[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2634 Referred in Senate (RFS)]
2d Session
H. R. 2634
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 24, 2008
Received; read twice and referred to the Committee on Foreign
Relations
_______________________________________________________________________
AN ACT
To provide for greater responsibility in lending and expanded
cancellation of debts owed to the United States and the international
financial institutions by low-income countries, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Jubilee Act for Responsible Lending
and Expanded Debt Cancellation of 2008''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Many low-income countries have been struggling under
the burden of international debts for many years.
(2) Since 1996, when the Heavily Indebted Poor Countries
Initiative (HIPC) was created, more than 30 nations have seen
some form of debt relief totaling approximately
$80,000,000,000.
(3) Congress has demonstrated its support for bilateral and
multilateral debt relief through the enactment of comprehensive
debt relief initiatives for heavily indebted low-income
countries in--
(A) title V of H.R. 3425 of the 106th Congress, as
enacted into law by section 1000(a)(5) of the Act
entitled ``An Act making consolidated appropriations
for the fiscal year ending September 30, 2000, and for
other purposes'', approved November 29, 1999 (Public
Law 106-113; 113 Stat. 1501-311) and the amendments
made by such title;
(B) title II of H.R. 5526 of the 106th Congress, as
enacted into law by section 101(a) of the Act entitled
``An Act making appropriations for foreign operations,
export financing, and related programs for the fiscal
year ending September 30, 2001, and for other
purposes'', approved November 6, 2000 (Public Law 106-
429; 114 Stat. 1900A-5); and
(C) title V of the United States Leadership Against
HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (Public
Law 108-25; 117 Stat. 747) and the amendment made by
such title.
(4) In 2005, the United States and other G-8 nations
reached an agreement to provide cancellation of 100 percent of
the debts owed by eligible poor nations to Paris Club members,
the IMF, the World Bank, and the African Development Bank. The
Inter-American Development Bank reached an agreement in early
2007 to provide similar treatment.
(5) The 2005 agreement led to the creation of the
Multilateral Debt Relief Initiative (MDRI). As of April 2007,
22 nations have seen the majority of their debts to the IMF,
World Bank, and African Development Bank cancelled under the
terms of the MDRI. In March 2007, the Inter-American
Development Bank announced it would provide full debt
cancellation to 5 Latin American countries on MDRI terms.
(6) Resources released by debt relief efforts to date are
reaching the poor. Cameroon is using the $29,800,000 of savings
it will gain from the MDRI in 2006 for national poverty
reduction priorities, including infrastructure, social sector
and governance reforms. Uganda is using its $57,900,000 savings
in 2006 on improving energy infrastructure to try to ease acute
electricity shortages, as well as primary education, malaria
control, healthcare and water infrastructure (specifically
targeting the poor and under-served villages). Zambia is using
its savings of $23,800,000 under the MDRI in 2006 to increase
spending on agricultural projects, such as smallholder
irrigation and livestock disease control, as well as to
eliminate fees for healthcare in rural areas.
(7) While debt cancellation has a record of success, there
remains an unfinished agenda on international debt. There are a
number of challenges to both the effective reduction of poverty
and inequality and the achievement of broader debt
cancellation.
(8) 2007 is an important year to address the unfinished
agenda on international debt as the global Jubilee debt
campaign has declared 2007 a ``Sabbath year'', 7 years after
the historic Jubilee 2000 campaign.
(9) A critical issue which needs to be addressed on debt is
the way that non-concessional lenders stand to gain financially
from lending to poor countries that have benefited from debt
relief without having paid for past debt relief or facing the
prospect of paying for the future relief of unsustainable and
irresponsible new lending. In these cases, the gains of debt
relief for poor debtor countries are at risk of being eroded.
This takes the form of new lending to countries that have
received debt cancellation from countries including China.
(10) It is also essential that all lenders and borrowers
accept co-responsibility and learn from past mistakes--as
evidenced by the debt crisis itself--by making more productive
investment choices and engaging in more responsible lending and
borrowing in the future. In October 2006, Norway became the
first creditor to accept co-responsibility for past lending
mistakes and cancelled the debt of 5 nations on the grounds
that the loans reflected poor development policy.
