Saturday, September 29, 2007

Where Did the Money Go? "AID" Received by Haiti: October 94 - October 1995

Where Did the Money Go?

Prepared by the

Washington Office on Haiti

“AID” Received by Haiti: October 94 – October 1995

A record amount of money from foreign sources was both committed and disbursed to Haiti since the return of President Aristide in October 1994. During the first year alone (October 1994-October 1995), $515.6 million of foreign aid poured into Haiti.

Many people wonder how such a large amount of money, equivalent to more than 30% of Haiti’s GDP, could have so little noticeable impact on people’s day-to-day lives and economic situation.

What follows is an attempt to answer this question by looking at international donors’ and lenders’ commitments, focusing on money actually disbursed over the first year of democratic rule. However, it should be noted that the money disbursed over this period is only part of a much larger package totaling U.S. $2.1 billion.

Of this sum, $1.12 billion are loans, and the rest are in the form of grants. The loans come primarily from three international financial institutions: Inter-American Development Bank (IDB), the IDA (a branch of the World Bank), and the International Monetary Fund. Most of this money is conditional on reaching agreements on structural adjustment.

It should be kept in mind that much of the foreign “aid” that flows into Haiti goes right back out, without leaving much impact on production of goods and services within Haiti. Most of it is used for imports – the trade deficit reached a record U.S. $176 million for the first six months of 1995 alone. Some goes for consultancies to foreign nationals, foreign financial assets or accounts owned by wealthy Haitian nationals. A U.S. AID official in Haiti recently told visitors that 79 cents of every U.S.AID dollar worldwide is actually spent in the U.S.

The major categories of “aid” to Haiti have been: