To Mr. Luis Alberto Moreno
President of the Inter-American Development Bank
1300 New York Avenue, NW
Washington, DC 20577
United States of America
Fax: (202) 623-3096

Cc.: Governors
Executive Directors

Ref: Debt Annulment of Bolivia, Guiana, Honduras, Nicaragua e Haiti

15 November 2006,

Dear Mr. President
Inter-American Development Bank
Luis Alberto Moreno,

We are aware that during the 47th Annual Assembly of the Inter-American Development Bank (IADB), held in April 2006 in Belo Horizonte, Brazil, the country-members of the Bank began a discussion regarding the annulment of the foreign debt claimed from Bolivia, Guyana, Honduras, Nicaragua and Haiti by this Bank. This initiative is of extreme importance since any proposal for the reduction or annulment of the foreign debt claimed from Latin American and Caribbean countries has to include the IADB considering that by the end of 2006, Bolivia, Guyana, Honduras, Nicaragua and Haiti will have been forced to pay more than US$ 313 million in debt services as demanded by IDB, more than US$320 million in 2007 and up to US$ 361 million until 2016 - amounts that surpass the available resources for the implementation of social policies.

In the case of Haiti, the poorest country in the region for instance, the debt situation is critical. The amount of external debt payment demanded from Haiti, duplicated between 1996 and 2003; during the years 2004/2005 amongst social and political crisis, 22% of the government’s budget was directed to the payment of these claimed debt services. During the period 2005/2006, the payment of interests plus the financial amortizations claimed reached US$ 69.21 million, double the amount spent on health care from the same budget (US$ 33.34 million). In the 2006/2007 budget the total payment of interests on this claimed debt will reach US$ 22.98 million and the financial amortizations US$ 47.92 million, a total of US$ 70.9 million.

Currently, 41% of the total foreign debt of Haiti is claimed from the IADB (US$ 556 million from a total of US$ 1.348 million). This means that during the 2006/2007 period, Haiti will have paid a total of US$ 33.82 million in interests and financial amortizations (US$ 11.96 million in interests and US$ 21.86 million in financial amortizations). In July 2003, Haiti paid US$ 32 million to the IADB in claimed “overdue” debts. Supposedly, this payment would give Haiti access to new loans from the Bank. However, the loans were not reimbursed. This payment represented a liquid transfer of capital to the IADB. The resources were taken from the country's international reserves causing a serious situation of fiscal vulnerability.

It is important to bear in mind that this country has a per capita income equivalent to 15% of the average in Latin America, less than one in 50 people has a permanent job, less than 40% of the population has access to potable water, the illiteracy rate reaches 45% and life expectancy fell from 52,6 years in 2002 to 49,1 years in 2003. This situation is the result of a long process of deterioration and structural crisis, worsened by the dogmatic application of several “stabilization” and “adjustment” policies imposed by the Multilateral Financial Institutions with the agreement of successive Haitian governments. The Haitian people are the real creditors!

While we recognise the importance of the fact that the IADB is analysing the possibility of annulling its debt claims from these five countries, we regret the fact that the Bank has not as yet opened any formal and effective consultation process with civil society. We know that during the assembly mentioned above, a Commission was created to study the issue and that this Commission held its first meeting on the 17th of July of this year. We now understand that the Commission will hold its second meeting on the 17th of November. It is unacceptable that the Bank carries out these decisive meetings without the participation of organizations from the five countries directly affected by the proposal - as well as from the other countries of the region indirectly affected. These organizations, many of which perform an important role regarding the monitoring of foreign and internal debt of the Southern countries, need to be heard, since their proposals and concerns include aspects of the issue which are not addressed by the Bank.

We are concerned with the fact that the current proposal to be discussed in the next meeting of the IADB, does not consider the possibility of total annulment of the claimed debts and that the initiative may result in future conditionalities for the five countries and other borrowers of the Bank. We question the fact that the Ordinary Capital (OC) debt is not being addressed, while this would have a greater immediate impact in the debt service indicators and therefore, in the amount of resources available for urgent social expenses. We are also aware that the proposal of the Bank is working with the claimed debt of 2003, while it should be addressing the current debt. With this proposal the debt claims to be annulled would be US$ 716 million for Honduras, US$ 517 million for Nicaragua, US$ 382 million for Bolivia, US$ 326 million for Haiti and US$ 248 million for Guyana; the five countries will remain with a debt claimed by the IADB in the amount of US$ 1.623 million, according to December 2005 data. Even so, the IADB intends to implement this annulment process only in 2007 (date not yet defined), while due to its urgency, it should be implemented immediately. These countries can no longer wait!

