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HAITI DEBT RELIEF 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTERNATIONAL MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 4, 2010 

Printed for the use of the Committee on Financial Services 

Serial No. 111–105 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON INTERNATIONAL MONETARY POLICY AND TRADE

GREGORY W. MEEKS, New York, Chairman 

LUIS V. GUTIERREZ, Illinois 

MAXINE WATERS, California 

MELVIN L. WATT, North Carolina 

GWEN MOORE, Wisconsin 

ANDRE ́ CARSON, Indiana 

STEVE DRIEHAUS, Ohio 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

GARY G. MILLER, California 

EDWARD R. ROYCE, California 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

MICHELE BACHMANN, Minnesota 

ERIK PAULSEN, Minnesota 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

March 4, 2010 ................................................................................................... 1 

Appendix: 

March 4, 2010 ................................................................................................... 33 

WITNESSES 

THURSDAY, MARCH 4, 2010 

Adams, Hon. Timothy D., The Lindsey Group ...................................................... 18 

Hart, Thomas H., Senior Director of Government Relations, ONE ..................... 21 

Lee, Nancy, Deputy Assistant Secretary for the Western Hemisphere, U.S. 

Department of the Treasury ................................................................................ 7 

St. Louis, Melinda, Deputy Director, Jubilee USA Network ............................... 19 

APPENDIX 

Prepared statements: 

Meeks, Hon. Gregory ........................................................................................ 34 

Adams, Hon. Timothy D. ................................................................................. 37 

Hart, Thomas H. ............................................................................................... 39 

Lee, Nancy ........................................................................................................ 46 

St. Louis, Melinda ............................................................................................ 52 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Green, Hon. Al: 

Citizens’ Petition for Haiti ............................................................................... 63 

(1) 

HAITI DEBT RELIEF 

Thursday, March 4, 2010 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON INTERNATIONAL

MONETARY POLICY AND TRADE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:02 a.m., in room 

2128, Rayburn House Office Building, Hon. Gregory W. Meeks 

[chairman of the subcommittee] presiding. 

Members present: Representatives Meeks, Waters, Watt, Carson; 

and Miller of California. 

Ex officio present: Representative Bachus. 

Also present: Representative Green. 

Chairman MEEKS. This hearing of the Subcommittee on International Monetary Policy and Trade will come to order. Without objection, all members will have 10 minutes for opening statements, 

which will be made a part of the record. And then we will get to 

our witnesses. 

I will start with an opening statement. And I would like to begin 

by thanking, of course, the ranking member on the full committee, 

Mr. Spencer Bachus, and my colleagues and the ranking member 

on this subcommittee, Mr. Miller, for their help in organizing this 

very important hearing on Haiti Debt Relief. 

I also, of course, want to thank all our witnesses who have taken 

the time to come and share their valued experience on the topic of 

debt relief for Haiti. 

A few notes on procedures before we begin. We are going to have 

a tight schedule today, with two panels to testify this morning, and 

a mark-up of H.R. 4573 scheduled to start at 1:00 p.m. this afternoon. And so, therefore, we are going to try to move as quickly as 

we can. And I am told we’re going to have some votes somewhere 

around 10:30. 

Today, we will consider an issue that is close to all of our hearts. 

Haiti suffered a devastating earthquake on January 12th of this 

year, a country which was finally making strides to more stable 

economic growth, and whose government was finally showing signs 

of becoming more stable, credible, and accountable was rocked by 

a natural disaster of historic proportions. 

The images from the disaster are fresh in our minds. The immediate needs of the people are clear. And the desire of the global 

community and of average American citizens to help Haiti recover 

as fast as possible are clear, and give us all hope. 

2 

This is a bipartisan issue, because it is a human issue at its simplest. And all of us have come together, as human beings, to deal 

with this issue. This is not about Democrats or Republicans, or 

about whether or not we are in an election year. This is about 

America showing its true compassion and capacity to help our 

neighbors in their time of greatest need. 

Average American citizens mobilized to help Haiti in a way that 

gives me great pride in my country. Our government stepped up to 

the challenge in the immediate aftermath. We are now moving to 

the second and third phase of the process, namely moving from immediate rescue and survival concerns, though they are still critical, 

to a reconstruction and, ultimately, long-term economic recovery. 

A critical step to this transition will be providing Haiti with debt 

relief, and working with the multilateral development banks and 

the IMF to ensure that Haiti will be provided the resources it 

needs in the medium- and longer-term, without adding to the nation’s debt burden. 

I look forward to hearing our witnesses here today, and I look 

forward to working with my good friend, Gary Miller—Ranking 

Member Gary Miller, from California—on moving a bill to empower 

the Administration to promote Haiti’s debt relief from the international institutions in which we are major shareholders, as well 

as pushing for bilateral debt relief from other nations holding Haiti’s debts today. 

Finally, I did want to inform you that this will be just the first 

in a series of hearings focused on Haiti. As some of you know, I 

chaired a bipartisan, members-only briefing on multilateral aid and 

financing coordination in February, at which the Treasury Department, the IDB, the World Bank, and the IMF provided clarity into 

how they planned to collaborate to ensure efficiency, and to eliminate waste and duplication of efforts in their work in Haiti. 

The next hearing is scheduled for March the 16th, and we will 

focus on the longer-term prospects of strategy for Haiti’s economic 

recovery. Long after the news cameras have left, we will continue 

to monitor the progress in Haiti, and to provide assistance to ensure that the nation can get back on its feet, back on a path to economic growth and political stability. 

We believe that this is our moral obligation to do, to help one of 

the poorest nations, economically, get on its feet by some of the 

most resilient people that you will ever see. Because if you just go 

to Haiti, they are a resilient and rich people in that spirit. And we 

need to stand by them and by their side through this critical period 

of time. 

With that, I will yield to Mr. Bachus for an opening statement. 

Mr. BACHUS. Thank you, Chairman Meeks. And I thank you for 

calling this important hearing, to focus on debt relief for Haiti in 

the aftermath of the devastating earthquake of January the 12th, 

and to consider legislation authored by Representative Waters to 

effectuate that relief. And I commend you and Ranking Member 

Miller for your strong participation in this effort. 

Creditors cannot expect Haiti to service its debt at a time when 

the country is lying in ruins. As former Under Secretary Adams, 

one of our witnesses today, says, ‘‘It is a cruel hoax on both the 

people of developing countries and on the taxpayers of donor counVerDate Nov 24 2008 13:05 Jul 06, 2010 Jkt 056769 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\56769.TXT TERRIE
3 

tries to pretend that even without an earthquake, a country whose 

citizens subsist on a dollar or two a day is ever going to pay back 

billions of dollars in loans.’’ 

The United States has always been a benevolent and caring 

country. Even during our current economic challenges, we have not 

lost our compassion. In fact, our present travails have, in some respects, engendered us with an appreciation for the desperation and 

suffering of those facing challenges and hardships in other parts of 

the world. Of course, to compare what we face here with the struggle to just exist in these countries is really a pale comparison. 

Consistent with our principles is forgiving the debt Haiti owes to 

multilateral agencies, in which the United States, in most cases, is 

the largest single donor. We can lead by example while we lend a 

helping hand. And when we do so, we will be doing so consistent 

with our principles and values as a country. 

I support this legislation, and I yield back the balance of my 

time. And I would also—I think it’s my understanding that we are 

going to move this legislation to the Floor early next week, and 

hopefully get it over to the Senate without delay. 

Chairman MEEKS. As I said, we thank you for the bipartisanship 

of this. 

Mr. BACHUS. Thank you. 

Chairman MEEKS. And the timeliness in which we were able to 

get this done. 

I would now like to yield to the gentlelady from California, who 

is the author of this bill, Maxine Waters. 

Ms. WATERS. I would like to thank you, Mr. Chairman, for organizing this hearing on Haiti debt relief, and for agreeing to mark 

up my legislation on this subject. 

I also appreciate the support of several members of the Financial 

Services Committee for this bill, including Chairman Barney 

Frank, of course, Chairman Gregory Meeks, and Ranking Member 

Spencer Bachus. 

Haiti was struck by a devastating earthquake on January 12, 

2010. According to the U.S. Agency for International Development, 

230,000 people were killed, and 1.3 million people were displaced 

from their homes. There is a desperate need for clean water, food, 

shelter, and basic sanitation. Three million people, one-third of the 

country’s population, were affected by the quake. 

Prior to the earthquake, Haiti was already the poorest country 

in the Western Hemisphere. I have traveled to Haiti many times, 

and I have seen the poverty and desperation of the Haitian people 

with my own eyes. According to the Central Intelligence Agency’s 

World Fact Book, there is widespread unemployment and underemployment, and more than two-thirds of Haitian workers do not 

have formal jobs. There is a high risk of infectious diseases, including diarrhea, hepatitis, typhoid fever, and malaria. The infant mortality rate is nearly 6 percent. Almost half of the adult population 

cannot read and write. 

One of the simplest but most important things we can do to help 

Haiti is cancel its debts. 

Haiti’s democratic government has worked very hard in recent 

years to qualify for debt relief. In order to qualify, the Government 

of Haiti successfully developed and implemented a comprehensive 

4 

poverty reduction strategy paper under the direction of the IMF 

and the World Bank. As a result, multilateral financial institutions 

provided Haiti 1.2 billion in debt relief last June. This was a critical step forward for Haiti. 

Nevertheless, despite previous debt relief, Haiti still has a significant debt burden that will interfere with relief, recovery, and 

development efforts, unless the remaining debts are canceled. According to the most recent figures provided to my office by the U.S. 

Treasury Department, Haiti still owes $828 million to multilateral 

development institutions. This includes $47 million to the InterAmerican Development Bank—that is, IDB—$284 million to the 

IMF, and $39 million to the World Bank Group’s International Development Association, IDA, and $58 million to the International 

Fund for Agricultural Development. 

I introduced H.R. 4573, Haiti Debt Relief and Earthquake Recovery Act of 2010, to free Haiti from the burden of these debts. H.R. 

4573 requires U.S. executive directors at multilateral development 

institutions to use the voice, vote, and influence of the United 

States to do three things: one, cancel immediately and completely 

all debts owed by Haiti to these institutions; two, suspend Haiti’s 

debt service payments until such time as the debts are canceled; 

and three, provide additional assistance to Haiti in the form of 

grants, so that Haiti does not accumulate additional debts. 

