$1.2 billion in debt relief approved for Haiti

Three international organizations canceled $1.2 billion of Haiti's debt Tuesday, freeing up millions of dollars each year for the deeply impoverished Caribbean nation that is beset by humanitarian crises.

The World Bank and the International Monetary Fund said their boards decided this week to forgive Haiti's obligations to the two organizations, a move that triggered previously announced debt relief from the Inter-American Development Bank.

The actions erased nearly two-thirds of Haiti's outstanding debt. As of April, Haiti owned more than $1.9 billion, according to the Washington-based Center for Economic and Policy Research.

"This is a pretty big victory, definitely. This is what we've been wanting," said Dan Beeton, an analyst with the center, said by phone from Washington. "It's a shame it had to take so long."

Until now, the desperately poor country, where more than 80 percent of its approximately 9 million people live on less than $2 a day, has been paying about $1.6 million each month to the World Bank, according to debt relief advocates at the Jubilee USA Network.

A significant portion of the debt forgiven Tuesday dates back to loans that lined the pockets of Haiti's dictators, especially Francois "Papa Doc" and Jean-Claude "Baby Doc" Duvalier, whose father-son dynasty ended in a 1986 popular rebellion.

Haiti was added to the World Bank and IMF's debt cancellation program for heavily indebted poor countries in 2006. The Inter-American Development Bank previously approved debt relief for Haiti, pending its completion of that program.

But it took several years for Haiti to implement reforms that included auditing government accounts, adopting a law on public procurement and strengthening tax and customs administration, as well as debt reporting. Other steps included approving an AIDS prevention and treatment plan, financing school tuition for children and improving immunization rates.

That was accomplished in spite of years of turmoil, including last year's food riots that toppled the prime minister and four tropical storms that killed some 800 people and caused more than $1 billion in damage.

Finance Minister Daniel Dorsainvil praised the announcement in a statement issued through the World Bank, saying the millions freed up from debt payments "will help us invest in growth and poverty reduction programs."

Others were skeptical about the benefits of the move. Haitian economist Kesner Pharel said debt forgiveness will make it far more difficult for Haiti to get new loans, impeding the government's ability to finance much-needed improvements in infrastructure and other areas.

"I don't see the government for the next five to 10 years having a lot of money. It's a bad idea. It's a cost, not a benefit," Pharel said.

Haiti is the 26th country to have its debt forgiven under the initiative, a list that includes Rwanda, Sierra Leone, Honduras and Bolivia.

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Associated Press writer Jennifer Kay in Miami contributed to this report.