April 12, 2012
The Haiti Reconstruction Fund (HRF) was a center piece of the international community’s pledge to “build back better”, yet its latest financial report reveals that despite receiving a significant share of donor disbursements, very little has thus far been spent on the ground. Additionally, without the Interim Haiti Recovery Commission (IHRC), unallocated resources from the HRF remain unutilized, collecting interest in bank accounts.
The HRF, established in March 2010, aims to coordinate and fund priority projects for Haiti’s reconstruction. The Fund has received 18 percent of all donor disbursements as of December 2011 and describes itself as the “largest source of unprogrammed funding for the reconstruction of Haiti”. The HRF allocates funding to projects that have been approved by the now defunct IHRC.
According to its February 2012 financial report, the HRF has received $377 million from donors, allocating $274 million (73 percent) to 16 projects. When the HRF allocates money for a project, the funds are transferred to a “partner entity”; either the UN, World Bank or Inter-American Development Bank, which then carries out the project. The financial report shows that while the Fund has transferred a large amount of resources, the partner entities have disbursed very little of it on the ground.
Figure 1 (click to enlarge)
As can be seen in Figure 1, only $55.7 million has been disbursed by partners out of over $259 million transferred, a disbursement rate of just 20.3 percent. The IDB has yet to disburse any of the funds from the HRF, while the UN and World Bank have disbursement rates of 24 percent and 28 percent respectively. While the World Bank and IDB have not charged any fees as of yet, the UN charges 7 percent of total program costs to cover “indirect costs”. So far, these fees have amounted to $9.5 million, or about 3.7 percent of the total funds transferred. Additionally, the administrative budget of the HRF itself has cost about $3 million.
Looking Forward
While HRF funded projects have been slow to get going, they maintain additional resources which could be mobilized if projects are identified. The February financial report shows $116 million dollars are being held in the trust, which thus far has earned $770,000 in “investment income”. Yet there is little reason to believe these additional funds will be mobilized anytime soon. As Josef Leitman, the head of the HRF, recently noted:
“Of the $396 million mobilized by the international community, $275 million has been allocated to 17 projects approved by the HRC [IHRC]…Since there is no longer a HRC [IHRC], things now go through the Prime Minister. We currently have a balance of more than $100 million in cash, but have not received any request for funding since last August.
The money is to finance reconstruction, but there is no formal proposal from the Haitian government…In the meantime, funds remain in the bank and are not being allocated in the citizens’ interests. This is nothing to be proud of.”
While the HRF was meant to coordinate and mobilize resources, major reconstruction projects have been slow to develop. With the passing of the IHRC mandate and the resignation of Prime Minister Conille, the HRF is without a “Government counterpart” to “receive, evaluate, select, and transmit new financing requests” (although this may soon change if the Chamber of Deputies approves PM nominee Laurent Lamothe, as the Senate just did). As such, the HRF is currently little more than a bank where donors have stashed over $100 million that remains unused. On the other hand, the vast majority of the money that has been allocated for specific projects remains in the coffers of partner entities, proving yet again that “building back better” remains nothing more than a slogan.
