* PM says inaction will lead to catastrophe

* Clinton and Ban urge more aid

* Political situation in Haiti has stabilized

By Lesley Wroughton and Sue Pleming

WASHINGTON, April 14 (Reuters) - Haiti's Prime Minister Michele Duvivier Pierre-Louis on Tuesday urged donors and international institutions to aid the impoverished Caribbean state suffering high unemployment and poverty.

"We are treading on very fragile ground," Pierre-Louis told a donor conference of about 40 countries and international agencies in Washington. "If no action is taken now the consequences will be catastrophic."

She urged donors to support the country's two-year economic program, which aims to create more than 150,000 jobs, encourage private-sector investment and spur growth.

"I want to take back with me the commitments and hope we are longing for in our quest for lasting development and democracy," Pierre-Louis said.

Haiti is the Western Hemisphere's poorest country with nearly 1 million people expected to enter the job market over the next five years, in what some development experts are calling "a youth tsunami".

The donor conference aims to raise $125 million over the next two years and rebuild infrastructure devastated by hurricanes last year that wiped out about 15 percent of Haiti's gross domestic product. Haiti is set to qualify for up to $1 billion in debt relief from international agencies by the end of 2009.

U.S. Secretary of State Hillary Clinton pledged $57 million, consisting of $2 million to help train the Haitian police, $20 million for infrastructure jobs, $20 million to help pay off debt and $15 million for agriculture.

"For all of us it is now a test of resolve and commitment. This nation is on a brink of either moving forward with the help of the collective community or falling further back," Clinton told the conference.

"The trajectory of progress has been undermined by the combined winds of hurricanes and the global economic recession. Haiti is in danger of stalling. This conference gives us all an opportunity to reignite its path to progress," she said.

U.N. Secretary General Ban Ki-moon said Haiti's recent political stability and improvements in security, backed by 9,000 U.N. peacekeepers, gave reasons for optimism.

"Haiti is at a turning moment," said Ban, who has made Haiti's reconstruction a priority and recently visited with former U.S. President Bill Clinton.

"By acting now, we will protect the considerable investment and progress we have made so far," he said.

Inter-American Development Bank chief Luis Alberto Moreno promised to step up financial and technical assistance.

He said the economy was slowly being revived through prudent monetary and fiscal policy, while inflation has fallen as global food and fuel prices have declined.

Still, Haiti was fragile with poverty levels unacceptably high and set to rise further in the global recession, which is depressing investment and growth, Moreno said.

(Reporting by Lesley Wroughton; Editing by Alan Elsner)

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