[House Report 106-483]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-483
HOUSE OF REPRESENTATIVES
1st Session Part 1
=======================================================================
DEBT RELIEF FOR POVERTY REDUCTION ACT OF 1999
_______
November 18, 1999.--Ordered to be printed
_______
Mr. Leach, from the Committee on Banking and Financial Services,
submitted the following
R E P O R T
together with
ADDITIONAL AND DISSENTING VIEWS
[To accompany H.R. 1095]
The Committee on Banking and Financial Services, to whom was
referred the bill (H.R. 1095) to require the United States to
take action to provide bilateral debt relief, and improve the
provision of multilateral debt relief, in order to give a fresh
start to poor countries, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Debt Relief for Poverty Reduction Act
of 1999''.
SEC. 2. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF AND PROCEDURES FOR NEW
LOANS, CREDITS, AND GUARANTEES.
(a) Amendment to the Foreign Assistance Act of 1961.--The Foreign
Assistance Act of 1961 (22 U.S.C. 2151 et seq.) is amended by adding at
the end the following:
``PART VI--CANCELLATION OF DEBT OWED TO THE UNITED STATES BY POOR
COUNTRIES
``SEC. 901. CANCELLATION OF DEBT.
``(a) Cancellation of Concessional Debt.--
``(1) In general.--Subject to amounts provided in advance in
appropriations Acts, the President shall, prior to September
30, 2004, cancel all amounts owed to the United States (or any
agency of the United States) by countries eligible under
section 902 as a result of concessional loans made or credits
extended prior to June 20, 1999, under any of the provisions of
law described in paragraph (2).
``(2) Provisions of law.--The provisions of law described in
this paragraph are the following:
``(A) Part I of this Act, including chapter 4 of part
II of this Act, or predecessor foreign economic
assistance legislation.
``(B) Title I of the Agricultural Trade Development
and Assistance Act of 1954 (7 U.S.C. 1701 et seq.).
``(b) Cancellation of Nonconcessional Debt.--
``(1) In general.--Subject to amounts provided in advance in
appropriations Acts, the President shall, prior to September
30, 2004, cancel all amounts owed to the United States (or any
agency of the United States) by countries eligible under
section 902 as a result of nonconcessional loans made,
guarantees or insurance issued, or credits extended prior to
June 20, 1999, under any of the provisions of law described in
paragraph (2).
``(2) Provisions of law.--The provisions of law described in
this paragraph are the following:
``(A) Sections 221 and 222 of this Act.
``(B) The Arms Export Control Act (22 U.S.C. 2751 et
seq.).
``(c) Immediate Relief From Debt Service Payments.--A country
eligible under section 902 for debt cancellation under this section
shall not be obligated to make debt service payments with respect to
amounts owed to the United States for which debt cancellation is to be
provided beginning on the date on which the country is determined to be
so eligible under section 902 so long as the country remains in
compliance with the other provisions of this part.
``SEC. 902. ELIGIBLE COUNTRIES.
``(a) In General.--Except as provided in subsection (b) and subject
to the fulfillment of the additional requirement in subsection (c), a
country that is performing satisfactorily under an economic reform
program shall be eligible for cancellation of debt under section 901 if
the country--
``(1) as of December 31, 2000, is eligible to borrow from the
International Development Association;
``(2) as of December 31, 2000, is not eligible to borrow from
the International Bank for Reconstruction and Development, or
is Nigeria; and
``(3)(A) has outstanding public and publicly guaranteed debt,
the net present value of which on December 31, 1996, was at
least 150 percent of the average annual value of the exports of
the country for the period 1994 through 1996; or
``(B) has outstanding public and publicly guaranteed debt,
the net present value of which, as of the date the President
determines that the country is eligible for debt relief under
all the criteria set forth in this section, is--
``(i) at least 150 percent of the annual value of the
exports of the country, for the most recent year for
which such information is available; or
``(ii) at least 250 percent of the annual fiscal
revenues of the country, and the country has a minimum
ratio of exports to gross domestic product of 30
percent and a minimum ratio of fiscal revenues of the
country to gross domestic product of 15 percent, for
the most recent year for which such information is
available.
``(b) Exceptions.--A country shall not be eligible for cancellation
of debt under section 901 if--
``(1) the government of the country has an excessive level of
military expenditures;
``(2) the government of the country has 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));
``(3) the government of the country is failing to cooperate
on international narcotics control matters;
``(4) the government of the country (including its military
or other security forces) engages in a consistent pattern of
gross violations of internationally recognized human rights;
``(5) the government of the country supports or condones the
practice of slavery or there is documented evidence of the
existence of slavery in the country and the government is not
making a concerted effort to eradicate the practice; or
``(6) the country is located in Southeast Asia, and the
government of the country is failing to fully cooperate with
the United States on all issues involving United States
prisoners of war/missing in action (POW/MIA), as determined by
the Secretary of State.
``(c) Additional Requirement.--A country which is otherwise eligible
to receive cancellation of debt under section 901 may receive such
cancellation only if--
``(1) the government of the country has established, through
transparent and participatory processes, including
participation of civil society--
``(A) a human development fund (hereinafter referred
to as the `Human Development Fund')--
``(i) the resources of which shall be
dedicated to reducing the number of persons
living in poverty, expanding access of the
poorest members of society to basic social
services, including education, health, clean
water and sanitation, and preventing the
degradation of the environment; and
``(ii) into which shall be deposited all
savings generated by debt reduction pursuant to
section 901 and section 2(c) of the Debt Relief
for Poverty Reduction Act of 1999;
``(B) arrangements to ensure that all expenditures
from the Human Development Fund during a year will be
used to the extent possible to increase annual
expenditures for human development by the government
above the greater of--
``(i) the total amount of annual expenditures
for human development by the government for the
preceding year; or
``(ii) the average total amount of such
expenditures for the 3 years immediately
preceding the year in which such fund is
established; and
``(C) arrangements for monitoring the operations and
financial transactions and accounts of the Human
Development Fund by an oversight body which includes
representatives of civil society; or
``(2) the country has developed and committed to an
integrated strategy, of the type described in section
1624(a)(1) of the International Financial Institutions Act, for
poverty reduction developed in cooperation with the
International Bank for Reconstruction and Development and the
International Monetary Fund, and in consultation with civil
society, which--
``(A) uses economic reform and technical assistance
programs developed and jointly administered by the
International Bank for Reconstruction and Development
and the International Monetary Fund;
``(B) includes monitorable poverty reduction goals
(such as increasing literacy, reducing infant and child
mortality, lowering the incidence of AIDS, and
improving environmental conditions) developed in
cooperation with the International Bank for
Reconstruction and Development, relevant agencies of
the United Nations, civil society groups, and other
appropriate organizations;
``(C) takes steps so that the financial benefits from
debt relief pursuant to the modified Heavily Indebted
Poor Countries (HIPC) Initiative, including savings
realized as a result of debt relief pursuant to section
901 and section 2(c) of the Debt Relief for Poverty
Reduction Act of 1999, are applied to poverty reduction
programs dedicated to achieving the goals described in
subparagraph (B);
``(D) includes transparent policymaking and budget
procedures, good governance, and anti-corruption
measures; and
``(E) broadens public participation and popular
understanding of the principles and goals of poverty
reduction, sustainable development, and good
governance.
On request of the country, the Secretary of the Treasury shall provide
or otherwise arrange for technical assistance to the country regarding
the establishment and management of the Human Development Fund in
accordance with paragraph (1) of this subsection. The Secretary of the
Treasury should also encourage international financial institutions to
provide funds for the country to hire technical assistanceconsultants
regarding the establishment and management of the Human Development
Fund in accordance with paragraph (1) of this subsection.
``(d) Definition.--In this section, the term `modified Heavily
Indebted Poor Countries Initiative' means the multilateral debt
initiative presented in the Report of G-7 Finance Ministers on the Koln
Debt Initiative to the Koln Economic Summit, Cologne, Germany, held
from June 18-20, 1999.
``SEC. 903. PRIORITY.
``In carrying out section 901, the President should seek to leverage
scarce foreign assistance dollars and give priority to those heavily
indebted poor countries with demonstrated need and the capacity to use
such relief effectively.
``SEC. 904. SPECIAL PROVISIONS.
``(a) Cancellation of Debt Not Considered To Be Assistance.--Except
as the President may otherwise determine for reasons of national
security, a cancellation of debt under section 901 shall not be
considered to be assistance for purposes of any provision of law
limiting assistance to a country.
``(b) Inapplicability of Certain Prohibitions Relating to
Cancellation of Debt.--The authority to provide for cancellation of
debt under section 901 may be exercised notwithstanding section 620(r)
of this Act or any similar provision of law.
``(c) Other Debt Cancellation Authorities.--The authority to cancel
debt under section 901 is in addition to the authority to cancel debt
under any other provision of law and does not in any way limit or
otherwise affect such other authority.
``(d) Child Labor and Workers Rights.--In exercising the authority
under section 901, the President shall take into account the country's
record on international child labor and international workers rights.
``(e) Female Genital Mutilation.--In exercising the authority under
section 901, the President shall take into account the country's record
with regard to female genital mutilation.
``SEC. 905. ANNUAL REPORTS TO THE CONGRESS.
``(a) In General.--Not later than December 31 of each year, the
President shall prepare and transmit to the appropriate congressional
committees a report, which shall be made available to the public,
concerning the cancellation of debt under section 901 and section 2(c)
of the Debt Relief for Poverty Reduction Act of 1999, determinations
made under section 904(a), activities undertaken under section 2(d) of
the Debt Relief for Poverty Reduction Act of 1999, the progress made in
accomplishing the purposes of such section 2(d), and other debt
restructuring activities for the prior fiscal year. The report shall
also include a list of the countries that have received debt
cancellation under section 901 and a list of the countries that,
although eligible under section 902(a)(3)(A), have been denied debt
cancellation under section 902 and the reasons therefor. The report
shall also include a description of the extent to which countries that
receive debt cancellation under section 901 or under section 2(c)(1) of
the Debt Relief for Poverty Reduction Act of 1999 have complied with
the requirements described in section 902(c) or section 2(c)(4) of such
Act, respectively.
``(b) Definition.--In this section, the term `appropriate
congressional committees' means--
``(1) the Committee on Banking and Financial Services, the
Committee on Appropriations, and the Committee on International
Relations of the House of Representatives; and
``(2) the Committee on Banking, Housing, and Urban Affairs,
the Committee on Foreign Relations, and the Committee on
Appropriations of the Senate.
``SEC. 906. SENSE OF THE CONGRESS.
``It is the sense of the Congress that the amounts that would
otherwise be provided by the United States for development aid or other
debt relief should not be reduced on account of any appropriations made
pursuant to section 907.
``SEC. 907. AUTHORIZATION OF APPROPRIATIONS.
``For the cost (as defined in section 502(5) of the Federal Credit
Reform Act of 1990) of the cancellation of any debt under section 901
of this Act, there are authorized to be appropriated to the President
such sums as may be necessary for each of the fiscal years 2000 through
2004.''.
(b) Annual Report by the Secretary of the Treasury on Paris Club Debt
Restructuring Actions and Cancellations.--Not later than January 1,
2000, and not later than January 1 of each year thereafter, the
Secretary of the Treasury shall prepare and submit to the Congress a
report containing the following:
(1) A description of debt restructuring actions and
cancellations undertaken by the United States as a member of
the Paris Club of Official Creditors for the prior fiscal year,
including--
(A)(i) the amount of debt restructured with respect
to each such debtor country;
(ii) the new maturity or maturities of each such debt
restructured;
(iii) the new interest rates and other costs of each
such debt restructured; and
(iv) any other terms and conditions of each such debt
restructured; and
(B) an assessment of the debt restructuring described
in subparagraph (A), including an assessment of the
effect of the restructuring on the debt service
payments of the debtor country.
(2) A description, based on the most recently available
information, of all outstanding amounts owed to the United
States Government by foreign countries as a result of loans
made, guarantees or insurance issued, or credits extended under
any provision of law, including the amount owed by each country
under each provision of law.
(c) Cancellation of Debt Owed to the Export-Import Bank or the
Commodity Credit Corporation.--
(1) In general.--Subject to amounts provided in advance in
appropriations Acts, the President shall cancel all amounts
owed to--
(A) the Export-Import Bank of the United States by
each country that the President determines is eligible
for debt cancellation under this paragraph, as a result
of loans made, or guarantees or insurance issued, prior
to June 20, 1999, under the Export Import Bank Act of
1945, or
(B) the Commodity Credit Corporation by each country
that the President determines is eligible for debt
cancellation under this paragraph, as a result of loans
made, or guarantees issued, prior to June 20, 1999,
under section 5(f) of the Commodity Credit Corporation
Charter Act (15 U.S.C. 714c(f)), section 201 of the
Agricultural Trade Act of 1978 (7 U.S.C. 5621), or
section 202 of such Act (7 U.S.C. 5622), or predecessor
provisions under the Food for Peace Act of 1966.
A country eligible under paragraph (2) for debt cancellation
under this paragraph shall not be obligated to make debt
service payments with respect to amounts owed to the United
States for which debt cancellation is to be provided beginning
on the date on which the country is determined to be so
eligible under paragraph (2) so long as the country remains in
compliance with the other provisions of this subsection.
(2) Eligible countries.--Except as provided in paragraph (3)
and subject to the fulfillment of the additional requirement in
paragraph (4), a country that is performing satisfactorily
under an economic reform program shall be eligible for debt
cancellation under paragraph (1) if the country--
(A) as of December 31, 2000, is eligible to borrow
from the International Development Association;
(B) as of December 31, 2000, is not eligible to
borrow from the International Bank for Reconstruction
and Development, or is Nigeria; and
(C)(i) has outstanding public and publicly guaranteed
debt, the net present value of which on December 31,
1996, was at least 150 percent of the average annual
value of the exports of the country for the period 1994
through 1996; or
(ii) has outstanding public and publicly guaranteed
debt, the net present value of which, as of the date
the President determines that the country is eligible
for debt relief under all the criteria set forth in
this paragraph, is--
(I) at least 150 percent of the annual value
of the exports of the country for the most
recent year for which such information is
available; or
(II) at least 250 percent of the annual
fiscal revenues of the country, and the country
has a minimum ratio of exports to gross
domestic product of 30 percent, and a minimum
ratio of fiscal revenues to gross domestic
product of 15 percent, for the most recent year
for which such information is available.
