IMF to issue emergency loan to Haiti

Thursday 28 January 2010 23.15
Haiti - Up to one million homeless
Haiti - Up to one million homeless

The International Monetary Fund will disburse $114m (€81m) to Haiti by Friday to help the government get back on its feet and restart the economy devastated by the earthquake.

Haiti: Earthquake coverage/donation information
Photographs: Haiti in Pictures

The loan includes $102m (€72.7m) in new emergency funding approved by the IMF's board on Wednesday.

The IMF said Haiti will not pay interest on its IMF loans until the end of 2011, part of a package of measures agreed last year to help poor countries cope with the impact of the global financial crisis.

‘The emergency augmentation will provide urgently needed financing for essential imports, and make cash available to banks and transfer houses,’ the IMF said in a statement.

As many as 200,000 people died in the 7.0-magnitude earthquake that struck Haiti on 12 January.

While international rescue teams still sift for survivors in collapsed buildings in the capital Port-au-Prince, there are parallel efforts being made to get the country functioning again.

The IMF funding will be used to import equipment for the government to resume operations after state buildings were flattened and records destroyed.

‘It will also enable the authorities to maintain an adequate reserves cushion in the face of very large import needs linked to reconstruction,’ the IMF said.

IMF mission chief to Haiti Corinne Deléchat told reporters on a conference call that once imports resume, the government expects a surge in demand for foreign exchange.

Therefore, it was critical for the authorities to hold foreign exchange in reserves to be able to manage large spikes in demand, which would otherwise translate into very high inflation.

She applauded the government for its efforts to restore the state and said the central bank was ‘in the best shape of all and able to operate.’

Ms Deléchat said it would take a ‘long-term effort’ by the international community to put the country on a sustainable development path.

She said about 80% of Haiti's textile capacity, which is located outside the capital Port-au-Prince, was capable of still operating, and that once the main port was repaired, textile exports could resume.

Textiles make up about 90% of Haiti's exports and the industry generates a lot of revenue for the government.

Ms Deléchat said international agencies including the IMF, World Bank and UN would begin an assessment in February of the extent of the damage, which would help determine how much aid will be needed for reconstruction.

A donor conference in March will nail down specific pledges from different governments for Haiti's rebuilding.

Haitian Prime Minister Jean-Max Bellerive told a donor conference in Montreal this week that the earthquake had set his country back by between four to five years and it would take up to 10 years to rebuild.

Anti-poverty groups have called on the IMF and other international institutions to cancel Haiti's debt - Ms Deléchat said it was a ‘political decision’ among donor countries.

Some $1.2bn (€.86bn) of Haiti's debts to the IMF and World Bank were written off in July last year as a reward by the international community for progress the country was making in economic reforms and management.

Meanwhile, angry crowds mobbed three food distribution sites in Haiti's capital, the latest handouts to turn chaotic as aid groups struggle to help the throngs left desperate and hungry by the catastrophic earthquake.

Earlier, Haiti's police chief said that bandits were preying on vulnerable earthquake survivors, even raping women, in makeshift camps set up in the capital after the disaster.

National police chief Mario Andresol told reporters that
'With the blackout that's befallen the Haitian capital, bandits are taking advantage to harass and rape women and young girls under the tents.'

He continued 'we have more than 7,000 detainees in the streets who escaped from the National Penitentiary the evening of the earthquake. He said It took us five years to apprehend them. Today they are running wild.'