[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2166 Reported in Senate (RS)]






                                                       Calendar No. 934
110th CONGRESS
  2d Session
                                S. 2166

                          [Report No. 110-438]

     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 SENATE OF THE UNITED STATES

                            October 16, 2007

Mr. Casey (for himself, Mr. Lugar, Mr. Dodd, Mr. Biden, Mr. Obama, Mr. 
 Sununu, Mr. Coleman, Mr. Brown, Mrs. Boxer, Mr. Durbin, Ms. Mikulski, 
 Ms. Collins, Mr. Lieberman, Mr. Isakson, Ms. Snowe, Mrs. Clinton, Mr. 
Leahy, Mr. Menendez, Mr. Smith, Mr. Wyden, Mr. Schumer, Mr. Kerry, Mrs. 
 McCaskill, Mr. Hagel, Ms. Klobuchar, Mr. Feingold, and Mr. Nelson of 
   Florida) introduced the following bill; which was read twice and 
             referred to the Committee on Foreign Relations

                             August 1, 2008

                 Reported by Mr. Biden, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 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 <DELETED>2007</DELETED>2008''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (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 countries have seen 
        some form of debt relief totaling approximately 
        $80,000,000,000.
        <DELETED>    (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--</DELETED>
                <DELETED>    (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. 1501A-311) and the 
                amendments made by such title;</DELETED>
                <DELETED>    (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</DELETED>
                <DELETED>    (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.</DELETED>
        <DELETED>    (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.</DELETED>
        <DELETED>    (5) The 2005 agreement led to the creation of the 
        Multilateral Debt Relief Initiative (MDRI). As of April 2007, 
        22 countries 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.</DELETED>
        <DELETED>    (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.</DELETED>
            (7)</DELETED>(3) While debt cancellation has a record of 
        success, there remains an unfinished agenda on international 
        debt. <DELETED>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.
        <DELETED>    (8) 2007 marks the halfway point to the deadline 
        set by the world's governments to reach the Millennium 
        Development Goals.</DELETED>
        <DELETED>    (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''.</DELETED>
        <DELETED>    (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 countries on the 
        grounds that the loans reflected poor development 
        policy.</DELETED>
        <DELETED>    (11) 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.</DELETED>
        <DELETED>    (12) The Government of the United Kingdom has 
        proposed that qualification for the MDRI be extended to the 67 
        countries that 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.</DELETED>
            (13)</DELETED>(4) Debt cancellation is an essential 
        component of the United States development assistance strategy 
        <DELETED>and a required component to facilitate achievement of 
        the Millennium Development Goals</DELETED>.
            <DELETED>(14)</DELETED>(5) 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. SENSE OF CONGRESS ON NEED TO FULLY FUND EXISTING UNITED STATES 
              ARREARS ON UNITED STATES COMMITMENTS TO DEBT RELIEF.

    (a) Renewed Commitment to Funding Debt Relief.--As the United 
States Government considers extending additional debt relief to 
alleviate the burden of international debts for an expanded group of 
low income countries, Congress makes a renewed commitment to funding 
the existing arrears on previous United States commitments to debt 
relief and international financial institutions.
    (b) Debt Cancellation and Development Assistance.--It is the sense 
of Congress that--
            (1) the provision of United States debt cancellation to 
        eligible low-income countries should not be followed by a 
        reduction in the provision of any other United States 
        development assistance to these countries; and
            (2) the United States should seek to ensure that, in the 
        course of negotiating a multilateral framework of comprehensive 
        debt relief for eligible low-income countries, all 
        participating creditors agree to avoid a reduction in the 
        provision of any other development assistance to those 
        countries in order to fund debt cancellation activities.