(3) Exceptions.--A country shall not be eligible for debt
cancellation under paragraph (1) if--
(A) the government of the country has an excessive
level of military expenditures;
(B) the government of the country has repeatedly
provided support for acts of international terrorism,
as determined by the Secretary of Stateunder 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));
(C) the government of the country is failing to
cooperate on international narcotics control matters;
(D) the government of the country (including its
military or other security forces) engages in a
consistent pattern of gross violations of
internationally recognized human rights;
(E) the government of the country supports or
condones the practice of slavery or there is documented
evidence of the existence of slavery in the country and
the government is not making a concerted effort to
eradicate the practice; or
(F) the country is located in Southeast Asia, and the
government of the country is failing to fully cooperate
with the United States on all issues involving United
States prisoners of war/missing in action (POW/MIA), as
determined by the Secretary of State.
(4) Requirement for an action plan for human development.--A
country which is otherwise eligible for debt cancellation under
paragraph (1) may receive such cancellation only if--
(A) the government of the country has established,
through transparent and participatory processes,
including participation of civil society--
(i) a human development fund (hereinafter
referred to as the ``Human Development
Fund'')--
(I) the resources of which shall be
dedicated to reducing the number of
persons living in poverty, expanding
access of the poorest members of
society to basic social services,
including education, health, clean
water and sanitation, and preventing
the degradation of the environment; and
(II) into which shall be deposited
all savings generated by debt
cancellation received pursuant to
section 901 of the Foreign Assistance
Act of 1961 or this subsection;
(ii) arrangements to ensure that all
expenditures from the Human Development Fund
during a year will be used, to the extent
possible, to increase annual expenditures for
human development by the government above the
greater of--
(I) the total amount of annual
expenditures for human development by
the government for the preceding year;
or
(II) the average total amount of such
expenditures for the 3 years
immediately preceding the year in which
such fund is established; and
(iii) arrangements for monitoring the
operations and financial transactions and
accounts of the Human Development Fund by an
oversight body which includes representatives
of civil society; or
(B) the country has developed and committed to an
integrated strategy for poverty reduction developed in
cooperation with the International Bank for
Reconstruction and Development and the International
Monetary Fund, and in consultation with civil society,
which--
(i) uses economic reform and technical
assistance programs developed and jointly
administered by the International Bank for
Reconstruction and Development and the
International Monetary Fund;
(ii) includes monitorable poverty reduction
goals (such as increasing literacy, reducing
infant and child mortality, lowering the
incidence of AIDS, and improving environmental
conditions) developed in cooperation with the
International Bank for Reconstruction and
Development, relevant agencies of the United
Nations, civil society groups, and other
appropriate organizations;
(iii) takes steps so that the financial
benefits from debt relief pursuant to the
modified Heavily Indebted Poor Countries (HIPC)
Initiative, including savings realized as a
result of debt cancellation under section 901
of the Foreign Assistance Act of 1961 and this
subsection, are applied to poverty reduction
programs dedicated to achieving the goals
described in clause (ii) of this subparagraph;
(iv) includes transparent policymaking and
budget procedures, good governance, and anti-
corruption measures; and
(v) broadens public participation and popular
understanding of the principles and goals of
poverty reduction, sustainable development, and
good governance.
(5) Definition of modified heavily indebted poor countries
(hipc) initiative.--For purposes of this subsection, the term
``modified Heavily Indebted Poor Countries (HIPC) Initiative''
means the multilateral debt initiative presented in the Report
of G-7 Finance Ministers on the Koln Debt Initiative to the
Koln Economic Summit, Cologne, 18-20 June, 1999.
(6) Priority.--In carrying out this subsection, the President
should seek to leverage scarce foreign assistance dollars and
give priority to those heavily indebted poor countries with
demonstrated need and the capacity to use such relief
effectively.
(7) Child labor and workers rights.--In exercising the
authority under this subsection, the President shall take into
account the country's record on international child labor and
international workers rights.
(8) Female genital mutliation.--In exercising the authority
under this subsection, the President shall take into account
the country's record with regard to female gential mutilation.
(9) Other debt reduction authorities.--The authority to
cancel debt under this subsection is in addition to the
authority to reduce debt under any other provision of law and
does not in any way limit or otherwise affect such other
authority.
(10) Authorization of appropriations.--For the cost (as
defined in section 502(5) of the Federal Credit Reform Act of
1990) of the cancellation of any debt under paragraph (1) of
this subsection, there are authorized to be appropriated to the
President such sums as may be necessary for each of the fiscal
years 2000 through 2004.
(d) Ensuring Burdensharing by Other Creditor Countries.--In order to
accelerate bilateral debt relief and promote human and economic
development and poverty alleviation in countries eligible for debt
cancellation under section 901 of the Foreign Assistance Act of 1961
(as added by subsection (a) of this section) or under subsection (c) of
this section, the Congress urges the President, immediately after the
date of the enactment of this Act, to establish efforts with countries
that are members of the Paris Club of Official Creditors, and, if
necessary, with other creditors, to accomplish the following by
September 30, 2004:
(1) The cancellation of all amounts owed to each such member
country by countries eligible for debt cancellation as of their
respective decision points, and by Nigeria, as a result of
concessional loans made or credits extended prior to June 20,
1999, by each such country.
(2) The cancellation of all amounts owed to each such member
country by countries eligible for debt cancellation as of their
respective decision points, and by Nigeria, as a result of
nonconcessional loans made, guarantees or insurance issued, or
credits extended prior to June 20, 1999, by each such country.
(3) The establishment of procedures by the Club to ensure
greater transparency in the decision-making process, including
publication of information for each restructuring action
undertaken by the Club as to the amount of sovereign debt
restructured, as to whom amounts are owed and by how much each
is owed, disaggregated by each country, as to how much each
debtor country owes each international financial institution,
as to new maturity or maturities of the restructured debts, as
to new interest rate and other costs associated with the
restructured debts, and as to any other new terms or
conditions. With due specificity, such information shall be
contrasted with such amounts, terms, and conditions in effect
before the restructuring, and offer an assessment of the
effects the restructuring will have on the country's debt
servicing.
(e) Definition of Decision Point.--In subsection (d), the term
``decision point'' means the point in time at which the Executive
Boards of the International Bank for Reconstruction and Development and
the International Monetary Fund review the debt sustainability analysis
for a country and decide that the country is eligible for debt relief
under the modified Heavily Indebted Poor Countries Initiative.
(f) Sense of Congress.--It is the sense of the Congress that any
assistance proposed to be provided by the United States to a country
that receives cancellation of debt under this section should be in the
form of grants only.
SEC. 3. ACTIONS TO IMPROVE THE PROVISION OF MULTILATERAL DEBT RELIEF
AND PROCEDURES FOR NEW LENDING.
Title XVI of the International Financial Institutions Act (22 U.S.C.
262p-262p-5) is amended by adding at the end the following:
``SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED POOR COUNTRIES
INITIATIVE; ENSURING EQUITABLE BURDEN SHARING.
