Haiti eligible for major debt relief, IMF/WB say

By Gilbert Le Gras

SINGAPORE, Sept 19 (Reuters) - Haiti qualifies for a debt write-off under a major multilateral relief effort, the International Monetary Fund said on Tuesday, marking a new stage in donors' attempts to bolster the poorest country in the Americas.

The IMF said in July that relief under the Highly Indebted Poor Countries Initiative could be worth $14 million in the first year for the impoverished, turbulent Caribbean country and could unlock potential additional contributions worth $22 million.

"We hope that the discussion of decision point at both the IMF board and Bank board takes place in early November. At that point they could become eligible for interim debt relief," said World Bank Latin America and Caribbean director Caroline Anstey.

"They receive the bulk of the debt relief at the completion point, which follows some two or two-and-a-half years later," Anstey added. "We believe it is very important that the savings from debt relief are spent on key social areas: health, access to clean water, education."

A meeting of 26 donor countries and agencies in July topped up and extended a two-year-old aid fund with $750 million for 13 more months after the original $1.1 billion package expired.

Donors meet again in Spain in November to review Haiti's progress in implementing its budget and social programmes.

In a statement, IMF deputy managing director Takatoshi Kato said Haiti had a satisfactory track record but faces daunting challenges in security, social conditions and income growth.

As a result, the country would need "continued financial support from and engagement with the international community".

Last month the United Nations renewed the mandate of its 9,000-strong peacekeeping force for six months, despite U.N. Secretary General Kofi Annan's request for a year-long extension and a World Bank official's call for a larger security force.

The IMF's Kato said further macroeconomic, structural and social reforms, as well as close attention to improving security, would be essential in enabling Haiti to reach the point where creditors agree to reduce its debt burden.

Haiti's external debt is about $1.3 billion, of which about $550 million is owed to the Inter-American Development Bank, which is also considering a debt write-off.

IADB President Luis Alberto Moreno, who is attending the Singapore meetings, was not immediately available for comment.

"Immediate cancellation of Haiti's debt to the IMF, World Bank and IADB would free much-needed resources needed to fight poverty," non-governmental organisations Jubilee Network USA and Institute for Justice and Democracy in Haiti said in July.

To date, debt reduction packages have been approved under the HIPC initiative for 29 countries, providing $35 billion in debt-service relief over time.

The initiative was launched in 1996 with the aim of ensuring no developing country faced a debt burden it could not manage.