Statement at Donor Meeting

Remarks by IMF Delegation: Donors Conference on Haiti

January 25, 2010

As others have described, and as we have all seen in graphic images on television, the earthquake that hit on January 12^th has totally devastated the country of Haiti, virtually obliterating the city of Port au Prince and resulting in a massive loss of life. This is the latest in a long history of disasters―natural and man-made― that have turned the Caribbean country into the poorest nation in the Western Hemisphere.

Two hundred years ago, Haiti was the “Pearl of the Antilles.” Its amazingly rich soil then produced four harvests a year. It is not unrealistic to imagine that the country can be rebuilt into a prosperous nation. But it needs outside help over a prolonged period.

The Managing Director of the IMF has proposed that the international community strive for a Marshall Plan-type reconstruction effort—an international effort that supports the Haitian authorities as they rebuild their country, and that reinforces their democratic institutions.

Hopefully we can begin the process here in Montreal and start to build the contours of a comprehensive plan. In the coming weeks and months, the IMF will do what it can, by providing funds and expertise, to support the authorities’ reconstruction plans.

As importantly, the international community must cooperate closely so as to maximize the impact of the global goodwill and resources available to help the country get on its feet. And we should seize this opportunity to build the foundation and infrastructure of the country better and stronger than it was before.

Let me give more specifics on what the IMF can bring in the very near term:

• We have the capacity to provide urgently needed cash quickly. The Fund—along with separate contributions from other international agencies—will make $100 million available in the next few days to help Haiti with immediate humanitarian needs and provide a bridge to tomorrow’s reconstruction. 

• The IMF Executive Board is set to meet on Wednesday to review Haiti’s request for an augmentation of their Extended Credit Facility with the Fund. Haiti’s performance under the program had been satisfactory. All going to plan, the monies should be available quickly thereafter. The dedication of the Haitian authorities and their close cooperation despite the extenuating circumstances – has greatly facilitated our ability to move so quickly and I would like to pay our greatest respects to their courage and tenacity.

• For the next couple of years, Haiti has no payments to make on its existing obligations to the IMF; as for the emergency loan we are providing this week, it is interest-free, has no repayments due for five years, and has no policy conditions tied to it.

• In terms of actions on the ground, we are working with other donors and the authorities to get cash circulating in the economy so that people can buy food and employees can be paid. Banks have reopened, and the payments system is broadly functioning. 

Priority needs to focus on restarting private sector activity, rebuilding businesses, and encouraging loan guarantees so that lending can get under way. And we must take care to ensure that aid does not crowd out efforts to re-start the private sector.

It will also be critical to support the creation of jobs in rural areas, where large groups of the population have moved following the quake. Spreading economic activity centers throughout the country would help, particularly given logistical and physical challenges involved with re-building in and around Port-au-Prince.

The Fund’s arrangement with Haiti is designed to support these key objectives: it will help maintain an adequate foreign reserve cushion in the face of very large import needs; it should complement the objectives of other donor programs; and it aims to assist the authorities, in close collaboration with others, to re-establish a working government and prepare a plan for economic recovery and reconstruction. 

Looking beyond the emergency phase, and as part of an international plan to rebuild the country, we will need to reassess Haiti’s debt situation in light of this catastrophe, the damage to the economy, and the sizable financing needs. At that stage, the international community needs to be ready to provide comprehensive debt relief. And we need to help ensure that the focus on Haiti must not result in the diversion of aid at the expense of other poor countries.

In sum, Haiti’s needs are massive and immediate: we need to work together to mobilize all available resources and to deliver them as quickly and effectively as possible. The most urgent priority is to save people; in a few weeks, it will be reconstruction. 

Let me end here, noting that our work today shows that once again the international community, acting together, can meet challenges that go well beyond individual governments.