January 25, 2010
Haiti and the Inter-American Development Bank
IDB in Haiti
- The IDB is Haiti’s largest multilateral donor, with a portfolio of more than 25 programs for a total of about $770 million as of the end of last year.
- In 50 years of operations the IDB has approved almost $1.5 billion in concessional loans, grants and guarantees for Haiti.
- Since 2007, IDB financing for Haiti has been exclusively in the form of grants, totaling $222 million through the end of 2009. Haiti is the only country that enjoys grant-only status at the IDB.
- In 2009, the IDB more than doubled the allocation for grants to Haiti to $122 million. For 2010 the allocation was increased further, to $128 million. These increases were approved prior to the earthquake as part of an effort to help the country recover from external shocks such as spikes in food and fuel prices and natural disasters, including the four hurricanes of 2008.
- During the April 2009 Haiti Donors Conference at the IDB, MDBs and bilateral donors pledged more than $350 million in new commitments.The IDB has also worked closely with UN Special Envoy for Haiti, President Bill Clinton, to attract foreign investment to key areas like garments, biofuels and agribusiness. An investor conference co-sponsored by the IDB in Port-au-Prince last year drew more than 600 participants.
IDB and Haiti after the earthquake
- After the earthquake, the IDB offered the Haitian government to redirect resources from existing operations to emergency relief and reconstruction efforts. Around $50 million could be reassigned to priority reconstruction projects.
- Management expects to propose to the Board of Executive Directors and Board of Governors, where all 48 IDB member countries are represented, additional resources for the grant facility that finances operations for Haiti.
- The IDB has remained operational in Haiti even after its office in Port-au-Prince was damaged. The Bank kept staff on the ground and is helping transfer emergency materials through chartered flights.
- IDB staff on the ground is coordinating closely with Haitian authorities and other organizations on a variety of relief and reconstruction issues like housing, helping business restore production and helping the government regain its financial and administrative capacity.
- IDB President Luis Alberto Moreno appointed Ciro de Falco, a former IDB Executive Vice President, to head a Special Task Force to coordinate with other bilateral and multilateral agencies involved in the reconstruction of Haiti. De Falco will also prepare the Bank’s strategy and work program to provide fast and efficient assistance for the country.
- The IDB is considering a mechanism for the further alleviation of Haiti’s $441 million debt to the IDB, given the magnitude of the destruction caused by the Jan. 12 earthquake. The IDB has been Haiti’s biggest multilateral source of debt relief.
- In 2009, the IDB provided $511 million in debt relief, clearing the way for the Government to undertake vital public investments. As approved by the Bank’s Governors, the cancelled amount covered all debt outstanding at the end of 2004.
- $181 million of the country’s outstanding US dollar debt with the IDB consists of concessional loans the country took in 2005 and 2006. These are 40-year loans with 10-year grace periods and interest rates capped at 2 percent. The country is not yet servicing this portion of the debt because it is within the grace period.
- The remainder comes from loans that had been approved before the end of 2004 but disbursed after the cut-off date. These loans for roads, electricity, schools, hospitals, agriculture and other key development sectors were not eligible for debt cancellation.
- Haiti’s debt service payments to the IDB from mid-2009 through 2011 are covered by resources from a US-supported trust fund. Thus, Haiti’s debt to the IDB is not causing any outflow of funds from the country.
IDB's strategy and priority sectors in Haiti before the earthquake
- About 60 percent of the IDB´s portfolio of projects aimed to strengthen foundations for economic growth, particularly in infrastructure and agriculture.
- Nearly 20 percent aimed to improve access to and coverage of basic services like water, sanitation, education, and health.
- Another 20 percent was earmarked to support economic governance and building institutional capacity.
Main IDB projects in Haiti before the earthquake
- Watershed Management and Natural Disaster Risk Prevention and Mitigation. A $30 million IDB 2009 grant will help limit flooding and erosion in watersheds. Planned anti-flooding works in three critical watersheds will cover 6 percent of Haitian territory, bringing benefits to 360,000 people of the Grande Rivière du Nord, Ravine du Sud and Cavaillon watersheds. This project complements a series of interventions to increase farmers incomes including irrigation investments and support to value chains in agriculture.
- Water and Sanitation. The IDB is supporting Haiti’s Drinking Water and Sanitation Sector Reform, to provide sanitation and potable water services for Saint-Marc, Port-De Paix, Les Cayes, Jacmel, Ouanaminthe and Cap-Haitien.
- Road Rehabilitation. The IDB has over$200 million in programs to improve the road network especially the primary roads linking major urban and production centers. In 2009, the Bank approved a $25 million grant, the third of a series of four annual grants, to finance road maintenance in the southern departments of Nippes, Grand Anse and Sud.
- School Reconstruction. A $20.5 million grant was approved in 2009 to help rebuild and equip schools destroyed or damaged by hurricanes or in dire need of repairs.
- Economic Governance. The IDB has been a reliable source of budget support for Haiti, promoting key reforms in areas like budgeting and internal controls, tax and customs codes, and commercial dispute resolutions.
- Private sector. The IDB Group supports to the private sector in Haiti through the Multilateral Investment Fund (MIF) and the Inter-American Investment Corporation (IIC). In 2009, MIF approvals reached $4.9 million. The IIC became an active player in Haiti through the approval of an $18 million loan to Distributeurs Nationaux, S.A. (Dinasa), a Haitian-owned company that is a leading marketer and distributor of fuel, as well as a $300,000 loan to Carifresh, a major supplier of quality agricultural products for export and domestic markets.