The bill also requires the Secretary of the Treasury to urge other 

bilateral, multilateral, and private creditors to cancel the debts 

that Haiti owes them. 

Chairman Meeks is planning to offer a manager’s amendment to 

this bill. The chairman worked with full committee Chairman 

Frank and myself on drafting this amendment. The manager’s 

amendment adds a provision directing the U.S. executive director 

of the IMF to advocate that some of the excess profits from the sale 

of IMF gold, which Congress approved last year, be used to provide 

debt relief and grants to Haiti. The amendment also adds updated 

statistics on Haiti’s debts to the bill’s findings, and makes other 

technical changes. I support the manager’s amendment, and I appreciate the efforts of Mr. Meeks, Chairman Frank, and others. 

Debt cancellation will allow the Government of Haiti to focus its 

meager resources on essential humanitarian relief, reconstruction, 

and development. The people of Haiti are poor, but they are resilient. I know that with the support of the international community, 

they will recover from this tragedy and create a brighter future for 

their children. 

I urge my colleagues to support the debt relief for earthquake recovery in Haiti, this act of 2010. 

Once again, I thank the chairman for holding this hearing and 

mark-up. I look forward to hearing the witnesses’ views on the benefits of debt relief for the people of Haiti. And I yield back the balance of my time. 

Chairman MEEKS. I thank the gentlelady, and I now yield to the 

ranking member of the Subcommittee on International Monetary 

Policy and Trade, Mr. Miller, from California. 

Mr. MILLER OF CALIFORNIA. Thank you, Mr. Chairman. In June 

2009, Haiti completed the requirements of the enhanced Heavily 

Indebted Poor Countries, HIPC, initiative, which made it eligible 

5 

for debt relief from multilateral institutions, and for relief of some 

of its bilateral debt. 

The enhanced HIPC initiative, coupled with the multilateral debt relief initiative, provided Haiti with $1.2 billion in debt relief. A 

particular note, the American Development Bank, Haiti’s largest 

creditor, forgave $511 million in debt for Haiti. At the time of the 

cancellation, Haiti still owed the IDB approximately $429 million, 

because the lending occurred outside the agreed-upon debt relief 

period. Also in the agreement, the United States canceled $12.6 million 

in Haiti debt relief, relieving Haiti of its entire outstanding bilateral debt to the United States. 

Currently, Haiti still is burdened with approximately $1.24 billion in external debt. This is comprised of debt owed to both multilateral institutions and other bilateral creditors. 

On the multilateral side, Haiti owes approximately $165 million to the International Monetary Fund, IMF; $441 million to the 

Inter-American Development Bank, IDB; $38 million to the World 

Bank’s concession lending arm, the International Development Association, IDA; and $54 million to other multilateral creditors. 

At present, the World Bank is suspending debt service for $38 

million debt for 5 years. The IMF will require virtually no payment 

from Haiti until 2013. The IDB debt service obligation is, by prior 

agreement, paid by the U.S.-supported trust fund. 

As the members of this panel know, on January 12, 2010, Haiti 

experienced a 7.0 magnitude earthquake centered approximately 

15 miles southwest of the nation’s capital, Port-au-Prince. What followed were 50 aftershocks of magnitude over 4.0, all occurring 

within 24 hours. The Haiti Government has estimated 230,000 

deaths, and 300,000 injured. Approximately 700,000 people have 

been displaced in the Port-au-Prince area. Damage caused by the quake is estimated between $8 billion and $14 billion, and speculation to reconstruct will be about $14 billion. 

Following this hearing, the subcommittee will be voting on legislation to require the Secretary of Treasury to instruct the U.S. director of the IMF, the World Bank, and the Inter-American Development Bank, and other multilateral development institutions, to 

use a voice vote to seek the immediate and complete cancellation 

of the debt owed by Haiti in such institutions. 

There is a serious situation we are trying to deal with, and we 

could all continue to read. But the issue is we have to help these 

people. They are good people. They have been devastated beyond 

what any of us can imagine. And I am really looking forward to 

hearing from our committee, what they have to say. I yield back 

the balance of my time. 

Chairman MEEKS. I now ask for unanimous consent to allow Mr. 

Green from Texas to participate in today’s hearings. He is a member of the full committee, but he is not on this subcommittee. So 

I ask unanimous consent. 

There being no objection, Mr. Green is acknowledged for an opening statement. 

Mr. GREEN. Thank you very much, Mr. Chairman. Mr. Chairman, I especially thank you for hosting this hearing. I thank Ranking Member Bachus, the ranking member of the full committee. I 

6 

thank Representative Waters, who has been a friend of Haiti, as 

has been the case with you, Mr. Chairman, for many years. She 

has been there for Haiti on many occasions, and continues to fight 

the good fight for Haiti. 

I also thank Chairman Frank, and I especially thank also my 

friend, Ranking Member Miller, because he and I have worked on 

a bipartisan basis before, and we continue to do so. I look forward 

to this bill passing. I support the bill. 

I came by this morning to make the moral argument that supersedes the monetary argument. The moral argument for passage of 

this legislation is one that, in my opinion, must be made for the 

record. And if the moral argument is to be made, we cannot escape 

some history that we have to understand. 

We have to understand that Haiti was in human bondage—it’s 

no secret; and that it won its independence in 1804. But when 

Haiti became the first African nation to win its independence, in 

a sense, in the Caribbean, when it did so, France threatened to reinvade, and would have reinvaded, but for Haiti’s agreeing to pay 

150 million francs, the equivalent of $21 billion today. And Haiti 

has been paying ever since. It has gone from human bondage to 

economic bondage. 

And this economic bondage is what this really is about today, 

eliminating the economic bondage that Haiti has suffered from 

these many years. Until last year, Haiti was forced to pay between $60 million and $80 million per year in debt service. At a time before the hurricane, 

when more than 75 percent of the population was living on less 

than $2 a day, when more than 50 percent of the population was 

living off of less than $1 per day, when 80 percent of the people 

were living in poverty, when the life expectancy of a typical Haitian was 52 years, when there was something called a ‘‘hunger season’’ that lasts from October through February, at a time when this 

country could barely afford to feed itself, it had to pay this debt 

service. 

It is time to liberate Haiti from economic bondage. And it is also 

time for us to understand that if we return Haiti to the status that 

it was in prior to the devastation from the earthquake, it would be 

sinful. It is time for us to strategize and compromise and work together, so that Haiti can have the future it richly deserves in this 

hemisphere. 

And, Mr. Chairman, I am so grateful that you allowed me to say 

this. I appreciate very you much, and I commend you very much 

for what you have done, as well as Representative Waters. And I 

yield back any time that I have left. God bless you. 

Chairman MEEKS. Thank you, Mr. Green. We will now go to our 

first witness, Ms. Nancy Lee, who is Treasury’s Deputy Assistant 

Secretary for the Western Hemisphere, responsible for managing 

Treasury’s engagement on economic and financial issues with Latin 

America, the Caribbean, and Canada. 

In 2008, she spent a year on sabbatical, as a visiting fellow at 

the Center for Global Development in Washington, focusing on the 

future of regional integration in the Western Hemisphere. She was 

Treasury’s Deputy Assistant Secretary for Europe, Eurasia, and 

the Western Hemisphere from 2002 to 2007. 

7 

Previously at Treasury, she was the Director of the Office of Central and Eastern Europe, Director of the Office of Mideast and Central Asia, and Deputy Director of the Office of Asia and Near East 

Nations. Also at Treasury, she has served in the Office of International Monetary Policy, working on G7 issues and U.S. policy in 

the IMF, and in the Office of International Trade Policy. She was 

Treasury’s negotiator in the Uruguay Round trade negotiations, 

and in the early part of the NAFTA negotiations. 

Prior to her work at Treasury, she conducted the economic research on U.S. trade and investment relations with developing 

countries at the Commerce Department. And in 2002, Dr. Lee became a member of the Council on Foreign Relations. In 2001, Dr. 

Lee was a recipient of the Meritorious Executive Presidential Rank 

Award. 

She holds a Ph.D. and an MA in economics from Tufts University, and a BA in economics from Wesleyan College, and she is 

married with two children. 

Dr. Lee? 

STATEMENT OF NANCY LEE, DEPUTY ASSISTANT SECRETARY 

FOR THE WESTERN HEMISPHERE, U.S. DEPARTMENT OF 

THE TREASURY 

Ms. LEE. Chairman Meeks, Ranking Member Miller, members of 

the House Financial Services Subcommittee on International Monetary Policy and Trade, Congressman Bachus, thank you very much 

for inviting me here today to testify at this important hearing on 

Haiti. 

I know the leadership role that you and others on this subcommittee have played on Haiti, both before the devastating earthquake and after, and it’s a privilege for me to testify today. 

I returned early this morning from Port-au-Prince, where I met 

with the senior economic team in Haiti’s government, as well as a 

variety of people from the private sector. And I am pleased to share 

my findings. 

On the ground, I saw the impact of the earthquake on Haiti’s 

economy is going to be massive, is already massive and will be 

massive. It will vary, though, by region and by sector. It will take 

some time before we fully understand the magnitude and nature of 

the impact of the earthquake on Haiti’s future. 

Today, I will provide our best assessment of the economic and financial challenges ahead for Haiti, and Treasury’s efforts to help 

Haiti address them. 

For the financial sector, initial efforts were focused on the successful restart of the banking sector and the payment system, for 

which, I would add, the Central Bank deserves an enormous 

amount of credit. An important aspect of the financial system for 

Haiti is the transfer of remittances, which are playing a vital role 

in helping people in small businesses weather this enormously difficult period. 

The U.S. role—and particularly our military helped—to get financial remittance providers access to the physical cash they needed to distribute remittances around the country. Going forward, a 

key challenge will be to create the conditions that enable the financial sector to better meet the needs of the Haitian economy. 

8 

Credit growth has lagged in Haiti for many years due to risk factors, risk aversion, institutional weaknesses, and a variety of 

shocks. Post-earthquake, as you can imagine, risk aversion has 

only increased. But we know that Haiti’s businesses are struggling. 

They have lost inventories, they have lost facilities, and they are 

going to need access to credit. 

