By Pascal Fletcher

PORT-AU-PRINCE (Reuters) - Haiti and its aidpartners are working to get credit flowing back into theearthquake-shattered economy to stimulate businesses, jobs andhouse building and make possible a projected growth rebound ofup to 10 percent next year, senior Haitian officials said.

With the help of the World Bank, the Inter-AmericanDevelopment Bank and the U.S. Treasury, Haitian authorities arepreparing a partial credit guarantee fund and leasingmechanisms to allow small entrepreneurs and businesses to getback on their feet after the devastating Jan. 12 quake.

Accompanied by measures to ease bank loan restructuring andboost financing for home construction, they hope this infusionof capital can help revert the estimated 7 percent contractionof the economy this year caused by the catastrophe.

"This is why we are working on all those measures to boostcredit, we hope that next year we're going to have 8-10 percentgrowth, hopefully," said Charles Castel, governor of thecountry's central bank, the Bank of the Republic of Haiti.

The quake, one of the most destructive natural disasters inrecent history, killed up to 300,000 people and pole-axed whatwas already the poorest economy in the Western Hemisphere.Donors have pledged some $11 billion over the next decade tofund reconstruction of the crippled Caribbean state.

In interviews last week, Castel, Prime Minister Jean-MaxBellerive and Finance Minister Ronald Baudin said the creditboosting measures aimed to put back into business or productivejobs tens of thousands of middle-class citizens and smallentrepreneurs, who lost not just homes but entire livelihoods.

"All we are doing, working with the banks, the insurancecompanies, trying to create more investment in Haiti, is tryingto rebuild, support that middle class and to stop what's leftof the middle class from leaving Haiti," said Bellerive.

Also underpinning growth hopes for next year was a majorprogram of national infrastructure construction anddevelopment, which seeks to use both institutional aid andprivate investment to build roads, bridges, ports, airports andmanufacturing parks to relaunch Haiti's economy.


Baudin said that after next year's projected economicbounce back, the country could achieve growth rates "not below6 percent" for subsequent years.

Castel said he was talking with the Washington-based IADBabout initiatives to finance micro-industries, such as thecredit guarantee fund, leasing facilities and also professionalschools. "People in welding, people in furniture-making, theydeserve to be financed," he said.

Such microfinancing had been obstructed in the past becauseof prohibitively high interest charged by banks. Hopes are thatthe partial credit guarantee fund, to be executed throughHaiti's state Industrial Development Fund, could initiallyguarantee $140 million in loans, and eventually more.

In addition, the central bank had eased loan provisionrequirements for banks to facilitate the restructuring of loansaffected by the earthquake, and also relaxed mandatory reserverules for loans for residential or commercial real estate.

To further boost financing for housing, the bank was alsoworking on a plan to offer fixed-rate, long-term loans over10-15 years for residential real estate -- the greatest needafter the quake left 1.3 million homeless.

Debt forgiveness formed part of the huge international aideffort for Haiti following the quake and the officialsestimated 90 percent of the nation's debts had been canceled.

This included $268 million from the International MonetaryFund. Part of the funds made available from this would gotoward reconstruction of institutions key to Haiti'sfunctioning that were destroyed or damaged -- the parliament,justice palace and administrative courts.


Officials note the bulk of Haiti's debt -- about $1 billion-- had already been forgiven last year, before the quake, inrecognition of government efforts to improve fiscal disciplineand financial accountability and transparency.

Over four to five years of macroeconomic stability anduninterrupted growth, including 3 percent in 2009, Haiti'sforeign reserves had risen to more than $1 billion from just$17 million in April 2004, central bank officials said.

The ministers and United Nations officials hopedU.N.-backed presidential and legislative elections on Nov. 28,to choose a successor for President Rene Preval, could keeppolitical peace in Haiti and support the reconstruction.

"With political stability, I believe it is reasonable tothink we're going to have high growth next year," Castel said.

He and Bellerive stressed the urgent need for a massiveinflux of foreign investment to complement international aid,which alone could not mitigate the quake impact and put Haition a path of sustainable development.

But the challenges were huge, not least the need to improveand modernize judicial and administrative structures to ensurethe rule of law and security in a society where these had longbeen largely absent. "If the society itself doesn't work well,finance cannot work well," Castel said. (Additional reporting by Simon Denyer and Guy Delva; Editingby Padraic Cassidy)