[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1690 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1690

 To require the United States to take action to provide bilateral debt 
relief, and improve the provision of multilateral debt relief, in order 
                to give a fresh start to poor countries.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 5, 1999

  Mr. Mack (for himself, Mr. Sarbanes, Mr. DeWine, Mr. Lieberman, Mr. 
Jeffords, Mr. Kerrey, Mr. Lugar, Mr. Kerry, Mr. Dodd, and Ms. Landrieu) 
introduced the following bill; which was read twice and referred to the 
                     Committee on Foreign Relations

_______________________________________________________________________

                                 A BILL


 
 To require the United States to take action to provide bilateral debt 
relief, and improve the provision of multilateral debt relief, in order 
                to give a fresh start to poor countries.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.

    (a) Short Title.--This Act may be cited as the ``Debt Relief for 
Poor Countries Act of 1999''.
    (b) Findings.--Congress makes the following findings:
            (1) The burden of external debt has become a major 
        impediment to economic development and poverty reduction in 
        many of the world's poorest countries.
            (2) Until recently, the United States Government and other 
        official creditors sought to address the problem by 
        rescheduling loans and in some cases providing limited debt 
        reduction.
            (3) Despite such efforts, the cumulative debt of many of 
        the poorest countries continued to grow beyond their capacity 
        to repay.
            (4) In 1996, the World Bank and the International Monetary 
        Fund adopted the Heavily Indebted Poor Countries Initiative 
        (HIPC), a commitment by the international community that all 
        multilateral and bilateral creditors, acting in a coordinated 
        and concerted fashion, would reduce poor country debt to a 
        sustainable level.
            (5) HIPC in practice has resulted in too little debt relief 
        being granted too slowly to too few countries.
            (6) The macro-economic and sectoral policy reforms which 
        are conditions of HIPC debt relief are intended to promote a 
        private sector-led, free market-oriented pattern of 
        development.
            (7) It is essential that such fundamental and wide-ranging 
        policies be designed and implemented in a transparent manner 
        and with broad participation of the citizenry of the debtor 
        country to assure that country circumstances are adequately 
        taken into account and that the interests particularly of the 
        poor and vulnerable are protected.
            (8) The poor and the vulnerable make up the large majority 
        of the population in the heavily indebted poor countries and 
        have suffered from the diversion of scarce domestic resources 
        to the servicing of excessive external debt.
    (c) Purpose.--It is the purpose of this Act to bring about more 
generous and rapid relief from debts owed to, or guaranteed by, the 
United States, and to promote United States leadership in improving 
HIPC to provide more debt reduction, more quickly, to more countries.

SEC. 2. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF AND PROCEDURES FOR NEW 
              LOANS, CREDITS, AND GUARANTEES.

    (a) Cancellation and Reduction of Debt and Procedures for New 
Loans, Credits, and Guarantees.--The Foreign Assistance Act of 1961 (22 
U.S.C. 2151 et seq.) is amended by adding at the end the following:

``PART VI--CANCELLATION AND REDUCTION OF DEBT OWED TO THE UNITED STATES 
BY POOR COUNTRIES AND PROCEDURES FOR NEW LOANS, CREDITS, AND GUARANTEES 
                        TO DEVELOPING COUNTRIES

``SEC. 901. CANCELLATION AND REDUCTION OF DEBT.

