G7 To Cancel Haiti’s $1.2 Billion Outstanding Debt

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The G7 group, which includes the US, Canada, the UK, Germany, France, Italy and Japan, announced late today that they will cancel Haiti’s $ 1.2 billion outstanding unilateral debt. Increasing pressure to do so were coming from the International Monetary Fund (IMF), and also from various NGOs, notably UK based Oxfam, for the international community to help Haiti recover from the catastrophic earthquake of January 12.

British PM Gordon Brown enthusiastically and eloquently endorsed the pledge made by the G7.

“It must be right that a nation buried in rubble must not also be buried in debt. The UK has already canceled all debts owed to it by Haiti and I strongly welcome today’s G7 commitment to forgive Haiti’s remaining multilateral debt. We will work with others to make sure this is delivered,” said UK’s PM Gordon Brown.

On Friday, the Obama administration expressed it support for a similar plan. The head of the IMF, Dominique Strauss-Kahn, was pushing the rich nations on the issue of debt relief for Haiti. Stauss-Kahn committed himself to provide full relief of Haiti’s debt due to the IMF, which includes a $102 million emergency loan granted to the country in January.

US Treasury Secretary Geithner added that the US would seek to reach a similar agreement with multilateral donors.

“The earthquake in Haiti was a catastrophic setback to the Haitian people who are now facing tremendous emergency humanitarian and reconstruction needs, and meeting Haiti financial needs will require a massive multilateral effort,” said Treasury Secretary Geithner.

Treasury Secretary Geithner’s statement echoed the approach of IMF’s head Strauss-Kahn. Shortly after the earthquake, Strauss-Kahn had mentioned the need of an effort of similar scope than the Marshall Plan.

This is very promising but it doesn’t explore the additional need of funding for Haiti’s reconstruction. Not only Haitians need to have their debt, both unilateral and multilateral cancel, but they are in desperate need for additional capital. Oxfam came up with an interesting suggestion on the matter: International transactions from bank to bank would be tax a small amount ,with no effect on the consumers, and the tax proceeds would be allocated to Haiti’s reconstruction.

Editor’s Note: Our co-founder/co-editor in chief, Dolores M. Bernal is covering Haiti on the ground for another week, and will keep NJP’s readers updated on the situation. For immediate updates on all of our articles, please follow The News Junkie Post on Twitter.