We demand the immediate, full and unconditional annulment of the debt claimed from these five countries by the IADB. In the specific case of Haiti, the country should not be obliged to fulfil the conditions of the HIPC and PRSP programs which have brought so many disastrous consequences to the other four countries. We demand that the IADB summit these debt claims to an external auditing process in the context of a general auditing process of all the debts claimed by the institution from the Latin American and Caribbean countries to verify the real impacts on the living conditions of the population, the terms and conditions, the beneficiaries of the contracts as well as the amount already paid. We understand that it is the peoples of these five countries and of all the region that are the real creditors and that the only legitimate debt to be claimed is the historic, social, cultural and ecological debt that we are owed.
The current situation of Haiti strongly demonstrate the importance of claiming the historic, social, cultural and ecological debt. This goes back to the colonial era and the ten year-long economic blockade imposed by France which was only lifted when the political leaders of Haiti agreed to pay 150 million gold francs (US$ 22 billion in current values) in compensation for the loss of their slaves. That debt continues accumulating in human, social, financial, ecological and cultural costs, resulting from the proliferation of duty-free zones and other policies elaborated and implemented by the Multilateral Financial Institutions and the so-called “international donors”, thus violating the right of self-determination of the Haitian people; the right to define their own policies, their trajectory and their destiny.

We consider that all the Multilateral Financial Institutions have great responsibility in the increase of the financial, social, cultural and ecological debt of our countries, and as such it is the countries that have benefited from them that should pay. Additionally, the United States of America, as the largest shareholder of the IADB, is one of the countries with the greatest share of responsibility for the current regional situation and should thus be responsible for the replenishment of the funds of the Bank. Other borrowing countries should not bear any of the negative impatcs of this process.

We consider that the debt “relief” programs promoted by the G8 and the Multilateral Financial Institutions, have been incapable of resolving the debt problems of our countries. On the contrary, they have strengthened the model that increases the dependency of our nations and worsens the vulnerability of our economies. Therefore, the IADB should not adopt the same model. It is in this sense that we demand the total and unconditional annulment of the debt claimed from Haiti, Bolivia, Guyana, Honduras and Nicaragua by the IADB allowing the governments of these countries to, with sovereignty, determinate the destiny of the resources not spent on services of the debt claims annulled.

We demand the immediate realisation of a collective meeting with civil society organizations and social movements from several countries of the region, directly and indirectly affected by this proposal of debt annulment by the IADB, so that we can effectively present our demands and concerns summed up in this letter.

Awaiting a prompt reply,

Sincerely,

Beverly Keene
Coordinator Jubilee South/Americas

South-South Continental Action for a new millennium free of debts and domination

Organizations Signing the letter:

Jubilee South/Americas
Ecological Debt Southern Peoples Creditors Alliance
Dialog 2000, Argentina
Jubilee South Network/America – Citizen Auditing of Debts Campaign, Brazil
Jubilee South Network/Americas - Brazil Network on Multilateral Financial Institutions, Brazil
Women and Economics Working Group, Colombia
Martin Luther King Memorial Center, Cuba
Ecological Action, Ecuador
Sinti Techan Network, El Salvador
Action Platform for an Alternative Development in Haiti (PAPDA) - Haiti
Association of Haitian Professionals Educated in Cuba (APROHFOC)- Haiti
Konbit Fanm, Haiti
Group in Support of Refugees and Repatriated (GARR), Haiti
Sabanet Youth Group (Rajes), Haiti
Popular Democratic Movement (MODEP), Haiti
CHANDEL, Haiti
Centro de búsqueda de acción para el desarrollo (CRAD), Haiti
Karl Léveque Cultural Instituto (ICKL), Haiti
Solidarity of Haitian Women (SOF), Haiti
Bloque Popular, Honduras
CAFRA, Santa Lucía
FITUN, Trinidad y Tobago
COMPA, Venezuela