    ``(a) Cancellation of Debt.--
            ``(1) In general.--Subject to amounts provided in advance 
        in an appropriations Act, the President shall, prior to 
        September 30, 2001, cancel all amounts owed to the United 
        States (or any agency of the United States) by heavily indebted 
        poor countries described in section 902 as a result of 
        concessional loans made or credits extended prior to January 1, 
        1996, under any of the provisions of law described in paragraph 
        (2).
            ``(2) Provisions of law.--The provisions of law described 
        in this paragraph are the following:
                    ``(A) Part I of this Act, chapter 4 of part II of 
                this Act, or predecessor foreign economic assistance 
                legislation.
                    ``(B) Title I of the Agricultural Trade Development 
                and Assistance Act of 1954 (7 U.S.C. 1701 et seq.).
    ``(b) Reduction of Debt.--
            ``(1) In general.--Subject to amounts provided in advance 
        in an appropriations Act, the President shall, prior to 
        September 30, 2001, reduce, by not less than 90 percent, 
        amounts owed to the United States (or any agency of the United 
        States) by each heavily indebted poor country described in 
        section 902 as a result of nonconcessional loans made, 
        guarantees issued, or credits extended prior to January 1, 
        1996, under any of the provisions of law described in paragraph 
        (2).
            ``(2) Provisions of law.--The provisions of law described 
        in this paragraph are the following:
                    ``(A) Sections 221 and 222 of this Act.
                    ``(B) The Arms Export Control Act (22 U.S.C. 2751 
                et seq.).
                    ``(C) Section 5(f) of the Commodity Credit 
                Corporation Charter Act.
                    ``(D)(i) Section 201 of the Agricultural Trade Act 
                of 1978 (7 U.S.C. 5621).
                    ``(ii) Section 202 of such Act (7 U.S.C. 5622).
                    ``(E) The Export-Import Bank Act of 1945 (12 U.S.C. 
                635 et seq.).

``SEC. 902. ELIGIBLE COUNTRIES.

    ``(a) Heavily Indebted Poor Countries.--Except as provided in 
subsection (b) and subject to the fulfillment of the additional 
requirement in subsection (c), a country shall be considered to be a 
heavily indebted poor country and eligible for cancellation or 
reduction of debt under section 901 if the country--
            ``(1) is eligible to borrow from the International 
        Development Association;
            ``(2) is not eligible to borrow from the International Bank 
        for Reconstruction and Development; and
            ``(3) has outstanding public and publicly guaranteed debt, 
        the net present value of which on December 31, 1996, was at 
        least 150 percent of the average annual value of the exports of 
        the country for the period 1994 through 1996.
    ``(b) Exceptions.--A country shall not be eligible for cancellation 
or reduction of debt under section 901 if the government of the 
country--
            ``(1) has an excessive level of military expenditures;
            ``(2) has repeatedly 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));
            ``(3) is failing to cooperate on international narcotics 
        control matters; or
            ``(4) (including its military or other security forces) 
        engages in a consistent pattern of gross violations of 
        internationally recognized human rights.
    ``(c) Additional Requirement.--A country that is otherwise eligible 
to receive cancellation or reduction of debt under section 901 may 
receive such cancellation or reduction, as the case may be, only if the 
government of the country--
            ``(1) agrees to and initiates the establishment of a 
        mechanism, which would make appropriate accounts and records 
        available to the public, to ensure that all savings generated 
        by cancellation or reduction of the debt under section 901 will 
        be used to--
                    ``(A) enable, facilitate, or encourage the 
                implementation of policy changes and institutional 
                reforms under economic reform programs, in a manner 
                that--
                            ``(i) ensures that such policy changes and 
                        institutional reforms are adopted through 
                        transparent and participatory procedures; and
                            ``(ii) ensures that such policy changes and 
                        institutional reforms are designed to promote 
                        sustainable growth, ensure that the benefits of 
                        such growth are shared widely by the 
                        population; and
                    ``(B) initiate new or enhance existing policies, 
                programs or projects designed through transparent and 
                participatory procedures, including the participation 
                of the nongovernmental organizations of a civil society 
                (including charitable, educational, trade union, 
                business, professional, voluntary, community, and other 
                civic organizations), to reduce the number of persons 
                living in poverty, expand access of the poorest members 
                of society to basic social services, such as education, 
                health, clean water and sanitation, and prevent the 
                degradation of the environment; and
            ``(2) ensures that all savings realized through debt relief 
        during a given year will be used by the government to increase 
        annual expenditures, described in paragraph (1) (A) and (B), in 
        an amount that is the greater of--
                    ``(A) the total amount of such annual expenditures 
                made by the government in the preceding year; or
                    ``(B) the average total amount of such expenditures 
                for the 3 years immediately preceding the year in which 
                debt reduction is made available.

``SEC. 903. PRIORITY.

