External debt of Haiti facts for kids
The external debt of Haiti is a large national debt that has caused many problems for the country. It mostly started because Haiti had to pay a huge amount of money to France after gaining its freedom from slavery in the 1800s. Later, corrupt leaders in the 20th century added even more debt.
Haiti was once a very rich French colony, but its wealth came from the forced labor of enslaved people. During the Haitian Revolution (1791–1804), enslaved Haitians fought bravely and won their independence from France. This was a huge victory, making Haiti the first free Black republic.
However, the French monarchy, supported by other European countries, sent warships to Haiti in 1825. They demanded a massive payment from Haiti. This payment was supposed to make up for France's loss of its very profitable slave plantations and the enslaved people. Haiti was forced to agree to pay 150 million francs, which would be like US$105 billion today. This "independence debt" was borrowed from French banks and an American bank called Citibank. Haiti finally finished paying it off in 1947.
Later, the Duvalier dynasty, a very corrupt family, ruled Haiti and borrowed even more money. They were believed to have used this money to keep their power and for their own personal gain. In the early 2000s, especially after the terrible 2010 Haiti earthquake, the World Bank and some other governments decided to forgive parts of Haiti's remaining debts. France also forgave a more recent loan of US$77 million. However, France has always refused to consider paying back the original independence debt.
Many people believe these old debts are a main reason for Haiti's poverty today. They call it an "odious debt", which means a debt forced on a country by unfair or abusive power. In 2022, The New York Times published a detailed investigation about this issue.
Contents
Haiti's Debt Story
The Independence Debt
Haiti was known as the richest and most productive European colony in the world in the early 1800s. This was because of the huge profits made from sugar and coffee plantations, worked by enslaved people. Haiti's long history of debt began soon after enslaved people revolted against France. They fought for and won their independence in 1804.
The President of the United States, Thomas Jefferson, worried that the idea of enslaved people gaining freedom might spread to the United States. Because of this, he stopped sending aid to Haiti and tried to keep Haiti isolated from other countries. France also prevented Haiti from trading freely in the Atlantic Ocean. This international isolation made Haiti desperate for economic help.
In 1825, France sent warships to Haiti and demanded that Haiti pay them for the loss of their enslaved people and their colony. In return for France recognizing Haiti as an independent country, France demanded 150 million francs. France also insisted that Haiti give them a 50% discount on all goods Haiti exported to France. This made it even harder for Haiti to pay the debt.
In 1838, France agreed to lower the debt to 90 million francs. This money was to be paid over 30 years to former plantation owners who had lost their property. This amount would be like US$21 billion in 2004. Historians have found loan papers from 1825 all the way to the final payment in 1947, which went to Citibank.
The Duvalier Family's Debt
From 1957 to 1986, Haiti was ruled by the Duvalier family. They were very corrupt and oppressive leaders. Loans taken out during their rule made up about 40% of Haiti's debt in 2000, before some debt was cancelled. The Duvaliers used these borrowed funds to strengthen their control over Haiti. They also used the money for dishonest plans and simply stole large amounts for themselves.
Jean-Claude Duvalier, who ruled from 1971 to 1986, was sent away to France after he was overthrown. He was later accused of stealing and misusing money during his time in power.
Efforts to Cancel Haiti's Debt
At its highest point, Haiti's total external debt was about $2.1 billion. Many groups, like Jubilee USA Network and Jubilee Debt Campaign, asked for Haiti's debt to be cancelled right away. They argued that this debt was unfair, calling it "odious debt". They believed Haiti could use the money spent on debt payments for important things like education, health care, and basic services.
Between 2006 and 2009, Haiti was included in a program by the World Bank and International Monetary Fund (IMF) called the HIPC initiative. This program helps very poor countries with large debts. In September 2009, Haiti met the requirements for this program. This meant a large part of its debt was cancelled. This reduced the debt by $757 million and saved $1.2 billion in future interest payments.
The Inter-American Development Bank (IDB) was Haiti's biggest lender. While they were part of the debt relief, the program only cancelled loans made before 2005. The IDB had lent more money to Haiti since then. Haiti still owed about half a billion dollars to the IDB. The U.S. government had been paying these debt payments for Haiti even before the earthquake.
After the terrible 2010 Haiti earthquake in early 2010, there were new calls for even more debt cancellation. The earthquake caused massive destruction, and Haiti's debts went back up to $1.25 billion. Groups like the Jubilee Debt Campaign asked for this new debt to be dropped. Also, the IMF offered emergency money to Haiti as loans, not grants. Many groups protested this, saying a country already so deep in debt should receive grants, not more loans, to recover from such a disaster.
On January 26, 2010, President Hugo Chávez of Venezuela announced that Petrocaribe, Venezuela's energy alliance, would forgive Haiti's debt to them. Haiti owed Venezuela $295 million, which was about a quarter of its foreign debt at the time.
On May 28, 2010, the World Bank announced that it had cancelled Haiti's remaining debts to the bank. This was worth $36 million.
In 2015, France forgave about US$77 million of modern-day debt that was not related to the original independence debt. In 2004, the Haitian government had asked France to pay back the millions of dollars Haiti paid between 1825 and 1947. This was money paid as "compensation" to French slaveholders and landowners after enslaved people gained their freedom. However, in 2015, the French government refused this demand and any reparations in general.
See also
- Odious debt
- Debt of developing countries
