to the Haitian authorities after the earthquake.

Following the Executive Board discussion of Haiti, Mr. Dominique Strauss-Kahn, Managing Director and Chairman of the Board, issued the following statement:

“The powerful earthquake that struck Haiti on January 12 caused unprecedented human and economic losses to the capital and neighboring cities, home to 3 million people or about one-third of the country’s population. Casualties number in the tens of thousands, and key economic and government infrastructure has been destroyed. Aside from the human tragedy, this disaster represents a major setback for the Haitian economy, following several years of progress in maintaining macroeconomic stability, resuming growth, and implementing essential structural reforms. Last year Haiti’s economy grew by almost 3 percent, the second highest growth rate in the Western Hemisphere. In June 2009, Haiti received US$1.2 billion in HIPC/MDRI debt relief.

“Haiti’s needs are massive and pressing. The international community has responded fast and has already mobilized substantial resources for the relief and recovery effort. The Fund’s augmentation under the Extended Credit Facility provides urgently needed cash resources to the government, which will allow the authorities to acquire emergency imports without depleting Haiti’s reserves.

“The Fund is participating in the coordinated international effort to assess the economic impact of the earthquake, and will assist the authorities in preparing and implementing a plan for medium-term reconstruction and economic recovery. In the short-run, the Fund, together with other development partners, is providing immediate technical support to the Haitian authorities in the area of economic management,” Mr. Strauss-Kahn said.

The emergency augmentation will provide urgently needed financing for essential imports, and make cash available to banks and transfer houses. It will also enable the authorities to maintain an adequate reserves cushion in the face of very large import needs linked to reconstruction. The emergency IMF assistance carries highly concessional terms. It is interest-free and repayments of principal are only due after a 5.5 years grace period. The financing is not subject to any additional policy conditions.

Completion of the review and the augmentation will bring total disbursements under the IMF program with Haiti to SDR 180 million (about US$281 million). The ECF has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality (see Factsheet).

Haiti’s original three-year PRGF arrangement was approved in November 2006 in an amount equivalent to SDR 73.71 million (about US$115 million; see Press Release No. 06/258). In June 2008, the Executive Board approved the first augmentation under the PRGF arrangement amounting to SDR 16.38 million (about US$25.6 million; see Press Release No. 08/145) to help Haiti cope with the impact of high international food and fuel prices. A second increase in financial assistance amounting to SDR 24.57 million (about US$38.4 million) was approved by the Executive Board in February 2009 to help mitigate the negative effects caused by a series of hurricanes in 2008, as well as the global downturn (see Press Release No. 09/34).