Don't bury Haiti in a mountain of debt

PUBLISHED : Saturday, 13 February, 2010, 12:00am
UPDATED : Saturday, 13 February, 2010, 12:00am

Haiti's future was looking bright for the first time in decades before the magnitude 7 quake struck last month. A UN peacekeeping mission, rare political stability, a concerted effort by the government to eradicate corruption and a tourism boom were slowly dragging the country back from its unenviable position as the poorest in the western hemisphere. In an instant all progress was obliterated; years will pass before the infrastructure that was flattened is rebuilt. It is fitting that the world's richest nations have cancelled debt owing to them - and called for international lending agencies to follow suit.

The Group of Seven most industrialised countries had loaned Haiti only a fraction of the US$1.25 billion it owed. With the G7's decision, the biggest lenders are now the World Bank, the International Monetary Fund, US government agencies and Taiwan and Venezuela. Some have also offered humanitarian aid but this shouldn't be used as an excuse not to also cancel debt. Haitians need all the help they can get. More than 200,000 people were killed and at least one million remain homeless. Billions of dollars were pledged in the wake of the quake but the outpouring of compassion is starting to subside. The fewer the number of charity events, the more journalists and camera crews who leave, the greater the risk of the country slipping from international attention. Clearing debt will help keep the focus and bring immediate benefits.

Interest payments alone have been holding back development. Haiti spent about US$37 million servicing its debt last year. The amount seems small but is substantial for a country so poverty-ridden. This was equivalent to one-third of the education budget, and more than was allocated to the tourism ministry - despite the importance of the sector to economic growth.

Debt relief will free funding for reconstruction. But there will also be huge psychological benefits. The nation has owed foreign governments money for most of its history. It must be finally unshackled from that obligation; as British Prime Minister Gordon Brown said, a nation buried in rubble must not be buried in debt.