On the fiscal side, the government faces a severe financing gap. 

The International Monetary Fund estimates that revenues may decline by as much as 40 percent while expenditures will surely rise. 

The IMF has also identified a potential balance of payments gap 

of upwards of $300 million, which, at the moment, is financed by 

approximately $100 million. 

As you know, and as several have already stated, these pressures 

come on top of a still significant Haitian external debt burden. A 

considerable portion of Haiti’s external debt was relieved when the 

country reached HIPC completion point, as was mentioned. At that 

point, the United States forgave 100 percent of Haiti’s bilateral 

debt to the United States. However, as has also been mentioned, 

Haiti’s multilateral debt stock stands now at $825 million, with 

$447 million owed to the Inter-American Development Bank alone. 

So, let me turn now to the efforts Treasury has taken, with our 

U.S. Government colleagues, the Haitian Government, and our 

international partners, to address these challenges. 

First, Treasury is focused on Haiti, to not just restart lending, 

but expand access to lending. The rate of credit growth will be a 

principal factor, as in any economy, in determining the rate of recovery of the private sector, and job creation. To deal with the very 

real uncertainties of this period, we are working with the multilateral development banks to develop risk-sharing tools to catalyze 

bank lending. 

The view of the people I talk to inside the country is that a lot 

of Haitian companies are viable, they are resilient if they are afforded a breathing space to get through this very tough period. So 

this is an urgent and critical challenge. 

We can also help Haiti extend a sound regulatory framework to 

a broader range of financial services, like microfinance and like insurance, to critical sectors, going forward. And these kinds of efforts yield disproportionate benefits, because the public resources 

expended leverage much greater amounts of private finance. 

Second, to ease the balance of payments pressures, Treasury 

strongly supported the January augmentation of the IMF program 

by $100 million. We equally strongly support the commitment by 

the managing director of the IMF to develop a means of financing 

Haiti’s remaining IMF obligations—that is, canceling that debt— 

using internal IMF resources. And we are working closely with the 

multilateral development banks to ensure that they strive to meet 

the substantial budget support needs generated by the collapse in 

revenues and the rising expenditures. 

Third, Treasury has called on donors to cancel Haiti’s remaining 

multilateral debt. As you know, ahead of the G7 ministerial in 

Canada earlier this month, Secretary Geithner announced that the 

United States is seeking commitments by donors to relieve Haiti’s 

debt to the IDB, to IFAD, and to the World Bank, to IDA. In his 

statement, Secretary Geithner recognized Congress’ leadership on 

9 

this issue, including the members of this subcommittee. Secretary 

Geithner was able to secure the commitment at that point of the 

G7 to cancel Haiti’s debt. 

Treasury has developed what we think is an innovative debt relief proposal that would relieve Haiti of its debt burden fully, without displacing or using up resources needed for Haiti’s recovery. So, 

let me briefly describe the three key elements of this proposal. 

First, transforming funds provided for debt relief into grant resources available now for Haiti. This would provide an immediate 

source of up-front financing for immediate needs. 

Second, converting existing loans that haven’t been disbursed 

into grants, so that this would guard against adding new debt to 

Haiti’s debt stock, which is something that’s reflected in the legislation that has been proposed. 

And separately, we are pressing, in the context of ongoing negotiations in the IDB with respect to a capital increase, for a commitment by that institution to transfer a portion of its annual income 

to finance projects for Haiti. This would provide a secure flow of 

resources going far into the future for the next decade, because, as 

has been said, this is a long-term effort that has to continue after 

the television cameras go away. 

To be sure, there will be a U.S. component to addressing the cost 

of debt relief in Haiti. And our hope is that we can build on the 

strong bipartisan support which has been mentioned, and we look 

forward to working very closely with you on this proposed approach 

on the days ahead. 

Let me now just very briefly touch on Treasury’s on-the-ground 

presence in Haiti. Following the tragedy, Treasury rapidly deployed 

staff to work with the Haitian Government to restore budgetary, 

tax, and financial functions. We now have a temporary senior representative, Treasury representative, in Port-au-Prince. And we 

sent two seasoned technical assistance advisors to help the Central 

Bank very shortly after the earthquake. Our ability to provide this 

kind of advice quickly in crises and in other situations is one of 

Treasury’s strongest strengths. And I think the governments 

around the world very much value that assistance. 

After the immediate post-earthquake efforts, our technical assistance team identified some medium-term priorities, in consultation 

with the government, and we aim to begin work on those as soon 

as possible. 

Our senior Treasury representative has been on the ground since 

early February, working on an array of urgent issues. He is also 

representing the United States in what’s called the post-disaster 

needs assessment, the PDNA, led by the World Bank, the IDB, the 

United Nations, and the European Commission. This is the assessment that is fundamental to understanding the multilateral assistance needed and the bilateral assistance needed for reconstruction 

and development. And the results of that assessment will then inform the high-level donor conference that will happen at the end 

of March in New York. 

In conclusion, under President Obama’s strong leadership, the 

United States mobilized our government to help Haiti weather the 

aftermath of the devastating earthquake. In close cooperation with 

the Haitian Government, its people, our international partners, 

10 

and the rest of our government, Treasury is resolved to play an active role in helping Haiti build an economy and a financial system 

that can finally meet the needs and aspirations of the Haitian people. 

Thank you again for the opportunity to appear here today, and 

I would be happy to answer your questions. 

[The prepared statement of Deputy Assistant Secretary Lee can 

be found on page 46 of the appendix.] 

Chairman MEEKS. Thank you so very much for your testimony 

and for your dedication. And I know you’re just coming back from 

Haiti and seeing what’s on the ground. 

Let me ask this question. In listening to your testimony, what I 

have always been concerned with is how quickly Haiti seems to 

incur debt with the IDB. Right after the first round, you see that 

their debt is up. Why is that? Can you explain this? And especially 

with us being a major shareholder in the IDB, how do we prevent 

this from happening in the future? How do we keep a limit there, 

so that their debt with the IDB doesn’t continue to rise as fast as 

it seems it always does? 

Ms. LEE. Along with debt cancellation, this is the other key question, because it’s really—as you’re pointing out, it’s not just a question of paying the cost of canceling Haiti’s previous debt, it would 

really, truly make no sense to start adding debt, as we move forward, in our desire to get assistance flowing for Haiti. So we really 

have to take a look at this in a kind of fundamentally different 

way, and we have to create the capacity to mobilize large amounts 

of grant resources. 

And the direct answer to your question is the reason institutions 

lend is that there is always a shortage of grant finance. And in the 

IMF case, the IMF does not do grants, and it does highly 

concessional lending. So, in the IMF case in particular, there is a 

need to cancel the debt that has already occurred, including the 

$100 million that was just disbursed, and the IMF will go forward 

to do that, using its own resources. 

In these other institutions, they were trying to be very active in 

the period over the last 5 years. They disbursed a lot of assistance, 

a lot more than they had in the earlier period, and it was lent on 

concessional terms, but nevertheless, lent. 

So, at this point, we need to have a new approach. We need to 

clear the decks, with respect to their existing debt, and we need to 

find a way to convert future assistance in these institutions to 

grants, which is why we framed our proposal in a way that would 

take the resources we are using to cancel the debt, and then use 

those resources to capitalize a fund for Haiti that would be disbursed in grant form. 

So, unlike the usual debt relief procedure in which you cancel the 

debt and just provide the institution, as a whole, with the resources 

to offset the impact of the debt relief, in this case we want to provide the resources to the institution, but create a fund for Haiti 

alone to use these resources as grants to go forward. And that’s 

why we can transform the debt relief financing into grant financing 

for Haiti. And this is particularly the case in the IDB, which is, by 

far, Haiti’s largest creditor. 

11 

Chairman MEEKS. They have the mechanism set up to do this? 

It seems as though all we have to try—as one of the largest shareholders—to work with them so that a mechanism can be put in 

place so we don’t have this headache time and time again. 

Ms. LEE. Yes. I mean there is a grant facility that can be used, 

and we want to convert it into a grant facility for Haiti alone. And 

the resources that would be disbursed out of that facility would 

only be grants. This is a new proposal. We have just formulated it. 

We are just beginning to talk to the institutions, to donors, to Haiti 

itself, and to you all, about the nature of this proposal. 

So, it will—there will be some discussion on it, and a— 

Chairman MEEKS. Let me ask this in the little time that I have 

left. The other area that I am always concerned with is whether 

or not—what we’re doing in regards to capacity-building, whether 

it deals with the institutions or individuals, so that they can be 

working on the ground, whether it’s the government. What do you 

see us doing, or Treasury doing, in regards to capacity-building for 

the long-term rebuilding of Haiti? 

Ms. LEE. Well, I heard a lot about that, actually, in Haiti this 

past week from the government, itself. And that’s an interesting 

aspect, going forward. I think there is a new—there are sort of two 

new focuses in Haiti that are worth noting. 

One is that—you certainly hear this from the private sector, but 

the public sector says over and over again, ‘‘Unless we build the capacity to make our institutions work better, you can give us an unlimited amount of money, and it’s not going to result in development in Haiti.’’ So they take that as a fundamental challenge, 

going forward. And there is no denial on that point. 

The other big issue is this question of decentralization, moving 

growth centers outside Port-au-Prince to make more diversified 

growth and more job creation. 

On the question of capacity building, that will play a key role in 

the needs assessment that all these multilateral institutions are— 

going forward, which is encouraging, because it will be a focus not 

just of Treasury efforts to build capacity in the Central Bank and 

in the finance ministry, but of all multilateral donors. So I think 

there is really a unity of view in the government itself, that it is 

really a central problem, and in the donor community. 

Chairman MEEKS. My time has expired. Mr. Miller? 

Mr. MILLER OF CALIFORNIA. Thank you. We have been talking a 

lot about debt relief and grants and stuff, but I keep thinking 

about the people, and seeing their faces. How do we effectively deal 

with the impact and loss that the government has faced, the private sector has faced, the government being roads, bridges, gas, 

electrical, sewer, those type of things that you have to provide to 

get the government operating again? Then the amount of clean-up 

we have to implement on houses and businesses before we can ever 

start talking about reconstruction. 

But what are we actively doing today? Is the Army Corps of Engineers out there, working on infrastructure to deal with the basic 

government needs so the private sector can be dealt with? Or how 

are we systematically dealing with this today? 

