[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.