[Senate Report 111-128]
[From the U.S. Government Publishing Office]
Calendar No. 276
111th Congress Report
SENATE
2d Session 111-128
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THE HAITI RECOVERY ACT
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February 25, 2010.--Ordered to be printed
_______
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 2961]
The Committee on Foreign Relations, having had under
consideration the bill (S. 2961), to urge international
financial institution debt relief for Haiti, to support the
creation of a multilateral fund for Haiti, and to encourage the
use of some of the excess profits at the IMF and the Inter-
American Development Bank to help Haiti, and for other
purposes, reports favorably thereon and recommends that the
bill do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................2
IV. Cost Estimate....................................................3
V. Evaluation of Regulatory Impact..................................4
VI. Changes in Existing Law..........................................4
I. PURPOSE
The purpose of S. 2961 is to urge international financial
institution debt relief for Haiti, to support the creation of a
multilateral fund for Haiti, and to encourage the use of some
of the excess profits at the IMF and the Inter-American
Development Bank to help Haiti.
II. COMMITTEE ACTION
S. 2961 was introduced by Senators Dodd and Lugar on
January 28, 2010. Senators Durbin and Kerry co-sponsor the
bill. On February 24, 2010, the committee ordered S. 2961
reported by voice vote without objection.
III. DISCUSSION
The largest earthquake ever recorded in Haiti devastated
parts of the country, including the capital, on January 12,
2010. The earthquake, centered about 15 miles southwest of
Port-au-Prince, had a magnitude of 7.0 in the Richter scale. A
series of strong aftershocks have followed. The damage is
severe and catastrophic. It is estimated that more than 200,000
people lost their lives and 1 million people were displaced by
the earthquake. Immediately following the earthquake, President
Rene Preval described conditions in his country as
``unimaginable,'' and appealed for international assistance.
Prior to the earthquake, the international community was
providing extensive development and humanitarian assistance to
Haiti. With that assistance, the Haitian government had made
significant progress in recent years in many areas of its
development strategy. The destruction of Haiti's nascent
infrastructure and other extensive damage caused by the
earthquake will set back Haiti's development significantly.\1\
The measures included in S. 2961 are intended to support
Haiti's recovery from the devastating earthquake.
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\1\Congressional Research Service, ``Haiti Earthquake: Crisis and
Response'' Rhoda Margesson, Specialist in International Humanitarian
Policy, Maureen Taft-Morales, Specialist in Latin American Affairs,
February 19, 2010 (R41023).
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S. 2961, The Haiti Recovery Act, urges the Secretary of the
Treasury to direct the U.S. Executive Director to each
international financial institution to advocate: (1) the
cancellation of all remaining debt obligations of Haiti,
including obligations incurred after the date of the enactment
of this Act and before February 1, 2012; (2) the provision of
debt service relief for all of Haiti's remaining payments; and
(3) that new assistance to Haiti should be primarily grants
rather than loans to end the debt-relief cycle.
According to the Treasury Department, Haiti currently owes
$709 million in debts to the multilateral financial
institutions ($447 million to the Inter-American Development
Bank (IDB), $165 million to the International Monetary Fund
(IMF), $39 million to the World Bank, and $58 million to the
International Fund for Agricultural Development (IFAD)).
Scheduled payments from Haiti in 2010, some of which may
have been paid prior to the earthquake, include: $11.5 million
to the IDB; $44,000 to the IMF, $293,460 to the World Bank and
$41,000 to IFAD. The United States Government, by prior
agreement, is scheduled to cover most of Haiti's payment to the
IDB.
Members of the Paris Club, an informal group of official
creditors who collaborate to find coordinated and sustainable
solutions to the payment difficulties experienced by debtor
countries, agreed in 2009 to provide 100 percent bilateral debt
reduction for Haiti. Other countries have either already done
so or are in the process of doing so. Among non-Paris Club
members, the Heavily Indebted Poor Countries (HIPC) Completion
Point document (http://www.imf.org/external/pubs/ft/scr/2009/
cr09288.pdf) states that Haiti owed Venezuela $167 million and
Taiwan $92 million at end-September 2008. There is a press
report that the Venezuela amount has risen to $295 million but
Treasury is unable to verify the accuracy of that number.
In September 2009, the U.S. concluded an agreement with
Haiti that eliminated 100 percent of the Haitian Government's
outstanding debt to the U.S., consistent with the Paris Club
agreement. This action was taken following Haiti's successful
completion of the HIPC Initiative process in June 2009.
The administration announced on February 5, 2010 that the
United States will work with its partners around the world to
relieve all debts owed by Haiti to international financial
institutions and to ensure grant financing to support Haiti's
reconstruction and recovery from the devastating earthquake in
January.
The administration is currently seeking a commitment with
other donors for the relief of Haiti's debt to the IDB, the
International Fund for Agricultural Development (IFAD) and the
International Development Association (IDA) to provide direct
and immediate grant support to Haiti.
IMF Managing Director Dominique Strauss-Kahn has called to
provide full relief for Haiti's outstanding IMF debt, including
the $102 million emergency loan approved on January 27, 2010.
Some have argued that it would be more efficient if the IMF
were simply to provide grants rather than loaning to a country
when it is clear that the loan will need to be forgiven. IMF
staff asserts that the organization does not currently have a
mechanism to offer grants. It instead can offer loans at zero
percent interest with an extended payment period, as it has
offered Haiti.
S. 2961 urges the Secretary of the Treasury to support the
creation of a multilateral trust fund for Haiti that would
leverage U.S. contributions and promote bilateral donations.
Such action will promote investment in Haiti's future following
the devastating earthquake, including efforts to combat soil
degradation and promote reforestation and investments such as
electric grids, roads, water and sanitation facilities, and
other critical infrastructure projects.
In addition, S. 2961 provides that the Secretary of the
Treasury should direct the U.S. Executive Director of the IDB
to increase earnings transfer to the Fund for Special
Operations, which finances programming in Haiti and other weak
economies in the Western Hemisphere. Unlike some of the other
multilateral development banks, the IDB does not currently have
a clear formula on the provision of profits from the interest-
earning part of the bank to its subsidized lending window, the
Fund for Special Operations.
S. 2961 also urges the Secretary of the Treasury and the
Secretary of State to use all appropriate diplomatic influence
to secure cancellation of all remaining bilateral debt of
Haiti.
IV. COST ESTIMATE
Rule XXVI, paragraph 11(a) of the Standing Rules of the
Senate requires that committee reports on bills or joint
resolutions contain a cost estimate for such legislation. To
date, the committee has not received the Congressional Budget
Office cost estimate.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, the committee notes that no
changes to existing law are made by this bill.