12 

Ms. LEE. Well, as you’re basically pointing out, there are a variety of facets to attack the problem of how do you actually reach 

Haitian people. 

Mr. MILLER OF CALIFORNIA. That’s what this is about. We have 

talked about banks, we have talked about monetary policy, we have 

talked about loan relief. But the goal here is to mitigate the impact 

on the people, the government infrastructure and the actual daily 

lives of people. So how are we doing that? 

Ms. LEE. I will describe the array of activities, some of which 

Treasury is involved in, and some of which Treasury is not involved 

in. So let’s start with the basic issue of beginning reconstruction. 

When you drive around Port-au-Prince, there is just an enormous 

amount of destruction. There is rubble everywhere. So, one of the 

things that the Administration wants to do is provide jobs for Haitian people in these immediate reconstruction efforts. The USAID 

has started up cash-for-work programs. And you see teams all over 

the streets— 

Mr. MILLER OF CALIFORNIA. Do they have the capacity and the 

expertise in those areas of reconstruction that are necessary, without some outside help? 

Ms. LEE. Does USAID? 

Mr. MILLER OF CALIFORNIA. Yes. Do the Haitian people have 

those resources, or do they need outside help from the Army Corps 

of Engineers and others to accomplish this? 

Ms. LEE. There is the issue of trying to create immediate jobs, 

and then there is the issue of where you need technical expertise 

to figure out what needs to be constructed and how it needs to be 

constructed. 

USAID is also helping to add to engineering capacity. Because, 

of course, there is an enormous challenge in determining which 

buildings are salvageable and which are not, and which people can 

reenter. 

So, there is an enormous U.S. military presence, including our 

Army Corps of Engineers. When you go to our embassy, there are 

tents all over the grounds of the embassy of people who are working on this. So, we are supplementing engineering capacity. Of 

course, our government is providing relief commodities: water; food; 

and shelter. 

But we very quickly have to move from these relief efforts to providing ways for the Haitian entrepreneurs themselves to start providing goods and services. And one of the things we have to be concerned about is if you give away food and water and shelters for 

too long a period of time, you’re essentially displacing the small 

businesses that do precisely that kind of business. 

Mr. MILLER OF CALIFORNIA. Yes, but that’s not the question. Yes, 

we need to help feed the people. Yes, we need to provide water for 

the people. And, yes, we need to provide some type of structure or 

whatever. 

But is the heavy equipment there that they own themselves? Do 

they have the expertise to repair the sewer, the gas lines, put the 

infrastructure back in, repair the bridge rapidly? There is a difference between repairing a bridge over 4 years and putting a 

bridge back into functionality in 60 days. Do they have the capacity 

to do that? 

13 

Ms. LEE. The answer is no. They have some capacity, but— 

Mr. MILLER OF CALIFORNIA. That, Mr. Chairman, is where we 

need to be focusing. It’s nice to say that debt has occurred, debt relief needs to be dealt with. But if we don’t make sure the expertise 

and the experience that we have in this country are put to work 

there with the people—putting the people to work if they don’t 

know what they’re doing doesn’t help anybody. Putting the people 

to work with individuals who do know how to accomplish something is what we need to be focusing on. 

And I am not imputing in any way—a lot of the conversation in 

this committee has been putting the cart before the horse. And we 

need to determine how to get the horse leading, and the expertise 

to that country, and the facilities and resources they need to get 

this done rapidly with the assistance of the Haitian people, necessarily. But I’m not sure they have the capability themselves, if 

we provide all the money they need, to do that without the expertise. 

And I hope we will get into that as we move along, but I see that 

my time has expired. And I thank you very much. If you would like 

to conclude in a comment, please? 

Ms. LEE. Yes. If I could just link your point with the debt relief, 

because there is a very strong link, we need the multilateral institutions to help add to the capacity, precisely the infrastructure 

building capacity that you’re talking about. And we need the multilateral institutions that do it well—not all of them do it well—to 

come in quickly. 

That has to be financed. In the past, it has been financed by 

lending—concessional lending, but lending. We want it to be financed by grants, going forward. And so we need a lot of up-front 

grant finance. And that’s what we’re trying to do with this debt 

proposal. 

Chairman MEEKS. The gentleman’s time has expired. Ms. 

Waters? 

Ms. WATERS. Thank you very much, Mr. Chairman. There are a 

couple of quick questions that I have, and then I want to engage 

a little bit in the way that Mr. Miller was trying to deal with the 

infrastructure development and the long-term development of 

Haiti. 

First of all, I want to know whether or not Taiwan and Venezuela, did they actually do debt relief yet? They had promised, according to the information I received. Haiti owes about $295 million to Venezuela, and $92 million to Taiwan. President Chavez announced that Venezuela would forgive Haiti’s debt. Do you know if 

that has been done? 

Ms. LEE. Those are the correct numbers, that’s absolutely right. 

Those are very large numbers, and so they were substantial additions to Haiti’s debt. 

Ms. WATERS. Has it been done? 

Ms. LEE. President Chavez has announced the cancellation of 

Haiti’s debt, as of— 

Ms. WATERS. And what about Taiwan? 

Ms. LEE. Taiwan, as we understand it, is exploring the question. 

It understands that this is a— 

14 

Ms. WATERS. Okay, it has not been done. I have to move quickly— 

Ms. LEE. It has not. 

Ms. WATERS. I only have 5 minutes. 

Ms. LEE. Okay. 

Ms. WATERS. According to the Treasury’s justification for appro- priations, the United States owes more than $478 million in arrears to the World Bank Group’s International Development Association. We also owe $75.4 million in outstanding pledges to the 

HIPC trust fund. 

Do our arrears make it more difficult for Treasury to negotiate 

additional debt relief for countries like Haiti? I am very pleased 

with the President, with Treasury, with my colleagues. Everybody 

would like to do this debt relief. But are we going to be hampered 

in any way because of our arrears? 

Ms. LEE. Well, I can just say from my personal experience on my 

particular region, the arrears influence—the arrears are raised 

with us when we engage with the institutions that deal in this part 

of the region— 

Ms. WATERS. Can we overcome that? 

Ms. LEE. We have to do something about the arrears. But we are 

pursing this negotiation seriously, and we wouldn’t have proposed 

it if we didn’t think we could get agreement to do what we proposed to do. 

Ms. WATERS. You are planning to do—well, we are planning to 

do an appropriations request letter, urging support for the Administration’s request of $1.235 billion for IDA’s replenishment, $50 

million for IDA’s arrears, and $50 million for the HIPC trust fund. 

Jubilee USA asked us to do this. 

However, I want to know if this is what you want us to do, if 

this is what you would urge us to get done. 

Ms. LEE. You mean the arrears clearance? 

Ms. WATERS. Yes. 

Ms. LEE. I’m not quite sure I understand the question. The arrears clearance would not cover these additional debt relief costs. 

Is that— 

Ms. WATERS. Yes, well, actually, my bottom line concern is that 

we are all wanting to do this debt relief. And I am very appreciative for Treasury’s support to move forward, to be our voice and 

our vote. Are we going to run into any problems doing it? 

Ms. LEE. To do this debt relief, this very ambitious proposal as 

we proposed it, it will require a substantial cost, somewhere—for 

all of the institutions together, the entire—sort of the bill for converting the undisbursed money into grants and for canceling— 

Ms. WATERS. Are we going to run into any problems doing this? 

Ms. LEE. —all the institutions will be substantial. But we 

think— 

Ms. WATERS. Is there anything else that we should do to be supportive, to make sure that we don’t get bogged down, and we can 

actually do the debt relief, particularly by way of grants? That’s 

really what my bottom line concern is. 

I know that everybody wants to do this. Is there anything that 

we should be doing to help give support to your voice and your vote 

to get this done? 

15 

Ms. LEE. The signal you have already sent is critical, because we 

can go to donors and say, ‘‘This is an idea that is attractive on the 

Hill,’’ so that was a key part of why we proposed what we proposed. 

But, of course, we will be coming for resources to finance this proposal. 

Ms. WATERS. Okay. And I think what my staff is telling me— 

that there is an Administration request, and we should be gathering support over here for that request, if that would be helpful 

in helping to get the job done. 

Ms. LEE. We are evaluating the need for a supplemental budget 

request for Haiti’s relief and reconstruction and recovery needs. 

And a decision will be made very soon about that. So we will then 

come back to Congress. 

Ms. WATERS. All right. Thank you very much. Mr. Miller—is he 

still here? One of the concerns I—oh, my time is up. Okay, thank 

you very much, Mr. Chairman. 

Chairman MEEKS. I’m going to try to get to Mr. Bachus and Mr. 

Carson. Mr. Bachus? 

Mr. BACHUS. Thank you. And I will yield part of my time to the 

sponsor of the bill, Ms. Waters. 

I want to commend the Treasury for your presence on the 

ground, and all you have detailed in your testimony. I appreciate 

that. I appreciate the Administration’s leadership in coordinating 

efforts with other countries. 

Ms. LEE. Thank you. 

Mr. BACHUS. I commend you for that. Let me ask one question. 

How aggressive is the Department of the Treasury, in ensuring 

that other actors or countries, whether they be private creditors or 

sovereign nations such as China, are not saddling Haiti with new 

debt, or taking advantage of the nation’s resources? 

I think there is a history of that happening in other countries. 

Would you comment on that? 

Ms. LEE. Well, in the context of the HIPC debt relief, we—which 

is the bilateral debt—all of the Paris Club creditors get together. 

And when the HIPC debt relief decision was taken, all bilateral 

debt in the Paris Club was supposed to be canceled. And we use 

our voice in that club to urge others to get on with it. 

Mr. BACHUS. Sure. 

Ms. LEE. As there are some—so— 

Mr. BACHUS. Of course what I’m talking about is a country coming in and trying to take advantage— 

Ms. LEE. Yes. 

Mr. BACHUS. —by buying resources for less than value or by saddling them with new and onerous debt to— 

Ms. LEE. Yes. I would say our intervention on that, when Haiti 

takes on what we call non-concessional debt, it’s really through the 

international financial institutions, in particular, because they— 

and particularly the IMF, because that is the institution which is 

supposed to worry about debt sustainability. 

Mr. BACHUS. Yes. 

