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                                                       Calendar No. 276
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-128

======================================================================



 
                         THE HAITI RECOVERY ACT

                                _______
                                

               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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.