On the wire (Bloomberg):
The U.S. Department of the Treasury today announced the United States will work with its partners around the world to relieve all debts owed by Haiti to international institutions and to ensure grant financing to support Haiti's reconstruction and recovery from the devastating earthquake in January.
"The earthquake in Haiti was a catastrophic setback to the Haitian people who are now facing tremendous emergency humanitarian and reconstruction needs, and meeting Haiti's financing needs will require a massive multilateral effort," said Treasury Secretary Tim Geithner. "Today, we are voicing our support for what Haiti needs and deserves – comprehensive multilateral debt relief."
Haiti has approximately $1 billion in external debt ($295MM of which is to Venezuela, which has forgiven their debt) which countries and external organizations are looking to forgive. Without trying to sound insensitive to what they are currently going through, debt relief is not going to help the country. What Haiti needs is structural reform which has eluded the country. Get the rule of law in place, the necessary skillsets and get FDI instead. Relieving debt will help, but, as in most cases, it will ultimately not help.
Secretary Geithner also welcomed International Monetary Fund (NYSE:IMF) Managing Director Dominique Strauss-Kahn's call to provide full relief for Haiti's outstanding IMF debt, including the $102 million emergency loan approved on January 27, 2010.
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