Reconstruction Grant Supports Urgent Needs of Haitians

August 5, 2010

  • US$30 million grant helps keep government running, ensures that essential services are delivered to Haitians
  • An additional US$25 million grant to be provided by the Haiti Reconstruction Fund
  • New projects will reinforce accountability and anti-corruption measures in Haiti's public finances

WASHINGTON DC, August 5, 2010 - The newly-approved $30 million Haiti grant will go a long way towards financing critical government expenditures but, perhaps just as importantly, will also help build up confidence between the government and the Haitian population by addressing their most urgent needs, the World Bank said today.

As the Emergency Development Policy Grant helps the government close its budget gap and address accountability in the public sector, it will send strong signals to the Haitians as well as the international donor community that the government is tackling the country's critical needs in a transparent manner, said World Bank regional vice president Pamela Cox.

"This grant is critical because it will help the government keeps its operations running post-disaster and makes sure that it provides the services that people need to cope with this terrible tragedy," said Cox.

Cox was able to assess first-hand these needs and progress being made on the ground in Haiti during a recent joint visit with World Bank Managing Director Sri Mulyani Indrawati, where she met with Prime Minister Jean-Max Bellerive and top government officials.

On assessing the Bank's response in Haiti, Cox said that the Bank stepped up very quickly after the earthquake. It has pledged –she said-US$479 million, of which half of it has already been delivered, with a record disbursement rate. She added that resources are being put in the hands of the Haitian government, but clearly needs are huge and it would take a concerted action from the international community.

"At this point it is important that the Interim Haiti Recovery Commission gets all the donors together and coordinated to get results," Cox noted.

In addition to its overall support to Haiti's reconstruction efforts, the Bank is also providing invaluable reconstruction experience. In her meeting with Prime Minister Bellerive, Indrawati conveyed some of the key lessons from her involvement in the reconstruction of Aceh, Indonesia, following its 2004 tsunami.

Indrawati, who as Indonesia's finance minister played a key role in the post-tsunami recovery, stressed the importance of the reconstruction commission's role in setting up priorities for the government and getting donors in one place, which can be difficult for most governments especially with fragile capacities like Haiti's. She also emphasized the value of a Trust Fund to coordinate donors, pool resources together under one umbrella, and co-finance projects with partner agencies, Cox noted.

Overall it was a "fruitful meeting" where Indrawati and Bellerive talked leader to leader and both took away a better understanding of their expectations and needs.

"We had a lot of good ideas on the table, and it was also an opportunity for the Prime Minister to establish where he needs positive and quick wins in the next few months, including the areas of debris clearance, where the Bank is helping, the whole issue of shelter and housing, and finally education, where the Bank also has a strong program," Cox said.

The new grant financing will support achieving these goals through its potential to act as a magnet for more funding, argued senior economist Luc Razafimandimby, who was instrumental in implementing the grant operation.

Since it builds on the short term government program that was presented by the Haitians at the March 2010 donors' conference in New York, it should be able to send out a clear signal that the Haitians mean business, Razafimandimby said.

"Let's not forget that this operation has an additional co-funding of US$25 million from the Haiti Reconstruction Fund, specifically from Brazil and Norway, who without the assurances of crystal-clear governance, would not have put money on the table," he said.

The newly-approved grant supports fiscal transparency in the electricity sector –which increasingly attracts public and private funding-, strengthens budget controls and public procurement, and supports anti-corruption measures by:

  • Increasing transparency in payments to independent power producers
  • Reinstating budget controls of external and internal audits at the Ministry of Finance
  • Enforcing the Law on Declaration of Assets among members of government to reduce corruption
  • Strengthening procurement regulation to ensure sound implementation of the new procurement law

The grant responds to the Haitian government's first request for HRF financing which was made on June 17 and approved the same day by the HRF's Steering Committee. Overall, the US$30 million in new grant budget support operation was approved in record time thanks to extraordinary dedication of the Bank staff, particularly the Haiti office, which was severely damaged after the earthquake, Cox said.

"We are still working together in one room while repairs are being done to the building but staff morale is very high and we all appreciate very much their dedication and hard work in this very challenging situation," she said.