``(a) Improvement of the HIPC Initiative.--In order to accelerate
multilateral debt relief and promote human and economic development and
poverty alleviation in heavily indebted poor countries the Congress
urges the President to commence immediately efforts, within the Paris
Club of Official Creditors, as well as the International Bank for
Reconstruction and Development (World Bank), the International Monetary
Fund (IMF), and other appropriate multilateral development institutions
to accomplish the following modifications in the Heavily Indebted Poor
Countries (HIPC) Initiative:
``(1) Prohibition on structural adjustment programs.--The
provision of debt reduction under the modified HIPC Initiative
shall not be conditioned on any country adopting or
implementing any structural adjustment or stabilization program
of the Enhanced Structural Adjustment Facility of the IMF or
any other structural adjustment or stabilization program
operated solely or jointly by the IMF, or any other program of
the IMF.
``(2) Promotion of poverty alleviation and environmental
protection.--The social and economic reforms on which debt
reduction under the modified HIPC Initiative is conditioned
shall incorporate effective measures for poverty reduction and
environmental protection.
``(3) Revision of country eligibility requirement.--A country
shall be regarded as having an unsustainable debt burden for
purposes of qualifying for debt reduction (or for further debt
reduction) under the modified HIPC Initiative if the country is
Nigeria or has outstanding public and publicly guaranteed debt,
the net present value of which at the decision point, is--
``(A) at least 150 percent of the annual value of the
exports of the country for the most recent year for
which such information is available; or
``(B) at least 250 percent of the annual fiscal
revenues of the country, and the country has a minimum
ratio of exports to gross domestic product of 30
percent, and a minimum ratio of fiscal revenues to
gross domestic product of 15 percent, for the most
recent year for which such information is available.
``(4) Requirement for an action plan for human development.--
Debt reduction under the modified HIPC Initiative shall not be
provided for the benefit of a country unless the government of
the country has established, through transparent and
participatory processes, including the participation of civil
society--
``(A) a plan of action for human development (in this
section referred to as the `Action Plan') which
includes policies, programs, and projects designed to
reduce the number of persons living in poverty, expand
access of the poorest members of society to basic
social services, including health, education, clean
water, and sanitation, and prevent the degradation of
the environment;
``(B) a human development fund (in this section
referred to as the `Human Development Fund')--
``(i) the resources of which are dedicated to
achieving the purposes of the Action Plan; and
``(ii) into which are required to be
deposited all savings generated by debt
reduction provided for the benefit of the
country under the modified HIPC Initiative and
under other debt reduction programs;
``(C) arrangements to ensure that all expenditures
from the Human Development Fund during a year will be
used, to the extent possible, to increase annual
expenditures for human development by the government
above the greater of--
``(i) the total amount of annual expenditures
for human development by the government for the
preceding year; or
``(ii) the average total amount of such
expenditures for the 3 years immediately
preceding the year in which such fund is
established; and
``(D) arrangements for monitoring the operations,
financial transactions, and accounts of the Human
Development Fund by an oversight body which includes
representatives of civil society, and a majority of the
members of which are citizens of the country.
On request of the country, the World Bank should provide
technical assistance to the country regarding the establishment
and management of the Human Development Fund in accordance with
the preceding sentence.
``(5) Requirement of southeast asian countries to cooperate
with united states on pow/mia issues.--Debt reduction under the
modified HIPC Initiative shall not be provided for the benefit
of a country located in Southeast Asia if the government of the
country is failing to fully cooperate with the United States on
all issues involving United States prisoners of war/missing in
action (POW/MIA), as determined by the Secretary of State.
``(6) Requirement for a natural resources development plan.--
``(A) In general.--Debt reduction under the modified
HIPC Initiative shall not be provided for the benefit
of a country unless the government of the country has
established through transparent and participatory
processes (including the participation of civil
society) a plan (in this section referred to as the
`Natural Resources Development Plan'), covering at
least a 5-year period, for the development of the
country's natural resources in a manner that will
benefit the population of the country. The plan shall
specify at least the following:
``(i) The natural resources that are being
developed or will be developed in the country.
``(ii) The profits and other benefits that
the government estimates will accrue to the
companies involved in the development of such
natural resources.
``(iii) The corporate tax revenues, land use
fees, resource extraction fees, export tariffs,
and other revenues that the government
estimates will be raised as a result of the
development and extraction of such natural
resources.
``(iv) The plans of the government for the
use of the revenues so raised.
``(v) The plans of the government to conserve
such natural resources and protect the
environment of the country.
``(vi) The plans of the government to protect
public health and safety and the rights of
workers.
``(vii) The plans of the government to
provide for the training and education of the
local population and to ensure that the
companies involved in the development of such
natural resources provide members of the local
population opportunities for employment and
advancement.
``(viii) Any other plans of the government to
ensure a fair return to the country and its
people for the development of such natural
resources.
``(B) Transparency.--All contracts between the
government (including any enterprise owned or
controlled by the government) and a foreign or
multinational corporation for the development of
natural resources of the country shall be made
available to the public.
``(C) Assistance.--The World Bank, the African
Development Bank, the IMF, or other appropriate
multilateral development institutions shall, under the
modified HIPC Initiative, provide assistance to
countries in developing their Natural Resources
Development Plans and in negotiating or renegotiating
equitable contracts with foreign or multinational
corporations for the development of natural resources.
``(7) Amount of debt reduction.--The amount of debt reduction
provided under the modified HIPC Initiative for the benefit of
a country with an unsustainable debt burden shall be sufficient
to help catalyze sustainable growth and poverty reduction, by
reducing--
``(A) the net present value of the outstanding public
and publicly guaranteed debt of the country to less
than 100 percent of the value of the annual exports of
the country; and
``(B) the amount of annual payments due on such
public and publicly guaranteed debt to a percentage of
government revenues, not greater than 10 percent, that
will facilitate higher levels of expenditure in areas
that have been identified as key to accelerated poverty
reduction as well as ensure that the country is able to
meet its current and future external debt-service
obligations in full, without recourse to debt relief,
rescheduling, or the accumulation of arrears.
``(8) Transparency and participation in hipc decision
making.--All decisions under the modified HIPC Initiative
concerning the amount, terms and conditions, and timing of debt
relief for a country, and the processes by which such decisions
are made, shall be subject to procedures which--
``(A) are transparent, including publication of the
content of the decisions and of all relevant
analytical, legal, and policy documents, including Debt
Sustainability Analyses, Policy Framework Papers, debt
relief agreements, and national development programs
and budgets;
``(B) are participatory, including the participation
of civil society and organizations with social sector
expertise, including United Nations agencies; and
``(C) require that the published content of the
decisions and documents described in subparagraph (A)
of this paragraph that affect or pertain to debt relief
for the country to be provided to the relevant
oversight body referred to in paragraph (4), and
require that such oversight body be consulted in the
making of key decisions regarding such debt relief.
``(9) Special provisions.--
``(A) Debt reduction under the modified HIPC
Initiative for the benefit of a country that has
demonstrated a sustained commitment to poverty
alleviation shall be provided in a greater amount or
more quickly than would otherwise be the case under
that Initiative.
``(B) A country that is emerging from civil conflict
or that has recently suffered a major natural disaster
should receive special consideration for debt relief
under the modified HIPC Initiative, notwithstanding the
country's record of performance under the country's
program of social and economic reform.
