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With U.S. contribution, IDB cancels Haiti’s remaining debt

The Inter-American Development Bank today announced the cancellation of Haiti’s outstanding debt of $484 million with the IDB, after receiving a $204 million advance contribution from the United States to the Bank’s soft loan window, the Fund for Special Operations (FSO).

“We are grateful for this contribution by the United States, which will allow us to relieve Haiti of all its debt obligations to us,” said IDB President Luis Alberto Moreno. “This will free up millions in assistance for Haiti for development, without creating any future burden for a country that faces enormous challenges. This is an important reaffirmation of the commitment by the region and the international community to a better future for Haiti.”

The IDB is Haiti’s leading multilateral donor. In response to the devastation caused by the Jan. 12 earthquake, in March the Bank’s Board of Governors agreed to provide Haiti $200 million a year in grants over the course of the next decade, subject to annual approvals.

U.S. Department of Treasury Under Secretary for International Affairs Lael Brainard said: "In the days following the earthquake, President Obama pledged the full and continued commitment of the United States in the recovery and reconstruction of Haiti," said Under Secretary Brainard. "Today marks an important milestone in that effort. Thanks to the steadfast support from Congress, the U.S. is today providing essential cash assistance to lift the lives of the Haitian people."

Haiti was represented at the ceremony by its Chief of Mission at the Haitian Embassy, William Exantus.

Under a broader agreement to increase the IDB’s capital, the U.S. government is contributing a total of $237.4 million to the Fund for Special Operations, which provides concessional lending to the Bank’s least developed member countries. The $204 million made available on Wednesday made it possible to proceed with the cancellation of Haiti’s debt. Through earlier assistance measures, the Haitian government had been relieved from servicing its IDB debt.

The contribution would also enable the IDB to convert into grants $144 million in undisbursed balances of soft loans approved before 2007, when Haiti became a grants-only country. In addition, the U.S. advance payment would make $60 million more available for new grants to Haiti.

Since the earthquake the IDB has approved grants totaling $166 million for Haiti, providing resources for repairing key infrastructure such as water distribution systems and the electricity network, as well as for building roads and provisional schools. Other projects support agriculture and job-creation through private sector development. So far this year the IDB has disbursed more than $118 million for projects in Haiti.

Other IDB member countries are slated to contribute resources to the FSO over the coming year, ensuring the fund’s ability to continue providing long-term resources to Bolivia, Guatemala, Guyana, Honduras, Nicaragua and Paraguay. Haiti receives funds from a separate Grant Facility.

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