SEC. <DELETED>3</DELETED>4. 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 existing 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 existing 
        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 
                <DELETED>the</DELETED>that allocation 
                <DELETED>determination</DELETED> process;
                    ``(C) develop and implement effective policy 
                reforms to ensure that savings from debt cancellation 
                are redirected to poverty reduction efforts and that 
                any future borrowing be conducted in a responsible 
                fashion; and
                    ``(D) produce an annual report 
                <DELETED>disclosing</DELETED>during the period 
                beginning when debt relief is granted and ending 5 
                years after the debt relief is completed that discloses 
                how the savings from debt cancellation were used, and 
                <DELETED>make the report</DELETED>which is made 
                publicly available and easily accessible to all 
                interested parties, including civil society groups and 
                the media.
        <DELETED>    ``(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.</DELETED>
            ``<DELETED>(6)</DELETED>(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.
    ``(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 into official 
        languages, 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 
        discourage `vulture fund' activity <DELETED>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')</DELETED>, 
        including by--
                <DELETED>    ``(A) designing legal remedies to curtail 
                or realign the incentives for this activity;</DELETED>
                <DELETED>    ``(B) identifying avenues to provide legal 
                support to countries being sued by `vulture funds'; 
                and</DELETED>
                <DELETED>    ``(C) providing technical assistance to 
                advise possible targeted governments on measures to 
                take to prevent `vulture funds' from successfully 
                taking them to court;</DELETED>
                    ``(A) seeking commitments from non-Paris Club 
                bilateral creditors not to on-sell their debt claims on 
                low-income countries to creditors who do not intend to 
                provide debt relief under the HIPC initiative, and 
                working with finance ministers from other G8 countries 
                to achieve the same goal; and
                    ``(B) providing technical assistance to recipient 
                governments to advise on measures to address `vulture 
                fund' activity;
            ``(3) provide that the external financing 
        <DELETED>needs</DELETED>from official creditors 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 
                <DELETED>or expect to take undue</DELETED> financial 
                advantage of <DELETED>acquired or newly awarded</DELETED> 
                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 
                <DELETED>irresponsibly</DELETED> provided; and
                <DELETED>    ``(D) provides for decisions on 
                irresponsible lending to be made by an entity 
                independent from the creditors; and</DELETED>
                    ``<DELETED>(E)</DELETED>(D) enables fair 
                opportunities for the people of the affected country to 
                be heard; and
            ``(5) support the development of responsible financing 
        standards <DELETED>where</DELETED>by which creditors and 
        aid<DELETED>/</DELETED>or loan recipients alike <DELETED>adhere 
        to standards to assure</DELETED>promote 
        transparency,<DELETED>and</DELETED> accountability <DELETED>to 
        citizens</DELETED>, human rights, and the avoidance of new 
        <DELETED>odious</DELETED> unsustainable debt, while encouraging 
        the development of renewable energy <DELETED>and helping 
        countries to transition away from dependence on oil</DELETED>.
    ``(d) GAO Audit of Debt Portfolios of Countries With Questionable 
Loans.--<DELETED>(1) In general</DELETED>.--The Comptroller General of 
the United States <DELETED>shall</DELETED>should undertake an audit of 
the multilateral debt portfolios of previous governments in countries 
such as the Democratic Republic of Congo and South Africa where 
<DELETED>there are allegations that odious</DELETED>significant concern 
exists that unsustainable loans were made to the government. Each such 
audit shall--
            ``<DELETED>(A)</DELETED>(1) consider debt owed to the World 
        Bank, the IMF, and the other international financial 
        institutions (as so defined)<DELETED>, export credit debts owed 
        to governments, and debts owed to commercial creditors</DELETED> 
        and debt owed to the United States Government and assess 
        whether or not past investments produced the intended results; 
        and
            ``<DELETED>(B)</DELETED>(2) 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<DELETED>; and</DELETED>.
        <DELETED>    ``(C) be planned and executed in a transparent and 
        consultative manner, engaging congressional bodies and civil 
        society groups in the countries.</DELETED>
        <DELETED>    ``(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).</DELETED>
    ``(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 <DELETED>the availability of</DELETED> 
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, 2008, and annually thereafter for 4 years, the Secretary of the 
Treasury 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;
            ``(3) that has demonstrated democratic governance and 
        transparency of decision-making;
            ``<DELETED>(3)</DELETED>(4) the government of which does 
        not have an excessive level of military expenditures;
            ``<DELETED>(4)</DELETED>(5) 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)), section 40 of the Arms Export Control 
        Act (22 U.S.C. 2780), or section 620A(a) of the Foreign 
        Assistance Act of 1961 (22 U.S.C. 2371(a));
            ``<DELETED>(5)</DELETED>(6) the government of which is 
        cooperating on international narcotics control matters;
            ``<DELETED>(6)</DELETED>(7) 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; and
            ``<DELETED>(7)</DELETED>(8) the government of which is not 
        engaged in, and has taken effective action to prevent entities 
        in its jurisdiction from engaging in, the proliferation of 
        weapons of mass destruction, related materials and components, 
        or associated delivery systems.''.