``(10) HIPC review.--The Secretary of the Treasury, after
consulting with the Committees on Banking and 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, shall make
every effort (including instructing the United States Executive
Directors at the IMF and the World Bank) to ensure that an
external assessment of the modified HIPC Initiative, including
the reformed ESAF program as it relates to that Initiative,
take place by December 31, 2001, incorporating the views of
debtor governments and civil society, and that such assessment
be made public and include--
``(A) an analysis of the contribution of the modified
HIPC Initiative to the poverty reduction and social
development goals for the 21st century established by
the Development Assistance Committee of the
Organization for Economic Cooperation and Development;
and
``(B) recommendations to the IMF, World Bank, and the
governments of the United States and other creditor
countries that may be necessary to strengthen the
contribution of the modified HIPC Initiative to the
poverty reduction and social goals referred to in
subparagraph (A).
``(11) Termination of the modified hipc initiative.--The
modified HIPC Initiative shall not terminate until all the debt
reduction contemplated by this section has been carried out.
``(b) Promotion of Equitable Burden Sharing.--In order to promote
equitable burden-sharing by bilateral, multilateral, and private
creditors under the modified HIPC Initiative, the Congress urges the
President to commence immediately efforts to ensure that such creditors
draw upon their own resources to finance debt reduction under the
modified HIPC Initiative to the extent possible without diverting funds
from other high priority poverty alleviation programs.
``(c) Contributions to the HIPC Trust Fund.--For payment to the
Heavily Indebted Poor Countries Trust Fund of the International Bank
for Reconstruction and Development, but only for purposes of debt
relief, there are authorized to be appropriated to the President such
sums as may be necessary for fiscal years 2000 through 2004, except
that if, with respect to fiscal year 2001, 2002, 2003, or 2004, the
President has not determined that, during the then preceding fiscal
year--
``(1) satisfactory progress was made in accomplishing the
improvements in the HIPC initiative described in subsections
(a) and (b); and
``(2) the United States' contributions to the reduction of
multilateral debt pursuant to the modified HIPC Initiative were
matched, by a ratio of at least two to one, by resources
provided in the aggregate by all other donors,
then no sums are authorized to be appropriated for such purpose for the
fiscal year.
``(d) Sense of Congress.--It is the sense of Congress that the
amounts that would otherwise be provided by the United States for
development aid or other debt relief should not be reduced on account
of any appropriations pursuant to subsection (c).
``(e) Report to the Congress.--Not later than December 31 of each
year, the President shall submit to the Committees on Banking and
Financial Services, on Appropriations, and on International Relations
of the House of Representatives and the Committees on Foreign
Relations, on Banking, Housing, and Urban Affairs, and on
Appropriations of the Senate a report, which shall be made available to
the public, on the activities undertaken under this section, and on the
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 relief under the original or modified HIPC
Initiative, a list of the countries whose request for such debt relief
has been denied and the reasons therefor, and a list of the countries
whose requests for such debt relief are under consideration. The report
shall also include a description of the extent to which countries that
receive debt relief under the modified HIPC Initiative have complied
with the requirements described in subsection (a)(4).
``(f) Definitions.--In this section:
``(1) Modified hipc initiative.--The term `modified HIPC
Initiative' means the multilateral debt initiative presented in
the Report of the G-7 Finance Ministers on the Koln Debt
Initiative to the Koln Economic Summit, Cologne, 18-20 June,
1999.
``(2) Decision point.--The term `decision point' means the
point in time at which the Executive Boards of the
International Bank for Reconstruction and Development and the
International Monetary Fund review the debt sustainability
analysis for a country and decide that the country is eligible
for debt relief under the modified Heavily Indebted Poor
Countries Initiative.
``SEC. 1624. REFORM OF THE ENHANCED STRUCTURAL ADJUSTMENT FACILITY.
``The Secretary of the Treasury shall instruct the United States
Executive Directors at the International Bank for Reconstruction and
Development and the International Monetary Fund to use the voice and
vote of the United States to promote the establishment of poverty
reduction strategy policies and procedures at the International Bank
for Reconstruction and Development and the International Monetary Fund
which support countries' efforts to honor the commitments as set forth
in lending operations under programs developed and jointly administered
by the International Bank for Reconstruction and Development and the
International Monetary Fund that have the following components:
``(1) The development of country-specific poverty reduction
strategies (Poverty Reduction Strategies) under the leadership
of such countries, that--
``(A) will be set out in poverty reduction strategy
papers (PRSPs) to provide the basis for the lending
operations of the International Development Association
(IDA) and the Enhanced Structural Adjustment Facility
and its successors (ESAF);
``(B) will reflect the role of the International Bank
for Reconstruction and Development in social sector
development, structural policies, and poverty
reduction, and the role of the International Monetary
Fund in macroeconomic issues; and
``(C) will make the advice and operations of the
International Monetary Fund and the International Bank
for Reconstruction and Development fully consistent
with the objectives of poverty reduction and broad-
based growth; and
``(D) should include--
``(i) a participatory poverty assessment,
undertaken as a systematic part of the design
of the Poverty Reduction Strategy, involving
collaboration between the government, civil
society, the International Bank for
Reconstruction and Development, organizations
with expertise in the social sector, including
United Nations agencies, and donors, which
analyzes, among other things, the economic and
social needs of the poor and the policy reforms
and public investments that will best address
these needs;
``(ii) social impact assessments, undertaken
as a systematic part of the design of the
Poverty Reduction Strategy, involving
collaboration between the government, civil
society, the International Bank for
Reconstruction and Development, and
organizations with expertise in the social
sector, including United Nations agencies, and
donors, which analyze the impact of policies
implemented under the Poverty Reduction
Strategy and related lending operations and
which are completed before International Bank
for Reconstruction and Development and
International Monetary Fund Executive Board
consideration of such operations;
``(iii) explicit consideration of the short-
and long-term tradeoffs between alternative
policy decisions, such as the distributional,
equity, and poverty reduction implications of
monetary and fiscal policies or the pace and
sequencing of structural reforms;
``(iv) implementation of transparent budget
procedures and mechanisms to help ensure that
the financial benefits of debt relief under the
modified HIPC Initiative result in increased
national expenditures on poverty reduction
programs; and
``(v) monitorable indicators of progress in
poverty reduction;
``(2) the adoption of procedures for periodic comprehensive
reviews of ESAF and IDA programs to help ensure progress toward
poverty goals outlined in the Poverty Reduction Strategies and
to allow adjustments in such programs;
``(3) the publication of the PRSPs (including social impact
assessments) prior to Executive Board review of related
programs under IDA and the ESAF;
``(4) the establishment of a standing evaluation unit at the
International Monetary Fund, similar to the Operations
Evaluation Department of the International Bank for
Reconstruction and Development, that would report directly to
the Executive Board of the International Monetary Fund and that
would undertake periodic reviews of International Monetary Fund
operations, including the operations of the ESAF, including--
``(A) assessments of experience under the ESAF
programs in the areas of poverty reduction, rapid
growth, and access to basic social services;
``(B) assessments of the extent and quality of
participation in program design by civil society; and
``(C) verifications that ESAF programs are designed
in a manner consistent with the Poverty Reduction
Strategies; and
``(D) prompt release to the public of all reviews by
the standing evaluation unit;
``(5) the promotion of simpler and clearer conditionality in
IDA and ESAF programs that focuses on reforms most likely to
support poverty reduction and broad-based growth;
``(6) the adoption by the International Monetary Fund of
policies aimed at reforming the Enhanced Structural Adjustment
Facility so that ESAF programs are consistent with the Poverty
Reduction Strategies;
``(7) the adoption by the International Bank for
Reconstruction and Development of policies to ensure that
International Bank for Reconstruction and Development lending
operations in HIPC countries are consistent with the Poverty
Reduction Strategies;
``(8) strengthening the linkage between borrower country
performance and lending operations by IDA and the ESAF on the
basis of clear and monitorable indicators;
``(9) full public disclosure of the proposed objectives,
financial organization and operations of the successor to the
Enhanced Structural Adjustment Facility of the International
Monetary Fund at least 90 days before any decision by the
Executive Board of the International Monetary Fund to consider
its adoption; and
``(10) the abolishment of ESAF, and its replacement with a
Poverty Reduction and Growth Facility (PRGF), which will be a
subordinate part of a new approach to defining the economic
framework for low-income countries, in that the new approach
will give to the government of a borrowing country the ability
to construct its own comprehensive development strategy, and
will allow the borrowing country government, at its sole
discretion, to request technical assistance, in creating the
comprehensive development strategy, from international
institutions, such as the World Health Organization, the Food
and Agricultural Organization, the International Bank for
Reconstruction and Development, and the International Monetary
Fund, and from private organizations, businesses, or civil
society organizations.