(11) A growing number of governments and intergovernmental
bodies, including the United Kingdom, the European Commission,
and Norway, are raising concerns about the harmful impacts of
certain economic policy conditionalities. Many impoverished
countries that have received debt cancellation under the HIPC
and MDRI initiatives have done so at a high social cost,
because they have had to implement certain economic policy
conditions, including the privatization of essential basic
services such as water, and comply with other harmful
requirements. Some of these policies have had the effect of
limiting fiscal space for productive investment and threatening
growth and human development. Several countries currently
eligible for debt cancellation under the HIPC or MDRI programs
are facing extended delays in receiving cancellation because
they are struggling to comply with such requirements from the
IMF and World Bank.
(12) There is also an urgent need to look beyond the
constraints of current debt relief initiatives to address the
need for expanded debt cancellation. The current initiatives
allow countries to qualify for relief based on economic
criteria rather than human needs. A January 2007 report by the
United Nations Human Rights Council found that eligibility for
debt cancellation should be expanded to cover all low-income
countries.
(13) The Government of the United Kingdom has proposed that
qualification for the MDRI be extended to the 67 nations which
qualify for assistance exclusively from the International
Development Association. To be eligible for cancellation,
countries must meet economic criteria pertaining to public
financial management, anti-corruption measures, and budget
transparency.
(14) Since debt cancellation is an essential component of
the United States development assistance strategy and the
United States has been able to lead the debt cancellation
efforts of the international community by example, the United
States should continue to work to improve and expand
initiatives in this area.
(15) The United States has been a leader in supporting debt
relief efforts to date and should continue to work to improve
and expand initiatives in this area.
SEC. 3. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW-INCOME COUNTRIES.
Title XVI of the International Financial Institutions Act (22
U.S.C. 262p--262p-8) is amended by adding at the end the following:
``SEC. 1626. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW-INCOME
COUNTRIES.
``(a) In General.--The Secretary of the Treasury shall commence
immediate efforts, within the Paris Club of Official Creditors, the
International Monetary Fund (IMF), the International Bank for
Reconstruction and Development (World Bank), and the other
international financial institutions (as defined in section
1701(c)(2)), to negotiate an agreement to accomplish the following:
``(1) Cancellation by each international financial
institution of all debts owed to the institution by eligible
low-income countries, and, to the extent possible, financing
the debt cancellation from the ongoing operations, procedures,
and accounts of the institution, without undermining the
financial integrity of the institution.
``(2) Cancellation by the United States of all debts owed
to it by eligible low-income countries.
``(3) Ensuring that any waiting period for the enhanced
debt cancellation is not excessive.
``(4) Ensuring that the provision of debt cancellation to
eligible low-income countries is not followed by a reduction in
the provision of any other development assistance to the
countries by international financial institutions and bilateral
creditors, or to other countries eligible for assistance from
the International Development Association.
``(5) Encouraging the government of each eligible low-
income country to allocate at least 20 percent of its national
budget towards poverty-alleviation programs such as the
provision of basic health care services, education services,
and clean water services to all individuals in the country.
This subsection shall not be interpreted to authorize the Secretary of
the Treasury to enter into an agreement to accomplish any of the
foregoing without express congressional authorization to do so.
``(b) Establishment of Framework for Creditor Transparency.--The
Secretary of the Treasury shall commence immediate efforts, within the
Paris Club of Official Creditors, the International Monetary Fund, the
World Bank, and the other international financial institutions (as so
defined), to ensure that each of the institutions--
``(1) continues to make efforts to promote greater
transparency regarding the activities of the institution,
including credit, grant, guarantee, and technical assistance
operations, following a policy of maximum disclosure; and
``(2) supports continued efforts to allow informed
participation and input by affected communities, including
translation of information on proposed projects, provision of
information (including draft documents) through information
technology application, oral briefings, and outreach to and
dialogue with community organizations and institutions in
affected areas.