SEC. <DELETED>4</DELETED>5. 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, significantly increase the costs of 
public services for low-income households, or degrade the 
environment.<DELETED>, including any policy that--
        <DELETED>    ``(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;</DELETED>
        <DELETED>    ``(2) provides for increased costs for low-income 
        households to pay for basic public services such as education, 
        health care, drinking water, or sanitation;</DELETED>
        <DELETED>    ``(3) 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</DELETED>
        <DELETED>    ``(4) 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.</DELETED>
    ``(b) Report on Previous Rounds of Debt Cancellation.--Not later 
than December 31, 2009, the Secretary of the Treasury 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 degree and extent to which 
previous rounds of debt cancellation for recipient nations were 
accompanied by the following conditions:
            ``(1) Implementation or extension of 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) Increased costs for low-income households to pay for 
        basic public services such as education, health care, drinking 
        water, or sanitation.
            ``(3) A prohibition on exempting increased government 
        spending on essential health care or education expenditures 
        from required conditions imposed by the IMF, including national 
        budget caps or restraints and hiring or wage bill ceilings.''.
<DELETED>    ``(b) Annual Reports to the Congress.--Not later than 
December 31, 2008, and annually thereafter for 4 years, the Secretary 
of the Treasury 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.''.</DELETED>

SEC. 6. SENSE OF CONGRESS ON CANCELLATION OF HAITI'S DEBTS TO 
              INTERNATIONAL FINANCIAL INSTITUTIONS.

    (a) Finding.--Congress finds that Haiti is scheduled to send 
$48,700,000 in debt payments to international financial institutions in 
2008.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) due to the current humanitarian and political 
        instability in Haiti, including food shortages and political 
        turmoil, the Secretary of the Treasury should use the 
        Secretary's influence to expedite the complete and immediate 
        cancellation of Haiti's debts to all international financial 
        institutions; and
            (2) if Haiti's debt to those institutions cannot be 
        cancelled, the Secretary of the Treasury should urge those 
        institutions to immediately suspend the requirement that Haiti 
        make further debt service payments on that debt.

SEC. 7. REPORT ON POTENTIAL FACILITY TO PROVIDE TEMPORARY FINANCING TO 
              RESPOND TO TEMPORARY ECONOMIC SHOCKS.

    (a) In General.--Not later than June 30, 2009, the Secretary of the 
Treasury 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 
feasibility and design of a potential facility, based at the 
International Monetary Fund or another international financial 
institution, to provide temporary financing to relieve debt service 
burdens in the case of shocks to the economies of low income countries 
beyond their control, including natural disasters and sharp spikes in 
commodity prices.
    (b) Basis for Financing Under Potential Facility.--The report 
required under this section shall assume that such a facility would be 
designed to allow low-income countries with good growth prospects to 
borrow reasonable amounts on reasonable terms and thereby minimize the 
risk of the need for additional debt relief in the future.
                                                       Calendar No. 934

110th CONGRESS

  2d Session

                                S. 2166

                          [Report No. 110-438]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                             August 1, 2008

                        Reported with amendments