Ms. LEE. Haiti is a sovereign country, and it has decided to take 

on this debt. But our role is really to try to fit this into some sort 

of— 

16 

Mr. BACHUS. But the Treasury, I think, is one of the departments that could be uniquely positioned to—since you’re involved 

in the debt relief, not to really keep your eye on this, and at least 

come up with a game plan, as opposed to leaving it just to the 

international organizations. 

Ms. LEE. Yes. 

Mr. BACHUS. Or, take a leadership role with them on the— 

Ms. LEE. Yes. There are some countries, though, where we have 

very—we, in terms of the creditor countries, we have very little influence. I would say the most effective thing that Treasury can do 

is to try to mobilize the grant resources, so that Haiti doesn’t have 

to— 

Mr. BACHUS. Right, and— 

Ms. LEE. —go to a country and take on non-concessionary— 

Mr. BACHUS. And, I’m talking about somebody coming in or— 

Ms. LEE. Yes. 

Mr. BACHUS. —taking advantage, going forward. 

Ms. LEE. Yes. 

Mr. BACHUS. Congresswoman Waters, I will yield my remaining 

time to you. And I commend you for your leadership. 

Ms. WATERS. And I appreciate the relationship that we have developed over the years. Many in the Jubilee movement helped to 

bring us together years ago, we have been working together, and 

it has been very rewarding. And I appreciate that. 

Mr. Miller, you asked about the water systems and the infrastructure and the development. And those are the kinds of questions that I think that the Congress of the United States is really 

going to have to get involved with, some real public policy about 

Haiti. 

What has happened is we have allowed some of our international 

funding organizations to be very slow in the way that they gave out 

the money. We have allowed too much of our resources to go to 

some—I don’t know, it’s 6,000 NGOs in Haiti now, rather than 

helping to see that there is a strong government, and that there 

are contracting systems put in place for specific projects. 

They need a water system in Haiti, even if the earthquake never 

hit. And they don’t have potable water. And that’s shameful, for 

the length of time that this has gone on. We have had the City of 

Gonaives that has been wiped out, promises that are made about 

the kind of reconstruction that would divert water that comes down 

off of the mountain that flooded out Gonaives, the historic City of 

Haiti. We have bridges and roads that were wiped out in the hurricane— 

Mr. MILLER OF CALIFORNIA. Let me respond to a little of that, 

I think it’s important. The Haitian people are very hard-working 

people, but they don’t necessarily have the talent. 

Ms. WATERS. That’s right. 

Mr. MILLER OF CALIFORNIA. We have a tremendous amount of 

talent unemployed in this country today. 

Ms. WATERS. That’s right. 

Mr. MILLER OF CALIFORNIA. We are spending—American taxpayers, to help good people—we’re spending their dollars. Why 

don’t we invest that into American labor, too, to assist the people 

of Haiti in reconstructing the areas we need to get their infrastrucVerDate Nov 24 2008 13:05 Jul 06, 2010 Jkt 056769 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\56769.TXT TERRIE
17 

ture back, providing the basic services they need, and accomplish 

it rapidly, rather than some of the ways we’re doing it? We’re 

throwing money out to organizations who are not getting it to the 

ground, where it needs to be put. 

And I would like to have this committee, whether it be in a formal hearing or on the Floor, talk about investing the talents of the 

American people. We are investing their monies, we might as well 

put it to the people who need the work in this country, who can 

benefit the Haitian people. And I would love to talk to you some 

more about that. 

Chairman MEEKS. The gentleman’s time has expired. Mr. Green? 

Mr. GREEN. Thank you, Mr. Chairman. Mr. Chairman, I want to 

compliment you. You used a term that I think we need to revisit, 

and that term was a ‘‘Marshall Plan’’ for Haiti. I am not sure that 

it will be called ‘‘Marshall,’’ but I am sure that kind of thinking will 

be helpful. I compliment Treasury on what you have done, the creative thinking, in terms of how you would use grants so as to eliminate debt. I think that’s a wonderful thing. 

But I see this as compartmentalized into three components. 

There has to be this initial response, which is almost an emergency 

response that’s still continuing. Then you have to have a mid-term 

response, because you have to deal with the infrastructure, as Congresswoman Waters has indicated. Contracting. You have to deal 

with the constabulary. You have to deal with the transit. You have 

to deal with all of the mobility questions that have to be dealt with. 

But then, long term, there has to be the leadership provided by 

the United States. We are the preeminent leader of the world, 

when it comes to helping countries redevelop themselves, and help 

themselves to extricate themselves from some of their economic 

woes. To do this, I think we have to get the rest of the world engaged in this Marshall Plan, as it were, that the chairman talked 

about, a plan that views Haiti as a long-term, independent, autonomous nation that can sustain itself in this hemisphere. 

I think that aid is great. Aid gives people hope, and they need 

hope now. But, in the final analysis, it’s trade that provides the 

help that they need. And I want us to move from that aid to trade, 

so that they will have the help to have the autonomy that they 

richly deserve. 

I thank you, and I especially thank Mr. Miller. Your words have 

warmed my heart, sir. He has been a dear friend, we have worked 

together on many things. But this one is exceptional, and I appreciate the way you and Ranking Member Bachus have embraced 

this. 

I yield back the balance of my time, Mr. Chairman. Thank you 

so much. 

Chairman MEEKS. Thank you, Mr. Green. And thank you, Ms. 

Lee, for your testimony here today, and for your cooperation in 

working with us on behalf of the United States of America with 

people in Haiti. 

At this time, we have three votes. So we are going to recess and 

come back after the three votes, and commence with the second 

panel. Thank you. 

Ms. LEE. Thank you. 

Chairman MEEKS. This committee stands in recess. 

18 

Ms. LEE. Thank you. 

[recess] 

Chairman MEEKS. I have been informed that Mr. Adams has 

time constraints, and so we will start right out, as soon as I get 

myself organized here, with Mr. Tim Adams, who is the managing 

director of The Lindsey Group. 

Previously, Mr. Adams served as Under Secretary of Treasury for 

International Affairs. As Under Secretary, Mr. Adams was the Administration’s point person on international financial issues, including exchange rate policy, G7 meetings, and the IMF and World 

Bank issues. He regularly interacted with counterparts in key 

emerging markets, including China, India, and Brazil, and traveled 

extensively throughout Asia, the Middle East, and Europe. 

Prior to assuming his post as Under Secretary, Mr. Adams had 

served as Chief of Staff to both Treasury Secretary Paul O’Niell 

and Treasury Secretary John Snow. He was the Policy Director for 

the Bush-Cheney reelection campaign from November 2003 

through the end of 2004, and also served as a full-time member of 

the Bush-Cheney campaign staff in Austin in the 2000 campaign. 

Mr. Adams also served in the White House under the first President Bush at the Office of Policy Development. And he holds a BS 

in finance and a master’s in public administration and an MA in 

international relations from the University of Kentucky. Mr. 

Adams, welcome. 

STATEMENT OF THE HONORABLE TIMOTHY D. ADAMS, THE 

LINDSEY GROUP 

Mr. ADAMS. Thank you, Mr. Chairman, and Congressman Bachus. It is an honor to be here today to talk about such an important 

issue. I obviously can’t speak to it with the same eloquence and 

passion that I have heard from the members of this committee 

today, so I won’t even begin to try. And, for the sake of time, I will 

be quite brief—and also to create time for my good friends here on 

the panel. 

I would like to just make three quick points, Mr. Chairman. One 

is that I enthusiastically support debt relief for Haiti. The conditions there, as Dr. Lee described this morning, as we have witnessed through various forms of media, certainly demand all that 

we can do. And debt relief is an important piece to the puzzle of 

support for this country, which has gone through such a terrible 

tragedy. 

Two is that we shouldn’t kid ourselves into believing that debt 

relief, however important it is, is a panacea, a silver bullet, for 

what ails this country, the challenges it faces in the short-term and 

medium- and long-term. It can’t substitute for other forms of support, whether it’s in-kind support or grants, or technical assistance, 

or humanitarian assistance. It’s an important piece, but there are 

so many other things that need to be done. And we need to commit 

ourselves for a long period of time to provide the resources that 

this impoverished country is going to need. It will require our attention for not weeks and months, but years and decades. 

And, three, an issue which is important to me and was important 

to me in my previous position at the Treasury Department, and 

that is to take an opportunity to reaffirm an approach to developVerDate Nov 24 2008 13:05 Jul 06, 2010 Jkt 056769 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\56769.TXT TERRIE
19 

ment which tries to move away from excessive lending for the poorest countries, and focuses more on grant funding for development. 

I was a part of the process, the multilateral development relief— 

debt relief initiative, and it was a highlight of my tenure in government, and I think certainly one of the highlights of the previous 

Administration’s tenure. 

But I hope that we never have to go through that again, that we 

don’t find ourselves repeating the lend-and-forgive cycle that we 

have seen that has occurred before. It is—as I note in my testimony—a cruel hoax to load up poor countries with debt that we 

know they can’t sustain, we know they can’t pay back, and to find 

at some point in the future that we have to cancel that debt. And 

it calls into question foreign assistance and development assistance 

generally, and it creates enormous cynicism among our voters and 

our taxpayers. And you most certainly must feel that and hear it 

when you go back to your districts. 

So, if I could do anything other than share the concerns you will 

hear with this panel—and again, we have heard from the members 

of the committee today—to help this country and do everything in 

our power, including debt relief, it is to think about how we do development assistance in the future, to move away from lending and 

to focus more on a grants-focused development assistance strategy, 

so that we don’t repeat this cycle in the future. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Adams can be found on page 37 

of the appendix.] 

Chairman MEEKS. Thank you, Mr. Hart. We now will hear the 

testimony of Ms. Melinda St. Louis. Melinda St. Louis is the deputy director of Jubilee USA Network, an alliance of more than 75 

religious denominations, faith-based organizations, human rights 

and environmental groups, and the development agencies dedicated 

to the debt cancellation for impoverished countries. 

She has more than a decade of experience in policy advocacy, 

communications, and nonprofit management both in Washington, 

D.C., and on the ground in Latin America and the Caribbean, as 

well as a master’s degree in international policy and development 

from Georgetown University. 

Welcome, Ms. St. Louis. 