``(c) Establishment of Framework for Responsible Lending.--The
Secretary of the Treasury shall commence immediate efforts to--
``(1) develop and promote policies to ensure all creditors,
with no distinction, will contribute to preserving the gains of
debt relief for low-income debtor countries;
``(2) provide that the external financing needs of low-
income countries are met primarily through grant financing
rather than new lending;
``(3) seek the international adoption of a binding legal
framework on new lending that--
``(A) guarantees that no creditor can take or
expect to take financial advantage of acquired or newly
awarded debt relief through the terms and rates of such
lending to beneficiary countries;
``(B) is binding on all creditors, whether
multilateral, bilateral or private;
``(C) foresees, as a sanction for creditors who
violate it, an equitable share in the burden of the
losses from any future debt relief needed by the
sovereign debtor to whom lending was irresponsibly
provided;
``(D) provides for decisions on irresponsible
lending to be made by an entity independent from the
creditors; and
``(E) enables fair opportunities for the people of
the affected country to be heard; and
``(4) support the development of responsible financing
standards where creditors and aid/loan recipients alike adhere
to standards to assure transparency and accountability to
citizens, human rights, and the avoidance of new odious debt,
while encouraging the development of renewable energy and
helping countries to transition away from dependence on oil.
``(d) GAO Audit of Debt Portfolios of Countries With Questionable
Loans.--
``(1) In general.--The Comptroller General of the United
States shall undertake an audit of the debt portfolios of
previous governments in countries such as the Democratic
Republic of Congo and South Africa, where there is significant
evidence that odious, onerous, or illegal loans were made to
the government. Each such audit shall--
``(A) consider debt owed to the World Bank, the
IMF, and the other international financial institutions
(as so defined), export credit debts owed to
governments, and debts owed to commercial creditors,
and assess whether or not past investments produced the
intended results;
``(B) investigate the process by which the loans
were contracted, how the funds were used, and determine
whether United States or international laws were
violated in the contraction of these loans, and whether
any of the loans were odious or onerous; and
``(C) be planned and executed in a transparent and
consultative manner, engaging congressional bodies and
civil society groups in the countries.
``(2) Report.--Within 2 years after the date of the
enactment of this section, the Comptroller General of the
United States shall prepare and submit to the Committees on
Financial Services and on Foreign Affairs of the House of
Representatives and the Committees on Banking, Housing, and
Urban Affairs and on Foreign Relations of the Senate a report
that contains the results of the audits undertaken under
paragraph (1).
``(e) Availability on Treasury Department Website of Remarks of
United States Executive Directors at Meetings of International
Financial Institutions' Boards of Directors.--The Secretary of the
Treasury shall make available on the website of the Department of the
Treasury the full record of the remarks of the United States Executive
Director at meetings of the boards of directors of the International
Monetary Fund, the World Bank, and the other international financial
institutions (as so defined), about cancellation or reduction of debts
owed to the institution involved, with redaction by the Secretary of
the Treasury of material deemed too sensitive for public distribution,
but showing the topic, amount of material redacted, and reason for the
redaction.
``(f) Report From the Comptroller General.--Within 1 year after the
date of the enactment of this section, the Comptroller General of the
United States shall prepare and submit to the Committees on Financial
Services and on Foreign Affairs of the House of Representatives and the
Committees on Banking, Housing, and Urban Affairs and on Foreign
Relations of the Senate a report on the availability of the ongoing
operations, procedures, and accounts of the IMF, the World Bank, and
the other international financial institutions (as so defined) for
canceling the debt of eligible low-income countries.
``(g) Annual Reports From the President.--Not later than December
31 of each year, the President shall submit to the Committees on
Financial Services and on Foreign Affairs of the House of
Representatives and the Committees on Foreign Relations and on Banking,
Housing, and Urban Affairs of the Senate a report, which shall be made
available to the public, on the activities undertaken under this
section, and other progress made in accomplishing the purposes of this
section, for the prior fiscal year. The report shall include a list of
the countries that have received debt cancellation, a list of the
countries whose request for debt cancellation has been denied and the
reasons therefor, and a list of the countries whose requests for debt
cancellation are under consideration.
