[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2634 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 2634

     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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 7, 2007

  Ms. Waters (for herself, Mr. Bachus, Mrs. Maloney of New York, Mr. 
    Gutierrez, Mr. Payne, Ms. Lee, and Mr. Cleaver) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
     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 2007''.

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 the effective implementation of 
        existing commitments, and broader debt cancellation is needed 
        if the global community is to reach the Millennium Development 
        Goals.
            (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. 2007 is also the halfway 
        point to the deadline set by the world's governments to reach 
        the Millennium Development Goals.
            (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, as 
        well as the threat posed by so-called ``vulture funds''.
            (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 
        economic policy conditionality. 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 economic policy conditions such as 
        privatization of public utilities and other basic services, 
        adhere to budget ceilings imposed by the IMF, and comply with 
        other harmful requirements. Some of these policies have had the 
        effect of limiting fiscal space and making it more difficult 
        for countries to meet the Millennium Development Goals. 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 requirements pertaining to public financial 
        management, anti-corruption measures, and budget transparency.
            (14) Debt cancellation is an essential component of the 
        United States development assistance strategy and a required 
        component to facilitate achievement of the Millennium 
        Development Goals.
            (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 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.
            ``(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) Requiring the government of each eligible low-income 
        country to--
                    ``(A) allocate the savings from debt cancellation 
                towards poverty-reducing expenditures;
                    ``(B) engage interested parties, including a broad 
                cross-section of civil society groups, in the 
                allocation determination process; and
                    ``(C) 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.
            ``(5) 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.
            ``(6) 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.
    ``(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) collaborate with appropriate government agencies to 
        prevent private investors from profiting from buying low-income 
        country debts at market value and attempting to recover their 
        original value or more (commonly known as `vulture funds'), 
        including by--
                    ``(A) designing legal remedies to curtail or 
                realign the incentives for this activity;
                    ``(B) identifying avenues to provide legal support 
                to countries being sued by `vulture funds'; and
                    ``(C) providing technical assistance to advise 
                possible targeted governments on measures to take to 
                prevent `vulture funds' from successfully taking them 
                to court;
            ``(3) provide that the external financing needs of low-
        income countries are met primarily through grant financing 
        rather than new lending;
            ``(4) seek the international adoption of a binding legal 
        framework 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 
                their new 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
            ``(5) 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 the World Bank;
            ``(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; and
            ``(3) the government of which does not have an excessive 
        level of military expenditures;
            ``(4) the government of which has not 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));
            ``(5) the government of which is cooperating on 
        international narcotics control matters; and
            ``(6) the government of which (including its military or 
        other security forces) does not engage in a consistent pattern 
        of gross violations of internationally recognized human 
        rights.''.

SEC. 4. PROHIBITION OF HARMFUL ECONOMIC AND POLICY CONDITIONS.

    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. PROHIBITION OF HARMFUL ECONOMIC AND POLICY CONDITIONS.

    ``(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 the provision of debt cancellation to 
eligible low-income countries (as defined in section 1626(h)) is not 
conditioned on any agreement by such a country to implement or comply 
with policies that deepen poverty or degrade the environment, including 
any policy that--
            ``(1) implements or extends user fees on primary education 
        or primary health care, including prevention and treatment 
        efforts for HIV/AIDS, tuberculosis, malaria, and infant, child, 
        and maternal well-being;
            ``(2) provides for increased cost recovery from low-income 
        people to finance basic public services such as education, 
        health care, or sanitation;
            ``(3) would have the effect of increasing the cost to 
        consumers with incomes of less than $2 per day of access to 
        clean drinking water through--
                    ``(A) decreased public subsidies for water supply, 
                treatment, disposal, distribution, or management;
                    ``(B) reduced intrasectoral or intersectoral 
                subsidization of residential water consumers with 
                incomes of less than $2 per day;
                    ``(C) reduced government ability to regulate; or
                    ``(D) mandated privatization of water resources;
            ``(4) undermines workers' ability to exercise effectively 
        their internationally recognized worker rights, as defined 
        under section 526(e) of the Foreign Operations, Export 
        Financing and Related Programs Appropriations Act, 1995 (22 
        U.S.C. 262p-4p); or
            ``(5) does not exempt increased government spending on 
        essential healthcare or education expenditures from national 
        budget caps or restraints, hiring or wage bill ceilings, or 
        other limits imposed by the IMF.
    ``(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.''.
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