``SEC. 1625. TRANSPARENCY AND PARTICIPATION OF CIVIL SOCIETY IN NEW
INTERNATIONAL FINANCIAL INSTITUTION LENDING.
``The Secretary of the Treasury shall instruct the United States
Executive Directors at the international financial institutions (as
defined in section 1701(c)(2)) to use the voice and votes of the
Executive Directors to encourage vigorously that their respective
institutions adopt transparency and other measures that will facilitate
participation of civil society in developing countries in the design of
poverty reduction strategies and in decisions to borrow from such
institutions in support of such strategies, including--
``(1) disclosure of Policy Framework Papers, Public
Expenditure Reviews, Country Assistance Strategies,
International Monetary Fund Letters of Intent, appraisal
documents, and other reports relevant to proposed lending
operations; and
``(2) provision of detailed information to the Board of
Directors of such an institution and to the public, prior to
the approval of a lending operation for a developing country,
as to the nature and extent of civil society participation in
the design of, and approval process for, such operation.''.
SEC. 4. ENHANCED STRUCTURAL ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR
COUNTRIES TRUST FUND.
The Bretton Woods Agreements Act (22 U.S.C. 286-286mm) is amended by
adding at the end the following:
``SEC. 62. APPROVAL OF CONTRIBUTIONS TO THE ENHANCED STRUCTURAL
ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR COUNTRIES
TRUST FUND.
``(a) In General.--For the purpose of mobilizing the resources of the
Fund in order to help reduce poverty and improve the lives of residents
of poor countries and, in particular, to allow those poor countries
with unsustainable debt burdens to receive deeper, broader, and faster
debt relief, without allowing gold to reach the open market or
otherwise adversely affecting the market price of gold, the Secretary
of the Treasury may instruct the United States Executive Director of
the Fund to vote--
``(1) to approve an arrangement whereby the Fund--
``(A) sells not more than a total of 14,000,000
ounces of its gold at prevailing market prices to a
member or members in non-public transactions;
``(B) immediately after, and in conjunction with,
each such sale, accepts payment by such member or
members of such gold to satisfy existing repurchase
obligations of such member or members so that the Fund
retains ownership of the gold at the conclusion of such
payment; and
``(C) transfers the earnings on the investment of the
profits of such sales to the Trust for Special ESAF
Operations for the Heavily Indebted Poor Countries and
Interim ESAF Subsidy Operations (ESAF/HIPC Trust Fund),
provided that such earnings shall be used, through a
separate subaccount, only for the purpose of providing
debt relief from the Fund under the modified HIPC
Initiative; and
``(2) to support a decision that would make available to the
ESAF/HIPC Trust Fund resources in Special Contingency Account 2
(SCA-2) of the Fund derived from the extended burdensharing
arrangements adopted pursuant to IMF Decision No. 9471 (90/98),
as amended, including any funds attributable to the United
States participation in such arrangements, which funds shall be
used only for debt relief under the original or modified HIPC
Initiative (within the meaning of section 1623 of the
International Financial Institutions Act).
``(b) Certification.--Within 15 days after the United States
Executive Director casts the votes necessary to carry out with the
instruction provided pursuant to subsection (a), the Secretary of the
Treasury shall certify to the Committee on Banking and Financial
Services of the House of Representatives and the Committee on Foreign
Relations of the Senate that the Fund has stated that--
``(1) when gold is sold pursuant to the authorization
provided under subsection (a), the estimated net present value
(as determined by the Fund) of the earnings on the investment
of profits from the total amount of gold that has been sold
shall not be greater than the estimated net present value (as
determined by the Fund) of the cost of the modified HIPC
Initiative (within the meaning of section 1623 of the
International Financial Institutions Act);
``(2) the earnings on the invested profits of such gold sales
shall be deposited in a separate sub-account and used only for
the purpose of providing debt relief from the Fund under the
original or modified HIPC Initiative; and
``(3) any funds attributable to United States participation
in the arrangements referred to in subsection (a)(2) shall be
used only for debt relief from the Fund under the original or
modified HIPC Initiative.''.
SEC. 5. UNITED STATES INTERNATIONAL FINANCIAL AGREEMENTS; TRANSMISSION
TO CONGRESS.
Section 112b of title 1, United States Code, is amended by adding at
the end the following:
``(f) The Secretary of the Treasury shall transmit to the Committee
on Banking and Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate a
copy of any international financial agreement to which this section
applies. Any such agreement the immediate public disclosure of which
would, in the opinion of the President, be prejudicial to the national
security of the United States, shall be so transmitted under an
injunction of secrecy to be removed only upon due notice by the
President.''.
SEC. 6. CORRUPTION IN FOREIGN GOVERNMENTS.
(a) In General.--It is the sense of the Congress that, in
deliberations between the United States Government and any other
country on money laundering and corruption issues, the United States
Government should--
(1) emphasize an approach that addresses not only the
laundering of the proceeds of traditional criminal activity but
also the increasingly endemic problem of governmental
corruption and the corruption of ruling elites; and
(2) encourage the enactment and enforcement of laws in such
country to prevent money laundering and systemic corruption.
(b) United States Votes in International Financial Institutions.--
Title XV of the of the International Financial Institutions Act (22
U.S.C. 262o-262o-2) is amended by adding at the end the following:
``SEC. 1504. UNITED STATES VOTES IN INTERNATIONAL FINANCIAL
INSTITUTIONS.
``The Secretary of the Treasury shall instruct the United States
Executive Director at each multilateral development bank (as defined in
section 1701(c)(4)) to use aggressively the voice and vote of the
United States to promote vigorously policies that would make the
institution more effective mechanisms, in concert with appropriate
international authorities and other international financial
institutions (as defined in section 1701(c)(2)), for promoting good
governance principles within recipient countries by fostering
structural reforms, including procurement reform, that reduce
opportunities for corruption and bribery, and drug-related money
laundering. In addition, the Secretary of the Treasury shall instruct
the United States Executive Director at each multilateral development
bank (as defined in section 1701(c)(4)) to use aggressively the voice
and vote of the United States to oppose loans or other assistance by
such bank to a country located in Southeast Asia if the government of
such country is failing to fully cooperate with the United States on
all issues involving United States prisoners of war/missing in action
(POW/MIA), as determined by the Secretary of State.''.
