Thursday, March 18, 2010

Obama Administration Says Near Deal on Haiti Debt

By MARTIN CRUTSINGER (AP Economics Writer)

Administration officials say agreement near to cancel Haiti's $477M debt to IADB

The Obama administration says it is near an agreement with other nations to cancel the $447 million that Haiti owes to the Inter-American Development Bank.

Treasury Department officials said Thursday that a deal would likely be struck this weekend to cancel Haiti's debt to the bank, which serves as a major source of development loans for Latin America and the Caribbean.

Two senior Treasury officials briefed reporters in advance of the annual meetings of the bank which will begin Friday in Cancun, Mexico. They spoke on condition of anonymity because the meetings have yet to occur.

Following the devastating earthquake which struck Haiti in January, Treasury Secretary Timothy Geithner said the administration would seek an agreement for the cancellation of all debts owed by Haiti to international lending institutions including the IADB, the International Monetary Fund and the World Bank.

Geithner won support for that drive at meetings of finance officials of the Group of Seven major industrial countries last month in Canada.

One of the Treasury officials who briefed reporters Thursday said that the administration is working for an agreement at the IADB meetings that would not only cancel Haiti's IADB debt but would also to lead to Haiti receiving grants from the bank that would not have to be repaid.

The Cancun conference will be attended by representatives from Latin American and Caribbean nations as well as the United States and China, two major donor countries to the Washington-based lending institution.

The Treasury Department will be represented at the meetings by Marisa Lago, Treasury's assistant secretary for international markets and development.

In addition to discussing debt relief for Haiti, the Cancun meetings are expected to lead to an agreement on boosting the IADB's capital reserves, which stand now at about $100 billion. An advisory panel last year recommended that the IADB's reserves be increased by up to $178 billion to sustain annual lending of $18 billion. But the Treasury officials would not provide a specific figure that the United States is supporting.

One Treasury official said that the administration would support a "substantial" increase that would provide the resources so that the bank would be able to double the amount in loans made before the financial crisis hit in 2008.

The bank loaned an average of about $6 billion a year before the economic meltdown and spiked to a level of $15 billion in loan commitments in 2009 in response to the financial crisis.

"There is a clear case for an increase that would allow the bank to effectively double its loan volume in relation to the pre-crisis loan levels," the Treasury official said.

Source: ABC

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