    ``In canceling or reducing debt under section 901, the President 
shall give priority to heavily indebted poor countries that have 
demonstrated a sustained commitment to poverty alleviation or have 
recently suffered a major natural disaster.

``SEC. 904. SPECIAL PROVISIONS.

    ``(a) Cancellation or Reduction of Debt Not Considered To Be 
Assistance.--Except as the President may otherwise determine for 
reasons of national security, a cancellation or reduction of debt under 
section 901 shall not be considered to be assistance for purposes of 
any provision of law limiting assistance to a country.
    ``(b) Inapplicability of Certain Prohibitions Relating to 
Cancellation or Reduction of Debt.--The authority to provide for 
cancellation or reduction of debt under section 901 may be exercised 
notwithstanding section 620(r) of this Act.

``SEC. 905. ANNUAL REPORTS TO CONGRESS.

    ``(a) In General.--Not later than December 31 of each year, the 
President shall prepare and transmit to the appropriate congressional 
committees a report, which shall be made available to the public, 
concerning the cancellation and reduction of debt under section 901, 
determinations made under section 904(a), activities undertaken under 
section 2(b) of the Debt Relief for Poor Countries Act of 1999, and the 
progress made in accomplishing the purposes of such section 2(b), for 
the prior fiscal year.
    ``(b) Definition.--In this section, the term `appropriate 
congressional committees' means--
            ``(1) the Committee on Banking and Financial Services and 
        the Committee on International Relations of the House of 
        Representatives; and
            ``(2) the Committee on Foreign Relations and the Committee 
        on Banking, Housing, and Urban Affairs of the Senate.

``SEC. 906. SENSE OF CONGRESS.

    ``It is the sense of Congress that the amounts that would otherwise 
be provided by the United States for development assistance or other 
debt relief should not be reduced on account of any appropriations made 
pursuant to section 907.

``SEC. 907. AUTHORIZATION OF APPROPRIATIONS.

    ``For the cost (as defined in section 502(5) of the Federal Credit 
Reform Act of 1990) of the cancellation or reduction of any debt under 
section 901 of this Act, there are authorized to be appropriated to the 
President such sums as may be necessary for each of the fiscal years 
2000 and 2001.

``SEC. 908. PROCEDURES FOR NEW LOANS, CREDITS, AND GUARANTEES.

    ``The President shall, to the extent appropriate, ensure that all 
decisions by the Government of the United States (or any agency of the 
United States) to make new loans, extend new credits or issue new 
guarantees to the governments (or any agency of the governments) of, or 
private parties in, any developing country shall be subject to 
transparent and participatory processes, including giving due notice to 
the public in advance of such decisions of the proposed purposes, 
terms, and conditions of such loans, credits, and guarantees.''.
    (b) Ensuring Burdensharing by Other Creditor Countries.--In order 
to accelerate bilateral debt relief and promote economic and human 
development and poverty alleviation in heavily indebted poor countries, 
Congress urges the President, immediately after the date of enactment 
of this Act, to establish diplomatic efforts with countries that are 
members of the Paris Club of Official Creditors (in this Act referred 
to as the ``Club''), and, if necessary, with other creditors, to 
accomplish the following by September 30, 2001:
            (1) The cancellation of all amounts owed to each such 
        country by heavily indebted poor countries described in section 
        902 of the Foreign Assistance Act of 1961 (as added by 
        subsection (a)) as a result of concessional loans made or 
        credits extended prior to January 1, 1996, by each such 
        country.
            (2) The reduction, by not less than 90 percent, of amounts 
        owed to each such country by heavily indebted poor countries 
        described in section 902 of the Foreign Assistance Act of 1961 
        (as added by subsection (a)) as a result of nonconcessional 
        loans made, guarantees issued, or credits extended prior to 
        January 1, 1996, by each such country.
            (3) The establishment of procedures by the Club to ensure 
        greater transparency in the decision-making process, including 
        publication of each decision and its rationale, on all 
        applications to the Club for debt reduction by heavily indebted 
        poor countries described in section 902 of the Foreign 
        Assistance Act of 1961 (as added by subsection (a)).

