IMF Refuses Debt-Relief For Hurricane-Devastated Barbuda
September 9, 2017
Hurricane Irma-battered Barbuda will require an estimated $150 million in reconstruction and recovery, yet the IMF refuses to forgive, or even delay demand for payment on a $3 million loan.
Facing devastation difficult to overstate, Hurricane Irma-battered Barbuda lost more than 90 percent of its structures in a record-breaking storm that will require an estimated $150 million in reconstruction and recovery.
It also has to repay a $3 million debt to the International Monetary Fund, whose special representative to the United Nations Christopher Lane resisted the idea of a moratorium on Friday.
“Our general view is that we’d rather put new money in than to have moratoria,” Lane said. “We borrow money from our members who lend. So we’d have to get agreement from the lending parties.”
A single sovereign state formed by two separate Caribbean islands, Antigua and Barbuda emerged from Irma’s wrath with dramatically different tolls.
Antigua was largely spared the brunt of the 500-year storm, but Irma’s eye passed directly over its sister Barbuda, making it the worst-hit of the Caribbean islands so far.
Prime Minister Gaston Browne said Irma landed like a “bomb,” laying most of the island to rubble and destroying its houses and vehicles.
Jubilee USA, a U.S.-based interfaith group pushing for a merciful approach to countries crushed by debt, asked the IMF’s managing director Christine Lagarde to cease payment demands until the nation lifts itself out of crisis.
“On behalf of Jubilee USA’s nearly 700 national and local faith institutions, we invite the IMF to implement an immediate moratorium on debt payments for countries severely impacted by the Category 5 storm until they have rebuilt and recovered,” its president Eric LeCompte said in a letter to Lagarde on Thursday.
Asked about this request on Friday, Lane said the institution is constrained by the wishes of the members that lent the money to Antigua and Barbuda.
“For example, we might borrow money from the United States and loan that to Antigua,” he continued. “If we don’t get paid back on time, we’d have to make an arrangement with the source of the funds themselves. It gets a bit arcane, but there’s a number of constraints on how we operate. We’re like a bank. We borrow and lend.”
Lane made the remark in a conference room of the basement of the U.N.’s Secretariat Building, during a briefing titled “Sovereign Debt Restructuring: Further Improvements on Market Based Approaches.”
Reacting in a phone interview, LeCompte called the IMF’s current position unsurprising, but he expressed hope that the institution’s position would evolve.
“Over time, we work with them,” he said. “We educate them on the situation.”
LeCompte emphasized that advocates have not called to cancel Antigua and Barbuda’s payments, only delay them.
Pointing out that $3 million “isn’t a huge amount of money for the International Monetary Fund,” LeCompte said: “This is a simple high-impact thing that they can do and have the power to do.”
Jubilee USA has set up a petition to the IMF, World Bank and creditors to enact a moratorium on payment demands for the Caribbean islands struck by Irma.
A separate petition will be sent to the White House and Congress, requesting that it send help to U.S. territories Puerto Rico and the Virgin Islands in the form of grants, rather than loans.
The organization takes its name from the Biblical concept of the Jubilee year, roughly after half a century, during which debts are forgiven and slaves and prisoners are freed.