STATEMENT OF MELINDA ST. LOUIS, DEPUTY DIRECTOR, 

JUBILEE USA NETWORK 

Ms. ST. LOUIS. Thank you. Thank you for having me. Chairman 

Meeks and Ranking Member Miller and other members of the subcommittee, I want to thank you for the opportunity to discuss debt 

relief for Haiti today. I would also like to especially thank both 

Representative Waters, who isn’t here right now, and Representative Bachus for being such long-time champions of debt cancellation, not only for Haiti, but for impoverished countries around the 

world. We have been very gratified to work with you over the 

years. 

I am pleased to represent the Jubilee USA Network and our alliance of our 75 organizations. It’s important for us to be here today 

because, as has been said, the people of Haiti have already suffered 

so much. And now they face a disaster that the scope is hard to 

20 

imagine: 1 in 50 Haitians have died; and millions are affected. And, 

as many have highlighted, that means Haiti clearly needs and deserves our generosity and solidarity. 

A critical first step for Haiti’s long-term recovery is 100 percent 

debt cancellation for all of its remaining debt. We are gratified by 

all the efforts taken thus far, both in Congress and by the Administration, to work towards full debt cancellation for Haiti, both in 

practical terms and because we all know Haiti can’t possibly repay, 

but also as a matter of justice. 

I say justice, because when we talk about Haiti’s current debt 

burden, we must not forget the historic legacy of unjust debt that 

was so eloquently stated by Representative Green earlier. Dating 

back to its independence from France, the legacy continued when 

the international community made loans to the Duvalier dictatorship, despite widespread reports of brutality and massive corruption. 

So, until last year, Haiti was paying $60 million to $80 million 

per year in debt service, without any distinction to the 40 percent 

of its debt that was incurred under the Duvalier dictatorship. 

The injustice of these debts, and the staggering development 

challenges facing Haiti as a result, compelled our member organizations, allies in Congress, and the Administration to advocate for 

many years for debt relief for Haiti. My written remarks detail how 

we accompanied Haiti through the very bumpy ride of the highlyindebted poor countries, or the HIPC initiative, which finally culminated in June of last year with $1.2 billion in debt relief, which 

we celebrated as a victory for the Haitian people. 

But, as we have heard, that wasn’t the end of the story. Because 

the HIPC initiative had set the cut-off date as the end of 2003, and 

Haiti had taken out loans since that time, Haiti still owed more 

than $1 billion to external creditors when the earthquake hit. 

Also, in the days following the earthquake, we have heard the IMF offered Haiti $100 million in emergency assistance through its 

extended credit facility, which was an extension of its previous 

loan. We and others reacted with very deep concern at this nearly 

doubling of Haiti’s debt to the IMF, urging them to not add to Haiti’s debt burden, and not to apply the conditions that normally are 

placed on IMF loans. 

The IMF’s managing director’s statements, intent to turn the 

loan into a grant and to cancel the rest of its debt, is very welcome. 

But it does require board action. And we are—but as of now, a 

$102 million loan has added to Haiti’s debt burden. 

But the very good news is that our swift call for full debt cancellation for Haiti from members of our network—ONE and many 

others—together with allies here in Congress, including the bill 

that will be marked up this afternoon, already has had a tremendous impact, as we heard earlier. We saw a high level of commitment from G7 finance ministers. And on February 6th, they indeed 

made a strong statement in support of multilateral debt relief for 

Haiti, which is an important victory, and it’s a critical first step to 

assuring its cancellation of Haiti’s multilateral debt. 

However, as we know, as the devastation in Haiti begins to fade 

from the public spotlight, we have to move quickly to negotiate 

debt cancellation, to ensure that it actually does happen. The upVerDate Nov 24 2008 13:05 Jul 06, 2010 Jkt 056769 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\56769.TXT TERRIE
21 

coming meeting, annual meeting of the IDB’s board of governors in 

Mexico later this month, and the joint spring meetings of the World 

Bank and IMF in April, are key opportunities to secure an agreement. We hope the U.S. directors will work with their colleagues 

to negotiate without a delay. And I am glad to hear that some of 

that is already happening. 

As we have heard, how to finance debt relief is clearly a key concern, as debt relief must not replace other donor assistance for 

Haiti. Where possible, institutions should use internal resources to 

cover the modest reduction in their income from debt relief. The 

managers amendment, which was mentioned earlier, would suggest 

that windfall profits from IMF gold sales could be allocated to debt 

relief for Haiti. I am glad to hear that the U.S. Treasury and the 

IMF are pursuing to use internal resources to benefit Haiti. 

I also want to underscore what has been said before, in that we 

must provide support as grants, and not loans. The United States 

needs to play a leadership role. It sounds like we’re already doing 

that. And to ensure that assistance is provided solely as grants. 

And, in addition to these immediate recommendations, I think 

the Haiti case should also encourage us to think more broadly 

about how to better deal with sovereign debt issues. The fact that 

we have to talk about negotiating voluntary debt relief on an ad 

hoc basis separately for each institution, and for a country that has 

already completed HIPC, highlights the limitations of our current 

mechanisms. 

Interesting ideas for future consideration, which I have briefly 

elaborated in my written remarks, include creating a multilateral 

disaster global fund, and mechanisms to coordinate debt reduction 

in a single process, pursuing procedures for fair and transparent 

arbitration for sovereign debt, and establishing international 

frameworks for responsible lending and borrowing to avoid buildups of odious and illegitimate debts. 

I want to conclude by urging support of Haiti debt cancellation 

through H.R. 4573, as well as quick passage of the Jubilee Act, 

which is H.R. 4405, which begins to address some of these broader 

sovereign debt challenges. We really must work to avoid the mistakes of the past, and ensure a brighter future for Haiti and for 

other impoverished countries. Thanks so much for taking the time 

to listen. 

[The prepared statement of Ms. St. Louis can be found on page 

52 of the appendix.] 

Chairman MEEKS. Thank you. And I think I previously misspoke 

upon the conclusion of Mr. Adams’s testimony. I said, ‘‘Thank you, 

Mr. Hart, for your testimony.’’ And we know we didn’t hear Mr. 

Hart yet. 

And so, now we will hear the testimony of Mr. Hart. But let me 

thank Mr. Adams for his testimony. 

STATEMENT OF THOMAS H. HART, SENIOR DIRECTOR OF 

GOVERNMENT RELATIONS, ONE 

Mr. HART. Mr. Chairman, it is an honor to be confused with Tim 

Adams in this regard. So I am happy to associate all my remarks 

with him, as well as Melinda. Mr. Chairman and Mr. Bachus, 

22 

thank you so much for the honor of coming before you today to talk 

about this important issue. 

My organization, ONE, is a global advocacy and campaigning organization backed by more than two million people nationwide, 

dedicated to fighting extreme poverty and disease. We are probably 

best known by our co-founder, Bono, who actually began his advocacy in the United States working with Mr. Bachus and Ms. 

Waters and others 10 years ago on the Jubilee 2000 movement for 

the first round of HIPC debt relief. 

Members of this committee, frankly, should be proud of all that 

has happened in the last 10 years on debt cancellation. Chairman 

Frank, Ms. Waters, Mr. Bachus, Chairman Meeks, and so many 

others, as well as President Clinton, President Bush, and now 

President Obama have all been deeply committed to debt cancellation and bringing the poorest countries out from underneath 

unpayable debts. 

I am not going to take time this morning to review all that has 

happened over the last 10 years. Suffice it to say 35 out of the 40 

poorest countries on the planet have qualified for debt service relief, 26 of them have now received both full bilateral and multilateral debt stock cancellation, freeing up $117 billion, so far, of debts 

that couldn’t be repaid. And, in fact, this freed up around $2 billion 

annually, that these countries were paying back to these institutions, and are now going in to service the needs of their countries 

and to fight poverty. 

We have been pleased to see that the World Bank has tracked 

social service spending during the course of this debt relief, and we 

have seen a nearly fivefold increase in social sector spending, such 

as education and health, for these 35 countries during the HIPC 

and MDRI programs. 

Last summer, as has been said a number of times, Haiti quali- fied for this debt relief. They got about $1.2 billion of debt that was 

incurred prior to 2005 written off. Venezuela and Taiwan did not 

participate in that, which is why their debt remains on the books, 

and is a real concern today. 

But at the time of the earthquake, Haiti still had more than $1 

billion of loans from 2005 to present. And I think the committee 

is now well familiar with the major shareholders: the IMF; the 

World Bank; the Inter-American Development Bank; the International Fund for Agricultural Development; Taiwan; and Venezuela. 

I do want to note that the large volume of debt from the InterAmerican Development Bank in such a short time is of particular 

concern. And, Mr. Chairman, you raised this earlier with Treasury. 

I think the Treasury Department has a particular burden, as the 

largest shareholder at that institution, to seek ways to avoid such 

a rapid debt reaccumulation there. 

Fortunately, all the major bilateral donors, including the United 

States, have gone to grant-only assistance to Haiti, and that should 

be applauded. 

I want to echo Tim’s sentiment that debt relief is not a silver bullet. In the immediate aftermath of the quake, of course, urgent relief is the most appropriate and most effective mechanism. Haiti 

was actually servicing very little of its current debt. Therefore, debt 

23 

relief relieves very little immediately. But, over the long term, that 

$1 billion would have to be paid back. And so, we believe debt relief 

occupies a very smart and important piece of the long-term reconstruction puzzle. 

I think the case for relieving Haiti’s debt really boils down to two 

very practical things. First, these loans were taken on with certain 

economic assumptions in mind. Haiti appeared to be on the way 

up, the IMF thought that it would grow at an annual rate of 4.5 

percent, exports were growing, governance indicators were improving. And so, one might have assumed that some of these loans 

could be serviced. 

Well, all of those assumptions are no longer appropriate. And to 

continue to hold Haiti accountable for a bunch of debts under assumptions that are no longer appropriate makes little sense. 

Second, holding Haiti to its international debts diminishes the 

impact of the assistance that the U.S. Government is providing, 

and the support the American people are providing. Donor assistance will hopefully continue to pour in. And if Haiti is still burdened with debt, some of that assistance will go to repaying those 

old debts. 