SEC. 3. ACTIONS TO IMPROVE THE PROVISION OF MULTILATERAL DEBT RELIEF 
              AND PROCEDURES FOR NEW LENDING.

    Title XVI of the International Financial Institutions Act (22 
U.S.C. 262p--262p-5) is amended by adding at the end the following:

``SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED POOR COUNTRIES 
              INITIATIVE; ENSURING EQUITABLE BURDEN SHARING.

    ``(a) Improvement of the HIPC Initiative.--In order to accelerate 
multilateral debt relief and promote economic and human development and 
poverty alleviation in heavily indebted poor countries Congress urges 
the President to commence immediately diplomatic efforts, within the 
Paris Club of Official Creditors, as well as the International Bank for 
Reconstruction and Development (World Bank), the International Monetary 
Fund (IMF), and other appropriate multilateral development institutions 
to accomplish the following modifications in the Heavily Indebted Poor 
Countries Initiative:
            ``(1) Limit on maximum waiting period before receiving debt 
        relief.--The period of satisfactory implementation of economic 
        and social reforms which a country may need to establish in 
        order to receive bilateral and multilateral debt reduction 
        under the HIPC Initiative shall not exceed 3 years.
            ``(2) Revision of country eligibility requirement.--A 
        country shall be regarded as having an unsustainable debt 
        burden for purposes of qualifying for debt reduction (or for 
        further debt reduction) under the HIPC Initiative if the net 
        present value of the outstanding public and publicly guaranteed 
        debt of the country at the end of 1996 was at least 150 percent 
        of the average annual value of the exports of the country for 
        the period 1994 through 1996.
            ``(3) Additional requirement.--Debt reduction under the 
        HIPC Initiative shall not be provided for the benefit of a 
        country unless the government of the country has, through 
        transparent and participatory processes--
                    ``(A) established a plan of action for economic 
                opportunity and human development (in this section 
                referred to as the `Action Plan') which shall include 
                policies, programs, and investments, by the public or 
                private sectors as appropriate, designed to--
                            ``(i) promote sustainable growth and ensure 
                        that the benefits of such growth are shared 
                        widely by the population; and
                            ``(ii) reduce the number of persons living 
                        in poverty, expand access of the poorest 
                        members of society to basic social services, 
                        including but not limited to education, health, 
                        clean water and sanitation, and prevent the 
                        degradation of the environment; and
                    ``(B) agreed to, and initiated establishment of, a 
                mechanism, which would make appropriate accounts and 
                records available to the public, to ensure that all 
                savings generated by debt reduction provided for the 
                benefit of the country under the HIPC Initiative are 
                dedicated to achieving the purposes of the Action Plan.
            ``(4) Amount of debt reduction.--The amount of the debt 
        reduction provided under the HIPC Initiative for the benefit of 
        a country with an unsustainable debt burden shall be sufficient 
        to reduce--
                    ``(A) the net present value of the outstanding 
                public and publicly guaranteed debt of the  country to 
less than 150 percent of the value of the annual exports of the 
country; and
                    ``(B) the amount of annual payments due on such 
                public and publicly guaranteed debt to not more than 10 
                percent of the amount of annual current revenue 
                received by the government of the country from internal 
                sources.
            ``(5) Transparency and participation in hipc decision 
        making.--All decisions under the HIPC Initiative concerning the 
        amount, terms and conditions, and timing of debt relief for a 
        country, and the processes by which such decisions are made, 
        shall be subject to procedures which are--
                    ``(A) transparent, including publication of the 
                content of the decisions and of all relevant 
                analytical, legal, and policy documents, including Debt 
                Sustainability Analyses, Policy Framework Papers, debt 
                relief agreements, and national development programs 
                and budgets; and
                    ``(B) participatory, including the participation of 
                civil society.
            ``(6) Special provisions.--
                    ``(A) Debt reduction under the HIPC Initiative for 
                the benefit of a country that has demonstrated a 
                sustained commitment to poverty alleviation or has 
                recently suffered a major natural disaster shall be 