(c) Annual Reports Required.--Not later than December 31 of each
year, the Secretary of the Treasury, in consultation with the Secretary
of State and the Attorney General, shall submit an annual report to the
Congress on efforts bilaterally and within the international financial
institutions (as defined in section 1701(c)(2) of the International
Financial Institutions Act) consistent with the objectives in sections
1503(a)(6) and 1504 of such Act.
SEC. 7. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.
The Bretton Woods Agreements Act (22 U.S.C. 286-286mm) is further
amended by adding at the end the following:
``SEC. 63. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.
``The Secretary of the Treasury shall instruct the United States
Executive Director at the Fund to use the voice and vote of the
Executive Director to vigorously encourage the Fund to--
``(1) require independent audits of central bank and other
relevant entities on a more systematic basis by developing
objective criteria to assist in determining when audits are
warranted;
``(2) ensure that such audits occur before Fund financing is
disbursed;
``(3) develop a systematic approach to reducing inappropriate
uses of foreign exchange reserves through laws, regulations,
and procedures, by means including the requirement of arms
length transactions and the prohibition of preferential access
to foreign exchange on a nontransparent basis; and
``(4) strongly encourage all countries receiving exceptional
levels of financial support to adopt and comply with Fund
standards applicable to management of foreign exchange
reserves, particularly with respect to the nature and location
of the institutions where such reserves are placed.''.
SEC. 8. UNITED STATES LENDING POLICIES TOWARD COUNTRIES RECEIVING DEBT
RELIEF.
(a) Study.--The Comptroller General of the United States shall study
and prepare a report on efforts to ensure that the lending policies of
the United States and the international financial institutions (as
defined in section 1701(c)(2) of the International Financial
Institutions Act) toward countries eligible for debt relief under part
VI of the Foreign Assistance Act of 1961 or this Act, or under the
modified HIPC Initiative (as defined in section 1623(f)(1) of the
International Financial Institutions Act) avoid moral hazard and
promote economic growth and poverty reduction, without recourse to
future debt relief, rescheduling, or the accumulation of arrears.
(b) Report.--Not later than September 30, 2000, the Comptroller
General of the United States shall submit to the Committees on Banking
and Financial Services and on International Relations of the House of
Representatives and the Committees on Banking, Housing, and Urban
Affairs and on Foreign Relations of the Senate the report required by
subsection (a).
Explanation of the Legislation
H.R. 1095 as amended provides for the following: (1) a
requirement that the President cancel all concessional and non-
concessional debts owed to the United States by eligible poor
countries under applicable provisions of the Foreign Assistance
Act of 1961, the Export-Import Bank Act of 1945, and the
Commodity Credit Corporation Charter Act; (2) an authorization
of such sums as necessary for the cost of canceling debts owed
to the U.S. by eligible poor countries; (3) definitions of
country eligibility for receiving U.S. debt relief together
with a list of exceptions, (4) a requirement that resources
freed through debt relief are used for poverty reduction
through a Human Development Fund or Poverty Reduction Strategy;
(5) a statement that in providing bilateral debt relief, the
President should seek to leverage scarce foreign assistance
dollars and give priority to those heavily indebted poor
countries with demonstrated need and the capacity to use such
relief effectively; (6) a requirement of annual reports on U.S.
debt relief for eligible poor countries and on U.S.
participation in Paris Club debt restructuring actions and
cancellations; (7) policy language urging the President to
ensure burdensharing by other creditor countries; (8) policy
language urging the President to seek improvements in the
Heavily Indebted Poor Countries Initiative (HIPC); (9) an
authorization of such sums as necessary for U.S. contributions
to the World Bank's HIPC Trust Fund, but only for the purposes
of debt relief, and provided that certain conditions are met;
(10) a requirement of an annual report on multilateral debt
relief under the modified HIPC Initiative; (11) a requirement
that the Secretary of the Treasury instruct the U.S. Executive
Directors of the World Bank and International Monetary Fund
(IMF) to use their voice and vote to reform the Enhanced
Structural Adjustment Facility (ESAF) and soon replace it with
a new Poverty Reduction and Growth Facility; (12) a requirement
that the Secretary of the Treasury instruct the U.S. Executive
Directors to the international financial institutions to use
their voice and vote to facilitate transparency and
participation of civil society in new international financial
institution lending; (13) an authorization for the Secretary of
the Treasury to instruct the U.S. Executive Director of the IMF
to approve the sale of up to 14 million ounces of the IMF's
gold in non-public transactions with a member or members of the
Fund, provided that the invested profits of the sales may only
be used for debt relief and deposited in a sub-account separate
from the Enhanced Structural Adjustment Facility; (14) an
authorization for the Secretary of the Treasury to instruct the
U.S. Executive Director of the IMF to transfer any funds
attributable to U.S. participation in Special Contingency
Account 2 (SCA-2) to the Fund's ESAF/HIPC Trust, which funds
shall be used only for debt relief; (15) a certification by the
Secretary of the Treasury that the amount of gold sold by the
IMF is not greater than the estimated net present value of the
cost of the Fund's participation in the modified HIPC
Initiative, that the earnings on the invested profits shall be
deposited in a separate sub-account and used only for the
purpose of providing debt relief from the Fund, and that any
U.S. funds transferred from the SCA-2 to the ESAF/HIPC Trust
shall be used only for IMF debt relief; (16) a requirement for
the Department of the Treasury to transmit international
financial agreements to the House and Senate Banking
Committees; (17) a requirement that the Secretary of the
Treasury instruct the U.S. Executive Directors of the
multilateral development banks to use their voice and vote to
promote good governance and anti-corruption principles in
recipient countries, as well as to oppose loans to Southeast
Asian countries failing to fully cooperate with the U.S. on
issues involving POW/MIAs; (18) a requirement that the
Secretary of the Treasury instruct the U.S. Executive Director
at the IMF to use his or her voice and vote to establish
additional safeguards on the use of IMF resources; and (19) a
requirement that by September 30, 2000, the General Accounting
Office (GAO) prepare and submit a report on efforts to ensure
that the lending policies of the U.S. and the international
financial institutions toward countries eligible for debt
relief avoid moral hazard and promote economic growth and
poverty reduction, without recourse to future debt relief,
rescheduling, or the accumulation of arrears.
Background and Need for the Legislation
The bill as reported fully authorizes U.S. participation in
the modified Heavily Indebted Poor Countries Initiative. it
authorizes the Executive Branch to cancel 100% of the debt owed
to the U.S. by up to 45 eligible heavily indebted poor
countries. It urges the President to seek several reforms in
the modified HIPC Initiative. It also provides authorization
for U.S. contributions to the World Bank's HIPC Trust, as well
as U.S. agreement to mobilizing IMF gold reserves and the
transfer of resources from an IMF reserve account to finance
the Fund's participation in the modified HIPC Initiative. It
requires the advocacy of certain policies by the U.S. in the
international financial institutions, particularly regarding
reform of ESAF, and requires the production of several reports
by the Secretary of the Treasury.