So, this ‘‘revolving door’’ of assistance—we provide assistance 

that then gets turned back into debt payments to donor-led institutions—defies common sense. Fortunately, I think common sense is 

prevailing, and I really applaud the committee, members of the 

committee and the Administration for having moved forward very 

rapidly in seeking support for debt cancellation for Haiti. 

We experienced a tremendous outpouring of support for this initiative among ONE’s own membership. Over 200,000 people signed 

a petition in support of debt cancellation. And we joined with Jubilee and other organizations to collect another 200,000 people’s 

names. 

The G7 finance ministers typically find the most remote location 

on the planet to meet, so that people like us don’t find them. We 

were lucky to have a ONE member, a Haitian-born citizen of the 

6,000-person Arctic village where the G7 finance ministers were 

meeting a month ago, deliver these 400,000 names to them. It was 

a very poignant moment, and also a moment showing broad public 

support for an initiative that the United States and Canada and 

others were adopting, to relieve Haiti of its debts. 

We applaud Secretary Geithner’s announcement of this and the 

G7 finance ministers’ support. 

In my written testimony, you will see a chart of all the institutions Haiti owes money to, and who the major shareholders are. Of 

course, the G7 countries are the major shareholders in these institutions. But key players like Argentina, Brazil, and Mexico are key 

players in the IDB, for example. And so, securing their support is 

going to be very, very important. 

Just quickly, on next steps, the IDB board meets in a couple of 

weeks in Cancun, where we hope they will deal with this subject 

very rapidly. Then, in April, the spring meetings of the IMF and 

World Bank meet, where again we hope they will approve cancellation. 

Another essential step is that each of the donors contribute a bit 

to a fund to help cover the cost of the cancellation. The cost of canVerDate Nov 24 2008 13:05 Jul 06, 2010 Jkt 056769 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\56769.TXT TERRIE
24 

cellation is not usually the face value of the loans that were lent, 

but donors do need to contribute in order to secure a global deal. 

We expect the Administration to request such funding in their 

Haiti package, which will hopefully soon be before Congress. ONE 

strongly supports this request. 

Let me conclude, given that time is short, by once again thanking 

the committee, Mr. Chairman, and my colleagues. I think, again, 

the argument in favor of canceling Haiti’s debt is compelling and 

very, very urgent. And I am happy to answer any questions. Thank 

you. 

[The prepared statement of Mr. Hart can be found on page 39 of 

the appendix.] 

Chairman MEEKS. Thank you. Thank all of you for your testimony. And knowing that Mr. Adams is short on time, I think we 

will ask him a couple of questions, and then we will let him go. 

In your reference to the cruel hoax of a lend-and-forgive cycle to 

which we subject many of the world’s poorest countries, I wonder 

what conclusions you think we should draw from the amount and 

the speed at which IDB acquired new loans following the last 

round of debt relief for Haiti? Can you give me some thoughts 

there? Similar to what I asked the Treasury. 

Mr. ADAMS. Yes, Mr. Chairman. Well, it’s somewhat troubling, 

how quickly the lending was done in the aftermath of debt relief. 

Now, I understand the structure of these institutions, they’re 

there to lend money. It’s a wonderful institution just down a few 

blocks from here. It’s populated with thousands of people who come 

in every day trying to do the right, noble thing. But the objective 

is to push money out the door. And having been a former official 

at Treasury, it’s easy to get in the habit of saying, ‘‘We need to do 

something. Let’s use the institutions, let’s call in the institutions, 

let’s do something.’’ 

And because of the limited nature of grant-based funding, it’s 

easy for those institutions to do what they do, which is to lend. And 

so, it’s not just the IDB—although I think that’s worth looking 

into—it is a development structure, a multilateral development 

structure, that has a bias toward lending, and an incentive toward 

lending. And I think we ought to think about that in a much more 

systemic way. 

Chairman MEEKS. What I’m going to do now is reserve the balance of my time. But if you—either one—have a question for Mr. 

Adams, because I know we had promised him to get out of here by 

12:15, you can ask him a question and then let him go. Mr. Miller? 

Mr. MILLER OF CALIFORNIA. No, I’ll hold. 

Chairman MEEKS. Mr. Bachus? 

Mr. BACHUS. One question. I referred to, in my opening remarks, 

and you have referred to in your testimony, that some creditors attempt to take advantage of the country if there is any freed-up borrowing capacity in the wake of debt relief, either countries coming 

in or private companies, in trying to take advantage of asset sales, 

or their natural resources, or putting more debt on them. How do 

we prevent this from happening? 

Mr. ADAMS. A great question, Congressman. And I share the concern, because I think we are seeing it happen. And it is unfair to 

the American taxpayer to pay the price of debt relief, only to find 

25 

that other countries are coming in and loading poor countries up 

with debt, and we know they can’t afford it. 

There are mechanisms in place, in the aftermath of MDRI in 

2005. We began something with the IMF and the World Bank that 

looks at debt sustainability analysis and models, then also work 

with the OECD and the export credit agencies. And Dr. Lee talked 

about bilateral assistance, and how it’s treated through the Paris 

Club. 

But we need to have a much more broadly encompassing mechanism to pull in those countries that don’t participate in these institutions. And I notice that Jubilee talked about an international 

framework for responsible lending. We need to think about new 

mechanisms much more broadly encompassing. 

And we have a G20 summit that’s going to occur in Canada in 

just a couple of months. I don’t know why the G20 couldn’t put this 

on the agenda for the things they are looking at. Because I think 

if we don’t, in 5 years we’re going to find a number of countries 

in Africa and other places that owe a tremendous amount of debt 

to countries who have been out there lending to get at natural resources. And it’s a new form of colonialism, and we need to stop 

it. 

Mr. BACHUS. Let me—if I could, I’m supposed to go to a speech— 

if I could just take 1 minute to wrap up, and then I appreciate the 

chairman and the ranking— 

Chairman MEEKS. Without objection. 

Mr. BACHUS. I want to illustrate, and I want to use Tom’s example. What Tom has reminded us all of, and what the Congress 

needs to realize, and I think the American people, is that debt relief is working in these countries. As you say, it’s not the total solution, it’s not a cure-all. Their problems were daunting. But there 

are more children in school. In many cases, either the life expectancy or the infant mortality has either been reduced or slowed. 

Now, some of them would have a famine or there would be something else, but it has really worked fantastically. 

And, as we predicted 8 or 10 years ago, for just pennies, just 

what an American would really—pocket change, it’s meant the 

ability of people to survive and better themselves. 

Two countries—and I will close—Afghanistan was one of the 

most illiterate countries with the lowest number of children in 

school. There was no debt relief. It was a highly impoverished 

country. We saw what happened there. You have groups take over, 

and they agree to educate the children. And we have a tremendous 

loss of life there, and with our troops. 

We cannot—I had a Marine brigadier general who told me several years ago, ‘‘This is a partial solution to our national defense, 

because we can’t be in all these countries.’’ And so I think Afghanistan is a wonderful example of how—I don’t know if we could have 

avoided it, but I wish we had known. 

The other is Namibia. About 6 years ago, I visited there—and I 

don’t know if it was the president or the prime minister—thanked 

me for debt relief. And we had not given debt relief to Namibia. 

And no one else had. They had the—I don’t know if good fortune, 

of being colonized by the Germans. And their debt was wiped out 

in World War II, and they apparently never incurred much, unlike 

26 

Haiti, their experience, and many other countries, which have just 

been in a cycle of debt for hundreds of years. 

So, I said, ‘‘Well, I didn’t realize that you received debt relief.’’ 

He said, ‘‘We didn’t. Our neighbors did.’’ And he said, ‘‘There is instability on our borders, disease, there are rebel groups.’’ And that’s 

one of the most stable countries in Africa. It’s a success story. But 

part of the reason is that—and he said it was the neighbor to the 

north. It had had some stabilizing influence there. I thought this 

was a powerful message. And I think, just like Namibia, the United 

States—there are may benefits that Americans don’t realize. 

And then, finally, as Mr. Adams said, if other countries do not 

follow suit, or if we don’t pass this bill, we will continue to pay the 

debt. I am encouraged that the world community is realizing that 

this is a problem which not only affects these citizens, it affects all 

of us. Thank you. 

Chairman MEEKS. Thank you, Mr. Bachus. 

Mr. BACHUS. Every one of your testimonies was excellent. I think 

everything about it—I thought it was wonderful. I wish every 

American could have heard it. 

Chairman MEEKS. Thank you, Mr. Bachus. And, Mr. Adams, we 

want to thank you. We know that you have to leave. We held you 

a little bit longer, but thank you for coming and giving your testimony. 

Mr. Hart, let me ask you a question really quick. I think that you 

have put forward the idea of having like a shock insurance facility 

for vulnerable, poor countries that would be able to buffer the fiscal 

and balance of payment shock for natural disasters, for example, 

among other things. 

Such a facility could be mobilized in a coordinated manner, 

which would happen automatically, I guess, in the event of a shock, 

something of that nature, giving folks like us—policymakers, etc.— 

more time to react to them as we are trying to do here today. 

Now, a couple of questions on that: One, could such a facility be 

financed entirely with existing resources from the international institutions; two, in your opinion, would the IMF be the best place 

to house such a pooled insurance mechanism; and three, has there 

been any more substantive discussion about this within the institutions? 

Mr. HART. Thank you for raising it, Mr. Chairman. Fortunately, 

there is a modest form of this idea already in existence. The HIPC 

and MDRI processes actually take a look at what they call ‘‘topping 

up.’’ If countries have gone through the processes, met all the 

qualifications of HIPC and MDRI, arrive at the debt cancellation 

that they were expected to get, and have experienced some sort of, 

as they say, ‘‘exogenous shock’’—food or fuel price changes, difference in the commodities, exports—they can receive a topping up 

of assistance, or additional debt relief, in order to get them back 

to the level that was expected. 

So, this idea is certainly not a unique one, not my own. And I 

merely wanted to make the point in my written testimony that, of 

course, a 7.0 earthquake would certainly qualify as an exogenous 

shock. We shouldn’t be concerned that now many other countries 

would expect additional debt cancellation. Clearly, countries experiencing natural disasters such as this one deserve—as I think we 

27 

have discussed today, and as so eloquently put by Mr. Bachus a 

moment ago—to get that additional relief. 