                provided in a greater amount or more quickly than would 
                otherwise be the case under the HIPC Initiative.
                    ``(B) Notwithstanding any longer period of 
                satisfactory performance required pursuant to paragraph 
                (1), in the case of a country emerging from civil 
                conflict which has an economic performance agreement 
                with the IMF and is otherwise entitled to begin 
                receiving enhanced bilateral and multilateral debt 
                reduction under the HIPC Initiative, the lack of a 3-
                year period of satisfactory performance under such IMF 
                agreement shall not cause a delay in the provision of 
                debt reduction for the benefit of the country under the 
                HIPC Initiative.
            ``(7) HIPC review.--The Secretary of the Treasury shall 
        make every effort (including instructing the United States 
        Executive Directors at the IMF and the World Bank) to ensure 
        that a comprehensive external assessment of the HIPC Initiative 
        shall take place by December 31, 2001, shall incorporate the 
        views of debtor governments and civil society, shall be made 
        public, and shall include--
                    ``(A) an analysis of the contribution of the HIPC 
                Initiative to the poverty reduction and social 
                development goals for the 21st century established by 
                the Development Assistance Committee of the 
                Organization for Economic Cooperation and Development; 
                and
                    ``(B) recommendations to the IMF, World Bank, and 
                the governments of the United States and other creditor 
                countries that may be necessary to strengthen the 
                contribution of the HIPC Initiative to the poverty 
                reduction and social goals referred to in subparagraph 
                (A).
            ``(8) Termination of the hipc initiative.--The HIPC 
        Initiative shall not terminate until all the debt reduction 
        contemplated by this section has been carried out.
    ``(b) Promotion of Equitable Burden Sharing.--In order to promote 
equitable burden-sharing by bilateral, multilateral, and private 
creditors under the HIPC Initiative, Congress urges the President to 
commence immediately diplomatic efforts to ensure that such creditors 
draw upon their own resources to finance debt reduction under the HIPC 
Initiative to the extent possible without diverting funds from other 
high priority poverty alleviation programs.
    ``(c) Contributions to the HIPC Trust Fund.--For payment to the 
Heavily Indebted Poor Countries Trust Fund of the International Bank 
for Reconstruction and Development, there are authorized to be 
appropriated to the President such sums as may be necessary for fiscal 
years 2000, 2001, and 2002, except that if, with respect to fiscal year 
2001 or 2002, the President has not determined that, during the then 
preceding fiscal year, satisfactory progress was made in accomplishing 
the improvements in the HIPC Initiative described in subsections (a) 
and (b), then no sums are authorized to be appropriated for such 
purpose for the fiscal year.
    ``(d) Sense of Congress.--It is the sense of Congress that the 
amounts that would otherwise be provided by the United States for 
development aid or other debt relief should not be reduced on account 
of any appropriations pursuant to subsection (c).
    ``(e) Report to Congress.--Not later than December 31 of each year, 
the President shall submit to the Committees on Banking and Financial 
Services and on International Relations of the House of Representatives 
and the Committee on Foreign Relations of the Senate a report, which 
shall be made available to the public, on the activities undertaken 
under this section, and on the progress made in accomplishing the 
purposes of this section, for the prior fiscal year.

``SEC. 1624. IMPROVEMENT OF PROCEDURES FOR NEW LENDING.

    ``The President, acting through the Secretary of the Treasury, 
shall work with the member countries of the international financial 
institutions (as defined in section 1701(c)(2)) to ensure transparency 
and public participation in decisions to make new loans, and the terms 
and conditions of such loans, to developing countries, including--
            ``(1) disclosure of Policy Framework Papers, Public 
        Expenditure Reviews, Country Assistance Strategies, 
        International Monetary Fund Letters of Intent, appraisal 
        documents, and other reports relevant to proposed lending 
        operations;
            ``(2) participation of civil society in developing 
        countries in the design of national development programs and in 
        decisions to borrow from such institutions in support of such 
        programs; and
            ``(3) provision of detailed information to the Board of 
        Directors of such an institution and to the public, prior to 
        the approval of a lending operation for a developing country, 
        as to the nature and extent of civil society participation in 
        the design of, and approval process for, such operation.''.
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