Transcript

Transcript of a Conference call on the IMF Executive Board's approval of US$114 Million in Emergency Aid to Haiti

January 29, 2010

MR. ADRIANO: Good afternoon to everybody and thank you for dialing into this conference call on the IMF’s approval of $100 million emergency aid to Haiti. I would like to introduce Corinne Deléchat. She’s the Mission Chief for Haiti in the Western Hemisphere Department at the IMF, and she will be ready to take questions after. Do you want to make some initial comments?

MS. DELÉCHAT: Oh, hi, just to say I’m here, and we’re here to take your questions and clarify any things that need clarifying.

MR. ADRIANO: We can start taking your questions.

QUESTIONER: Thank you. Yes, the Managing Director said that the negotiations to forgive the debt to Haiti succeeded, and this loan now will be forgiven as well, and I wonder if you could give us an update on where those talks are. What will be needed for the IMF to forgive this debt? I mean would they require member countries to put up the money so that there’s not a hole in the funds that they traditionally have.

MS. DELÉCHAT: Okay, thank you for your question. I think the Managing Director has made a few comments, but clearly there are two issues we need to separate. Today Haiti needs massive resources. Today, Haiti pays no debt service to the Fund at all and very little overall to other creditors, at least for this year and the next. So, to respond to today’s need, what is needed is fresh resources which is what we’ve brought with approval of the $100 million this morning. This money will be in the hands of the authorities by Friday. I think this is the first, the largest financing package to reach the authorities 15 days after the earthquake.

Now when we know more about the extent of the damages and the needs for reconstruction in terms of financing, these will be clearly very, very significant. There will be both a disaster needs assessment in February and a big donors conference in March. The Fund will accompany that process. And, as a result of the needs assessment, there will be a need for a concerted international effort to give resources to Haiti for long-term reconstruction.

At this point, debt relief will be considered as one of the ways to deliver that assistance to Haiti, but clearly what debt relief can achieve is little in comparison of the needs. But there’s good will from the IMF and the membership and good will from the other international organization to seriously consider the debt at this point. We’re already awaiting good news on debt relief from bilateral creditors, and we expect a very large amount of support from the community. In the end the debt relief itself would be a political decision down the road.

MR. ADRIANO: Next question, please.

QUESTIONER: You say you’re going to be disbursing immediately $114 million. Since the government is basically a nation in collapse right now, with no government buildings or few of them, and the government barely being able to operate, how is this going to work? Can you tell me how they’re planning on getting this economy up and running, how they disburse this money to the banks and so on, just to give us sort of an idea of how it’s going to be done?

MS. DELÉCHAT : Well, first on the government, I think we really had to commend authorities for really trying very hard to get back on their feet. There’s a crisis committee chaired by the prime minister and with other key ministers. The minister of finance has started to regroup and operate in various locations. The central bank is actually in the best shape of all. They are able to operate. They have reopened last week, and the banks have reopened this weekend.

They’re ready to receive the money, and then they will do a number of things with it. First, it will clearly be used to import urgently needed equipment. So, for example, to operate again, as you said, the government will need more computers, telecommunications equipment and the like.

Down the road, they will need to import for reconstructing schools and hospitals. Ninety percent of the schools of the country have been destroyed. And also from an economic management perspective, once imports start going again, the government expects a surge in the demand for foreign exchange. So it’s critical that they have enough foreign exchange in reserves to be able to manage big spikes which would translate otherwise in very high inflation.

QUESTIONER: I’m sorry, if I could just have a follow-up on the third. How does an economy like this, how long would you estimate for it to recover? I know there’s a needs assessment going to be done by the Bank and the Fund and other U.N. agencies. But how long could you, in your mind as you’ve seen the damage -- probably not yourself but probably compared to other disasters like this -- how long can you see an economy like this taking, getting back on its feet, and what measures are needed for that?

MS. DELÉCHAT: Yes, thank you. That’s a very good question. I think you know the prime minister said in Montreal, and I would agree with his assessment on the ballpark, that the earthquake set Haiti back at least four or five years, and with that all the slow progress that was achieved in different areas.

Now how long does it take to get back there? it clearly will be a long-term effort to get the country on the sustainable development path, which is what the international community is committed to do. But if the reconstruction plan is smart, you can, rebuild better and start on the right foot with doing things in a different way that would allow you not to have to go back all the way,.

