## Press Release: IMF Executive Board Cancels Haiti's Debt and Approves New Three-Year Program to Support Reconstruction and Economic Growth _IMF News, July 21, 2010_ ## Source details **Canonical URL:** [Press Release: IMF Executive Board Cancels Haiti's Debt and Approves New Three-Year Program to Support Reconstruction and Economic Growth](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10299) ## Other formats - [Markdown version](/en/news/articles/2015/09/14/01/49/pr10299/index.md) - [Structured JSON version](/en/news/articles/2015/09/14/01/49/pr10299/index.json) - [Bundle manifest](/en/news/articles/2015/09/14/01/49/pr10299/bundle-manifest.json) ## Bibliographic details - Published: July 21, 2010 --- ### Executive decisions and rationale - The Executive Board approved full cancellation of Haiti’s outstanding liabilities to the Fund, of about SDR 178 million (equivalent to US$268 million). - The Board approved a new three-year arrangement for Haiti under the Extended Credit Facility (ECF) to support reconstruction and growth. - Both decisions form part of a broader strategy to support Haiti’s longer term reconstruction plans following the January 12, 2010 earthquake. - Cancellation of existing debt was advocated by IMF Managing Director Dominique Strauss-Kahn to help launch a “Marshall Plan” for reconstruction and to catalyze donor contributions. ### Financing, ECF terms, and donor context - Donor pledges at a high-level conference: US$ 9.9 billion pledged for Haiti’s reconstruction, of which US$ 5.3 billion is to be disbursed over the next 18 months. - Debt relief financing: the Post-Catastrophe Debt Relief (PCDR) Trust Fund. - ECF financing: SDR 40.9 million (about US$ 60 million) over three years to boost international reserves and help the central bank manage currency swings without adding to net debt. - ECF interest and repayment terms: - Interest rate: zero interest rate until end-2011 and thereafter zero to 0.5 percent. - Maturity: 10 years. - Grace period: 5½ years. - The temporary interest waiver is financed from the IMF’s internal resources, including the use of resources linked to the gold sales, and through bilateral contributions. ### Expected macroeconomic impact and objectives - Resources freed by IMF debt relief are intended to help meet substantial balance-of-payments needs exacerbated by the earthquake. - The new program aims to: - Provide a coherent macroeconomic framework to support the authorities' reconstruction and growth objectives. - Smooth the impact on the economy of large expected aid flows (projected to triple to about 15 percent of GDP over in the next 3 years). - Raise domestic revenue, align the budget and its financing with reconstruction priorities, and continue strengthening fiscal governance. - Upgrade monetary and exchange rate policies to facilitate absorption of aid inflows while avoiding large exchange rate swings and keeping inflation under control. - Support a comprehensive medium-term technical assistance strategy. ### Technical assistance and institutional strengthening - The IMF will provide a comprehensive medium-term technical assistance program focused on: - Tax policies. - Revenue administration. - Budget preparation and execution. - Assisting with Haiti’s first ever issuance of government securities. - Technical assistance aims to strengthen state institutions, improve the business environment, and foster private credit and investment. ### Statements from IMF and Haitian authorities - Dominique Strauss-Kahn: urged donors to deliver quickly so reconstruction can be accelerated, living standards improved, and social tensions soothed. - Ronald Baudin, Haiti’s Minister of Economy and Finance: “The new program will provide a coherent macroeconomic framework to support the implementation of our Action Plan and ensure efficient spending and absorption of aid inflows.” - Charles Castel, Governor of the Bank of the Republic of Haiti: emphasized improving the business environment and rebuilding economic institutions to support growth. - Naoyuki Shinohara, Deputy Managing Director and Acting Chair, highlighted eligibility for PCDR debt stock relief and stressed the dependence of reconstruction on timely disbursement of donor pledges. ### Annex — Recent economic developments (key statistics) - Earthquake losses: estimated at 120 percent of 2009 GDP. - 2009 growth: almost 3 percent (second-fastest rate in the Western Hemisphere). - Remittances: grew by 12 percent between January and May of 2010 (over the previous year). - Aid inflows: projected to triple to about 15 percent of GDP over in the next 3 years. - Main program projections and targets: - Growth: GDP is projected to expand by 9 percent in fiscal year 2011-12, due mostly to reconstruction activity, and 6 percent by 2015. - Inflation: expected to reach 8.5 percent in the current fiscal year and to decline to 7 percent by 2013. - Fiscal strategy: boost revenue collection to 13 percent of GDP by 2013, from 10% percent currently. - Monetary policy: build a sustainable external position while absorbing reconstruction-related foreign exchange flows; further steps to improve the Bank of the Republic of Haiti’s independence; gradual development of a market for government securities. *IMF Press Release No. 10/299, July 21, 2010* --- ## Content in this bundle - [042210pdf (PDF)](/-/media/websites/imf/imported/external/np/pp/eng/2010/_042210pdf.pdf){rel="external" type="application/pdf"} - [062310pdf (PDF)](/-/media/websites/imf/imported/external/np/pp/eng/2010/_062310pdf.pdf){rel="external" type="application/pdf"} --- ## References - [Haiti and the IMF](http://www.imf.org/external/country/HTI/index.htm) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [IMF Executive Board Establishes a Post-Catastrophe Debt Relief Trust](https://www.imf.org/external/np/sec/pn/2010/pn1092.htm) - [Factsheet: The IMF’s Post-Catastrophe Debt Relief Trust](https://www.imf.org/external/np/exr/facts/pcdr.htm) - [Financing the Fund’s Concessional Lending to Low-Income Countries](https://www.imf.org/external/np/exr/facts/concesslending.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10299_