Haiti Needs Grants not Loans

Since Haiti gained its independence in 1804, it has been saddled with illegitimate debt. Initially, this was also coupled with the imposition of a ruthless blockade by Britain, which was subsequently imposed by Haiti's former colonial rulers France (to whom Haiti only finished paying compensation in 1947 for recognition of its freedom).

The US backed Duvalier father-son dictatorship (1957-1986) then accumulated hundreds of millions of illegitimate debt that was spent on personal loans by Papa Doc and Baby Doc and used to maintain their despotic rule. The money did not benefit the vast majority of the population in any way, shape or form. Yet, the world still demanded that the Haitian people pay back such loans. Last year Haiti finally qualified for debt cancellation worth roughly $1.2 billion, which was owed to the IMF, World Bank and the US Government, but the country still owes close to $1 billion.

Now, in response to the devastating earthquake in Haiti, the IMF is offering a new loan of $100 million, albeit interest free. Responding to criticism from those calling for debt cancellation for impoverished nations; the IMF said that it did not have a procedure to provide immediate grants. Interestingly, it does have mechanisms in place to provide immediate loans - loans that could tie Haiti into debt repayments for decades. The IMF does not have the mandate to act in this crisis and has nothing to do with development. Haiti's experience of the IMF in the 1990s was that it was forced to slash tariffs which allowed the US to dump its subsidised surplus of rice on the country, ruining the livelihoods of thousands of indigenous rice farmers. Its influence will not help the survivors of the earthquake and given the length of time it may take Haiti to repay such a loan, the IMF could wield influence for years to come. If any international financial institution is to get involved, it should be the World Bank, who could provide the same money in the form of a grant payment without any policy conditions attached.

Haiti does not need loans. It needs grants and it needs the balance of its debt to be cancelled. Now!