[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