Short title

This Act may be cited as the

Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008

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.

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:

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.

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:

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.

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.

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.