The administration of US President Barack Obama said it was near an agreement with other nations to cancel the US$447 million that Haiti owes to the Inter-American Development Bank (IADB).
US Treasury Department officials said on 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 was to begin yesterday in Cancun, Mexico. They spoke on condition of anonymity because the meetings had yet to occur.
Following the devastating earthquake that struck Haiti in January, US 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 IMF and the World Bank.
Geithner won support for that drive at meetings of finance officials of the G7 major industrial countries last month in Canada.
One of the Treasury officials who briefed reporters on Thursday said that the administration was working for an agreement at the IADB meetings that would not only cancel Haiti’s IADB debt, but would also 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 US and China, two major donor countries to the Washington-based lending institution.
The US 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 US$100 billion.
An advisory panel last year recommended that the IADB’s reserves be increased by up to US$178 billion to sustain annual lending of US$18 billion, but the Treasury officials would not provide a specific figure that the US was 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 US$6 billion a year before the economic meltdown and spiked to a level of US$15 billion in loan commitments last year 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.
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