(Recasts to add details from interview)

By Lesley Wroughton

WASHINGTON, July 1 (Reuters) - Canceling Haiti's debts will free up about $50 million a year for spending over the next 10 to 15 years to reduce poverty in the Caribbean nation, an IMF official said on Wednesday.

The country won $1.2. billion in debt relief from the World Bank, IMF and other creditors earlier on Wednesday under a program by rich nations to ease the debt burdens of the world's poorest countries.

"It is a very important milestone for Haiti," Corinne Delechat, IMF mission chief for Haiti, told Reuters.

"It is a recognition of the reform efforts the government has made since 2004 and 2005 when there was some return to political stability and democracy," she said.

Delechat said the government's program to stabilize the fragile economy has reduced inflation, brought the budget deficit under control, improved management of public finances and increased reserves in Haiti.

Finance Minister Daniel Dorsainvil hailed the debt relief as "good news" for the Caribbean nation, where most people live on less than $2 a day.

Writing off the debts will allow the government to increase spending on anti-poverty programs that focus on job creation and projects that limit damage from natural disasters, such as hurricanes, which pummeled the country last year and killed 800 people.

Delechat said Haiti was expected to request a new IMF financing program when the current one expires at the end of the year, which will encourage budget support from donors.

"The IMF program is the anchor for other donors to come and also commit to multi-year budget support," she added. "With that anchor, the Inter-American Development Bank, the World Bank and the European Commission will start budget support operations."

The largest share of Haiti's foreign debt is owed to the Inter-American Development Bank (41 percent of total external debt), the World Bank (27 percent), and bilateral creditors (24 percent).

Helped by 9,000 U.N. peacekeepers, Haiti appears to be on a slow recovery from its troubled past of dictatorship and political violence. Former U.S. President Bill Clinton, who has been appointed special U.N. envoy to the country, has declared this is Haiti's turning point.

Delechat said debt relief offered the government an opportunity to rebuild.

"We are cautiously optimistic," Delechat said. "It is a turning point for Haiti and it is up to the government to use the opportunity well.

"The security situation is much improved and it is a land of opportunity if you're an entrepreneur and an investor," she added. "It is a golden moment for Haiti to start investing in export capacity, particularly in textiles," Delechat said.

(Additional reporting by Joseph Guyler Delva in Port-au-Prince)

(Reporting by Lesley Wroughton; Editing by James Dalgleish, Bernard Orr)

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