So the government has a fairly clear idea of what needs to be done. As days go by, we’re learning more about the extent of the damage but also what’s been rescued. So, for example, we heard today that 80 percent of the capacity of the textile plants around Port-au-Prince is actually operating, is actually safe. We thought before that they might all have been destroyed, and this is 90 percent of the country’s exports. So this was a very good news which means when the port is operational again fully, then exports can resume.

There’s a lot of regions that are not affected by the earthquake and big movements of population to these regions. What is critical is not to try to rebuild the capital where it was, and put all the effort there, but, as the authorities and others have said, to spread economic opportunities throughout the country. And then that will give you a more balanced model of development for the country.

The north is untouched. The Royal Caribbean Cruises are still coming every week with 6,000 tourists. Putting some of the efforts into developing that region and the infrastructure would help it get going without really a need for the center. So this is the example we need to follow for other parts of the country as well.

QUESTIONER: I’m sorry. Can you repeat? Did you say 80 percent of the textile capacity is still there?

MS. DELÉCHAT: Yes.

QUESTIONER: Eighty percent, so most of the factories were not destroyed?

MS. DELÉCHAT: Right. All the textile plants, except one which is near the Dominican Republic, are around Port-au-Prince. Out of the ones around Port-au-Prince, I heard this morning from the governor of the central bank that 80 percent are okay.

QUESTIONER: Yes, I have a question regarding the needs assessment. What is the IMF’s role going to be in that part? Is it specifically looking at certain specifics on the economy or can you just follow up on that?

MS. DELÉCHAT: Yes, thank you very much. We really clearly want to be very much involved in that, now the needs assessment will be in different stages with different missions. It’s coordinated by the United Nations and the World Bank and then other technical U.N. agencies. So the first mission will be a mission to assess damages to infrastructure, and there they will need engineers and the like to be able to cost the damages.

The second part will be more an economic assessment. So we’re ready to take an active role in translating the data we’re getting into a macroeconomic framework and an estimate of overall financing needs, et cetera. That will be the anchor for the donor conference in New York and then for the future donor support.

I must add that we’ve been working with the authorities from day one on helping them restore that basic capacity we’re talking about. So we’ve been in close contact with them in our areas of expertise which is revenue and payroll and payment system, to see and advise on an ongoing basis.

QUESTIONER: Right now, the government is not getting any revenue, correct? That’s quite hard.

MS. DELÉCHAT: Well, the tax administration was decapitated. I mean literally. The director died when the building collapsed. They managed to salvage a server, but a lot of records, were on paper in the building.

On the customs side, the system is computerized in decentralizing the customs offices. But, no, you’re right, 80 percent, 85 percent of total revenue is collected around the capital from the largest enterprises. So you need to restart businesses and then give people an income before you can collect taxes. Even in the provinces with the influx of people from the city, there will be pressure on families who are depending on their earnings to start with, right.

QUESTIONER: Right. You just said all documentation and records and so on have been destroyed. You know. So how does one rebuild from that?

MS. DELÉCHAT: Well, we don’t know exactly the extent of the damage. We’ve been coordinating with our colleagues at U.S. Treasury and the World Bank, and they’ve already sent experts to help the authorities assess the damage and salvage as much data as they can. So I can’t tell you exactly what the implication is, and they may have salvaged enough to operate, but there will be issues, clearly.

QUESTIONER: I wanted a little more clarification on the textile plants. When you say that there is 80 percent of the textile plant capacity around Port-au-Prince is operating, do you mean just barely functioning? Are they fully operating?

MS. DELÉCHAT: I don’t know the details. I mean I’m not an expert, and then I heard that from, again, the governor of the central bank this morning. So I’m just relaying what I heard, which I thought was reassuring, but we clearly would need more details. I think that there are clear constraints in terms of energy supply and then transport and the like. So it probably doesn’t mean they can reopen tomorrow.

QUESTIONER: Oh, so it actually means that 80 percent of the textile capacity is capable of resuming operation.

MS. DELÉCHAT : Yes, yes. I would take this -- exactly. I would take that in that sense, right. They’re meaning they’re not flat on the ground.

QUESTIONER: Right, okay. Great. Thank you very much.

Thank you very much, everybody, for calling in, and have a good afternoon.