``(h) Eligible Low-Income Country Defined.--In this section, the
term `eligible low-income country' means a country--
``(1) that is eligible for financing from the International
Development Association but not from the World Bank, and does
not qualify for debt relief under the Enhanced HIPC Initiative
(as defined in section 1625(e)(3)) and under the Multilateral
Debt Relief Initiative;
``(2) that has transparent and effective budget execution
and public financial management systems which ensure that the
savings from debt relief are spent on reducing poverty;
``(3) the government of which does not have an excessive
level of military expenditures;
``(4) the government of which has not provided support for
acts of international terrorism, as determined by the Secretary
of State under section 6(j)(1) of the Export Administration Act
of 1979 (50 U.S.C. App. 2405(j)(1)), or section 620A(a) of the
Foreign Assistance Act of 1961 (22 U.S.C. 2371(a));
``(5) the government of which is cooperating with the
United States on international narcotics control matters;
``(6) the government of which (including its military or
other security forces) does not engage in a pattern of gross
violations of internationally recognized human rights (as
defined in section 116 of the Foreign Assistance Act of 1961
(Public Law 87-195));
``(7) the government of which has not been identified in
the most recent Trafficking in Persons Report issued by the
Department of State as not fully complying with minimum
standards for eliminating human trafficking and not making
significant efforts to do so;
``(8) the government of which has been determined by the
President to be cooperating with United States efforts to stop
illegal immigration to the United States;
``(9) the government of which has been determined by the
President to be committed to free and fair elections;
``(10) the government of which was chosen by and permits
free and fair elections; and
``(11) the government of which does not have business
interests with Iran.''.
SEC. 4. LIMITATION ON CONDITIONALITY OF DEBT RELIEF FOR ELIGIBLE LOW-
INCOME COUNTRIES.
Title XVI of the International Financial Institutions Act (22
U.S.C. 262p--262p-8) is further amended by adding at the end the
following:
``SEC. 1627. LIMITATION ON CONDITIONALITY OF DEBT RELIEF FOR ELIGIBLE
LOW-INCOME COUNTRIES.
``(a) In General.--The Secretary of the Treasury shall commence
immediate efforts within the Paris Club of Official Creditors, the
International Monetary Fund (IMF), the International Bank for
Reconstruction and Development (World Bank), and the other
international financial institutions (as defined in section
1701(c)(2)), to ensure that debt cancellation is provided to eligible
low-income countries (as defined in section 1626(h)) subject to all and
only the following conditions: That the government of such a country--
``(1) take steps so that the financial benefits of debt
relief are applied to programs to combat poverty (in particular
through concrete measures to improve economic infrastructure,
basic services in education, nutrition, and health,
particularly treatment and prevention of the leading causes of
mortality) and to redress environmental degradation;
``(2) make policy decisions through transparent and
participatory processes;
``(3) adopt an integrated development strategy to support
poverty reduction through economic growth, that includes
monitorable poverty reduction goals;
``(4) implement transparent policy making and budget
procedures, good governance, and effective anticorruption
measures;
``(5) broaden public participation and popular
understanding of the principles and goals of poverty reduction,
particularly through economic growth, and good governance;
``(6) promote the participation of citizens and
nongovernmental organizations in the economic policy choices of
the government; and
``(7) produce an annual report disclosing how the savings
from debt cancellation were used, and make the report publicly
available and easily accessible to all interested parties,
including civil society groups and the media.
``(b) Annual Reports to the Congress.--Not later than December 31
of each year, the President shall submit to the Committees on Financial
Services and on International Relations of the House of Representatives
and the Committees on Foreign Relations and on Banking, Housing, and
Urban Affairs of the Senate a report, which shall be made available to
the public, on the activities undertaken under this section, and other
progress made in accomplishing the purposes of this section, for the
prior fiscal year.''.
SEC. 5. SENSE OF THE CONGRESS.
It is the sense of the Congress that to further the goals of debt
reduction for low-income countries, in addition to the efforts
described in this Act, the United States should pay off outstanding
arrearages of $595,800,000 to the International Development Association
and regional development banks, and become current on all debt
reduction efforts, including those carried out by the International
Development Association and under the Enhanced Heavily Indebted Poor
Countries Initiative and the Multilateral Debt Relief Initiative.
SEC. 6. SENSE OF THE CONGRESS.
(a) Finding.--The Congress finds that Haiti is scheduled to send
$48,700,000 in debt payments to multilateral financial institutions in
2008.
(b) Sense of the Congress.--It is the sense of the Congress that,
due to the current humanitarian and political instability in Haiti,
including food shortages and political turmoil, the Secretary of the
Treasury should use his influence to expedite the complete and
immediate cancellation of Haiti's debts to all international financial
institutions, or if such debt cancellation cannot be provided, to urge
the institutions to immediately suspend the requirement that Haiti make
further debt service payments on debts owed to the institutions.
Passed the House of Representatives April 16, 2008.
Attest:
LORRAINE C. MILLER,
Clerk.