Could such a facility be entirely financed by the institutions 

themselves? I think it certainly is possible. Looking at the IMF’s 

resources, they are going to be able to cover, through their own resources, the cost of the cancellation of Haiti’s debt. They—as I 

think this committee knows well—sit on millions and millions of 

ounces of gold. And that gold can be sold on open markets, as has 

been the case in the past, to finance debt cancellation. An amount 

of that could be sold and the proceeds of that used to cover this 

exogenous shock facility. 

I think the IMF certainly could be the place to house this. It 

could be housed in a number of places. And so, I think there is discussion around the additional topping up of debt assistance. 

There is not enough discussion of what Mr. Adams relayed, 

which is how do we avoid getting back in these circumstances? We 

don’t want to have to continually top up countries. We want to 

avoid getting them in this circumstance in the first place. So we 

need to, as a global community, pause before we release another 

‘‘X’’ billion dollars in new debt, and think, ‘‘Can we finance this 

through grants?’’ 

Chairman MEEKS. Thank you. Ms. St. Louis, let me ask you a 

question really quick, before I go to Ranking Member Miller, because you talked also about establishing a mechanism for more 

transparent and accountable debt accrual, and I guess where applicable, debt default for forgiveness. 

What agency? Would it be the IMF? Who do you think is best 

suited to establish and administer such a mechanism? 

Ms. ST. LOUIS. The mechanism for responsible lending and borrowing? Well, there is an interesting initiative that has been 

launched, actually, by the United Nations Conference on Trade and 

Development, UNCTD, which begins a process of bringing together 

legal experts and governments and the nonprofit sector, coming together to come up with a set of guidelines for responsible lending 

and borrowing that could kind of be a code of conduct, initially, and 

then kind of build toward responsible—toward more soft law, perhaps down the road. 

And this is an interesting initiative, particularly because China 

is at the table, and that has been one of the problems within the 

Paris Club and within other institutions. It gets a little bit to the 

question that Ranking Member Bachus talked about earlier. 

So, having an initiative through the United Nations, which is a 

place where some of these other kinds of emerging markets that 

are engaging in lending—to get them to make sure that they are 

engaged at the table, I think it is more likely to have success more 

broadly. 

And so, that’s one initiative where we are recommending that the 

U.S. Government play a constructive role. It’s really getting off the 

ground. I think it will take a while. But I think that having those 

guidelines in place, and trying to ensure that all of the relevant actors who are lending are at the table at the beginning will be really 

important. 

Chairman MEEKS. Thank you. Mr. Miller? 

28 

Mr. MILLER OF CALIFORNIA. Thank you, Mr. Chairman. Mr. Hart, 

in your testimony, you mentioned the importance of country ownership of programs. I believe, more specifically, you said, ‘‘country 

ownership of development initiatives where funding supports country priorities, rather than donor priorities.’’ Then you go on to say, 

‘‘country-owned poverty reduction plan increase in ownership,’’ and 

in many cases there has been a lack of poverty reduction efforts on 

the part of government. 

Could you explain that more fully? 

Mr. HART. Sure, of course. The HIPC and MDRI initiatives are 

built upon the foundation that the amount of payments going to old 

debts that is now freed up, that those proceeds, the windfall from 

debt relief, would go to poverty reduction. 

And so, the World Bank has led a process with these countries 

called the Poverty Reduction Strategy Process. It’s a process by 

which the countries themselves consult with civil society, begin a 

national dialogue about what their poverty reduction and development plans are, and they put together these strategies, which debt 

relief—and other assistance—go to fund. Now— 

Mr. MILLER OF CALIFORNIA. How can donor priorities, rather 

than country priorities, differ that are in conflict with each other? 

Mr. HART. Oh, very often donors— 

Mr. MILLER OF CALIFORNIA. We have an initiative to get the 

money to the people. 

Mr. HART. Right. 

Mr. MILLER OF CALIFORNIA. And to help the people. Perhaps if 

it went to the government, it might not get to the source we’re trying to achieve. 

Mr. HART. I think it’s not necessarily a case of giving it to the 

governments of these countries directly, so much as having a country plan that says, ‘‘We need this number of schools, we need this 

number of clinics. It would be great if we had a farm-to-market 

road system.’’ If the donor community understands what the development priorities of the country are, their donor assistance is going 

to be that much more effective. 

Oftentimes in the past, our assistance has gone into priorities 

that we think we want to achieve, but don’t necessarily resonant 

with what the countries, themselves, need. 

A very innovative example of that new approach is, frankly, the 

Millennium Challenge account, which was set up during the last 

Administration. It’s a negotiation across the table. It’s a, ‘‘Hey, we 

would like to do this. We need this. How can we work together to 

get it done?’’ And that’s really the process— 

Mr. MILLER OF CALIFORNIA. That can be done, though, without 

necessarily country ownership, can’t it? Just do bilateral agreements on issues. 

Mr. HART. The best bilateral agreements are obviously going to 

be where the country and its citizens are fully bought in. 

Mr. MILLER OF CALIFORNIA. Okay. Buying in is different than 

ownership. I see where you’re going, then. 

Ms. St. Louis, you talked in here about the flaws of a multilateral debt relief process that is voluntary. How would that impact 

shareholders if it were not voluntary, being this is a contribution? 

29 

How would you have shareholders involved, and then have their 

debt relief be non-voluntary on their part? 

Ms. ST. LOUIS. Well, what I was referring to in that was the fact 

that for sovereign—for countries that are in debt distress, the— 

there is no international bankruptcy type of mechanism that, you 

know, an individual or a corporation that’s in debt distress has. 

There is a way for an orderly work-out of the mechanism. And that 

doesn’t exist in the international framework. 

And so, that’s one of the things we were talking about. It’s not 

so much saying that it’s going to be involuntary, but that there is 

actually a comprehensive mechanism where everybody is at the 

table together, and—so that there aren’t hold-outs, there aren’t 

countries, there aren’t corporations that, therefore, hold out of negotiations, and therefore benefit from U.S. taxpayer—or debt relief, 

and so forth. 

Mr. MILLER OF CALIFORNIA. Sure. 

Ms. ST. LOUIS. So the need to have something that’s comprehensive and that—fair and transparent arbitration for countries that 

are in debt distress that would benefit both creditors and borrowers, because there would be, again, orderly work-outs. 

Mr. MILLER OF CALIFORNIA. How would you do that? Let’s look 

in the future. We have a country that we want shareholders to invest in. And their company is thinking, ‘‘We’re going to make loans, 

we’re going to invest, and we’re probably going to get repayment 

on our loan, eventually.’’ 

How would you structure those prior to that situation occurring 

to still encourage donors and shareholders to be involved, if it’s not 

a voluntary situation? 

Ms. ST. LOUIS. Well, again, I make the analogy to the— 

Mr. MILLER OF CALIFORNIA. I’m concerned about even the debate 

would impact countries in the future from receiving assistance that 

they might not otherwise receive if shareholders thought they could 

be wiped out. 

Ms. ST. LOUIS. Right. Well, I guess I would continue to make the 

analogy to the bankruptcy, that knowing there is going to be an orderly debt work-out is actually beneficial to lenders, as opposed to 

thinking there might be a chaotic series of defaults. 

And so, the approach is to say—I mean, every lender knows that 

there is a risk involved in lending, and that if they could count on 

an arbitration mechanism that’s fair and transparent, that actually 

is beneficial to lenders. And I think that it would not be—that it 

wouldn’t cause a— 

Mr. MILLER OF CALIFORNIA. I would really like to have more information, because my concern—Mr. Chairman, and you can see 

it—is if a bank lends me money, they know that I might go 

through bankruptcy or whatever, and it’s figured in the rates. But 

if a state or government sells bonds, the bond holder doesn’t assume that they’re going to go bankrupt on them. They’re going to 

get their bond repayment back. 

So, when we talk about anything that’s not done on a voluntary 

basis, I could see somehow maybe somewhere down the road, that 

might hurt the very countries we are trying to help, as it puts their 

shareholders in a situation where they feel like they could be put 

at risk they didn’t otherwise believe they— 

30 

Ms. ST. LOUIS. Well, no, I— 

Mr. MILLER OF CALIFORNIA. I understand—I know where you’re 

trying to go, but I’m cautious on how we get there. 

Ms. ST. LOUIS. No, I think it definitely is an idea that’s in development. It does need to be fleshed out. 

The UN commission that was headed by Nobel laureate Joseph 

Stiglitz has a whole section, where they actually look at that issue 

and address some of them. And they come down pretty strongly 

that it would be beneficial. But I think you do have to work out 

the details of how that— 

Mr. MILLER OF CALIFORNIA. And on that, I am going to close 

with, it’s very easy for somebody to determine what might be beneficial when it’s not their money. When the other group is coming 

in and putting their money into it, they look at it from a different 

perspective. 

It’s always easier to—I’m willing to go out to dinner and spend 

his money and have a great time. But when I go to dinner, I’m 

going to check the bill, if I’m paying. There is a difference there. 

So that’s where my cautions arise. 

And I really appreciate the testimony. I was not impugning anything you said. Please don’t take it that way. It’s more of a concern— 

Ms. ST. LOUIS. Sure. 

Mr. MILLER OF CALIFORNIA. —that we might hurt the people 

we’re trying to help in the future by creating a situation that might 

cause confusion, more than anything else. 

I yield back, and I thank you, sir. 

Chairman MEEKS. Thank you, Mr. Miller. And I want to thank 

our witnesses. I think that you have been absolutely excellent. And 

the line of work that you have chosen is really what I call God’s 

work, in trying to make sure that you are taking care of those who 

really need a hand up and a change around. It’s really humanitarian. 

And I think that the unfortunate situation that we’re dealing 

with in Haiti because of the earthquake is just a testament to the 

great organizations that you belong to, and on the ground and 

hands on. 

And again, I thank the ranking member for your steadfastness 

and real heartfelt concern on how we really make a difference, we 

don’t continue to stay in this spin of loaning money without it 

changing the reality on the ground for the people. How do we really 

get that done? So I really appreciate everybody on this. 

31 

The Chair notes that some members may have additional questions for this panel which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for members to submit written questions to these witnesses and to 

place their responses in the record. 

This hearing is now adjourned. 

[Whereupon, at 12:38 p.m., the hearing was adjourned.] 

(33) 

A P P E N D I X 

March 4, 2010 

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