The International Monetary Fund announced Wednesday it has cancelled Haiti's $268 million debt.

The IMF will also lend the earthquake devastated country $60 million to help it rebuild. The three-year loan carries a zero interest rate until 2011 which then rises to no more than 0.5 percent.

The Jan. 12 magnitude-7 earthquake killed an estimated 300,000 people and left 1.6 million homeless.

IMF officials said forgiving Haiti's debt will encourage more international aid and help victims rebuild their homes and lives.

"Donors must start delivering on their promises to Haiti quickly, so reconstruction can be accelerated, living standards quickly improved and social tensions soothed," IMF chief Dominique Strauss-Kahn said in a statement.

Six months after the quake, rubble and collapsed buildings can still be seen. Crime is prevalent in all of the camps.

Back in March, donors at a conference pledged a total of $9.9 billion. The money was intended to be separate from the humanitarian aid - to help Haiti recover.

However, less than 2 percent of it has arrived to help the impoverished island nation. The rest is mired in bureaucracy and politics of the more than 60 countries and organizations that pledged to help.