Relieving the debt burdens of the world's poorest countries
is one of foremost economic, humanitarian, and moral challenges
of the late 20th century. Seldom has three been such a
compelling conjunction between abstract economics, ethics, and
public policy. In addition, because the Heavily Indebted Poor
Countries (HIPC) Initiative represents a uniquely comprehensive
approach to debt reduction, multilateral and bilateral issues
are interwoven in ways that challenge traditional approaches to
foreign policy of all creditor countries. In this context, the
HIPC Initiative raises authorization and policy issues that
overlap the jurisdictions of this Committee and the Committee
on International Relations. The Banking Committee is extremely
grateful to the International Relations Committee for its
gracious cooperation and understanding on this most complex and
important subject.
The goal of the H.R. 1095 is simple: to provide faster and
deeper debt relief to more countries provided they are
committed to reform as well as translating savings from debt
relief into poverty reduction and sustainable development.
The Committee on Banking and Financial Services strongly
supports international efforts to relieve the debt burdens of
the world's poorest countries. As the president of the World
Bank recently observed, more than one billion people around the
world still live in extreme poverty. Nearly 1.4 billion people
lack access to clean water. Approximately three billion live
without basic sanitation. In 1999, 11 million children under
the age of five will die of preventable diseases. For those
children who live past five, more than 250 million of them will
work instead of going to school. Yet several hundred million of
the world's poor live in countries where crushing foreign debt
obligations, almost exclusively to official bilateral and
multilateral creditors, stand in the way of economic growth and
poverty reduction.
At the request of the G-7 industrial nations for a
comprehensive framework to relieve the debt burdens of heavily
indebted poor countries, the World Bank and the International
Monetary Fund (IMF) proposed the HIPC Debt Initiative in 1996.
The HIPC Initiative is the first coordinated effort to include
all creditors, particularly the international financial
institutions, in addressing the debt problems of poor
developing countries. The goal of the original HIPC Initiative
was solely to bring countries' debts to ``sustainable'' levels,
meaning that in the future they would be able to make debt
payments on time and without rescheduling. As a condition of
receiving the exceptional levels of debt relief provided under
the initiative, countries were required to successfully
complete as much as six years of economic reform under ESAF.
The World Bank and the IMF originally classified a group of
41 developing countries as heavily indebted poor countries. The
41 countries are the following: Angola, Benin, Burkina Faso,
Burundi, Cameroon, Central African Republic, Chad, Congo, Cote
d'Ivoire, Democratic Republic of the Congo, Equatorial Guinea,
Ethiopia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras,
Kenya, Lao PDR, Liberia, Madagascar, Mali, Mauritania,
Mozambique, Myanmar, Nicaragua, Niger, Nigeria, Rwanda, Sao
Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan,
Tanzania, Togo, Uganda, Vietnam, Yemen, and Zambia. Nigeria was
subsequently dropped off the original list. As introduced, H.R.
1095 would extend eligibility to 4 additional countries:
Bangladesh, Cambodia, Comoros, and Haiti. During Committee
markup Nigeria was subsequently added as an additional eligible
country.
The original HIPC Initiative, however, failed to fulfill
its early promise. The common refrain was that debt relief was
``too little'' and ``too late.'' As of September 14, 1999,
eligibility has been reviewed for 14 countries. Relief has been
agreed to for 7 countries: Bolivia, Burkina Faso, Cote
d'Ivoire, Guyana, Mali, Mozambique, and Uganda, yielding debt
relief of $3.4 billion in net present value (NPV) terms. Four
countries (Bolivia, Uganda, Guyana and Mozambique) have already
received debt relief amounting to an NPV of $2.8 billion.
Preliminary review has been completed for five more countries,
Ethiopia, Guinea-Bissau, Nicaragua, Mauritania, and Tanzania.
In response to widespread criticism of the original
program, in June 1999 at the G-7 summit in Cologne, Germany,
the World Bank and IMF endorsed proposals to modify the HIPC
Initiative. The goal of the so-called ``modified'' HIPC
Initiative is to provide faster, broader, and deeper debt
relief, while strengthening the links between debt relief and
poverty reduction. In contrast to the original framework, the
newly modified HIPC Initiative is designed to increase the
safety cushion against unanticipated economic shocks and to
increase the probability of a permanent exit from unsustainable
debt relief. Deeper debt relief will be provided through a
lowering of the NPV debt-to-export target from 200-250% to
150%; a lowering of the NPV debt-to-fiscal revenue target for
countries with very open economies from 280 to 250% and a
lowering of the qualifying thresholds from 40 to 30% (export-
to-GDP ratio) and from 20 to 15% (revenue-to-GDP ratio).
Similarly, in response to concerns that the original
Initiative was insufficiently linked to poverty reduction, the
modified HIPC attempts to free up resources for high levels of
social spending aimed at poverty reduction through: more
generous ``interim'' relief between the decision and completion
points; and the introduction of ``floating completion points''
which would shift the focus of assessment more towards
achievements and outcomes rather than the length of the track
record of reform. Strong performers could reach the completion
point earlier by accelerating key reforms while maintaining
macroeconomics stability. It also envisions ``front-loading''
the delivery of debt relief by the international financial
institutions (IFIs) on a ``case-by-case'' basis.
On September 29, 1999, President Clinton announced that the
U.S. would increase the amount of bilateral debt relief
available to eligible countries to 100% of all market-based
loans ``when needed to help them finance basic human needs''
and when the money will be used to do so. This follows
agreement at the G-7 summit in Cologne to reduce non-concession
debt owed to governments by HIPCs by up to 90% and concessional
debt by 100%. The authorization provided by this legislation is
necessary to enable the U.S. to fulfill this commitment.
Creditors may provide relief through several means, such as
rescheduling debt payments through lower interest rates, buying
back the debt, making debt service payments as they come due,
and/or lending new funds on concessional terms to make debt
service payments. Multilateral creditors have said they will
not forgive debt outright; instead, they intend to provide debt
relief in ways that preserve their preferred creditor status.
The World Bank's participation in the HIPC Initiative is to
be funded solely from the Bank's own resources. Debt relief
provided by the Bank takes place primarily through
contributions to its HIPC Trust Fund from transfers of net
income. The World Bank's HIPC Trust Fund also receives
contributions from the U.S. and other participating creditors
that are to be used primarily to help other multilateral
development banks, such as the African Development Bank, to
finance their share of HIPC debt relief. Because providing the
necessary financing is crucial to turning the promise of the
modified HIPC Initiative into reality, the committee included
an authorization of such sums as may be necessary for the U.S.
contribution to the HIPC Trust Fund.
The IMF is participating in the Initiative through the
ESAF/HIPC Trust, which is to finance both debt relief and the
subsidy cost of ESAF loans from 2000 to approximately 2005 (the
``interim'' ESAF). At the completion point, ESAF grants are
deposited into escrow accounts to meet the debt service
payments owed to the IMF under a predetermined schedule.
The enhancements to the Initiative agreed to in Cologne
will more than double the estimated costs from $12.5 billion to
about $27 billion in NPV terms, divided roughly between
bilateral and multilateral creditors. Of this, the costs to the
Bank would amount to about $5 billion, to the Fund about $2.3
billion, and to other multilateral institutions just under $6
billion. If Liberia, Somalia, and Sudan are added to the 33
countries thought likely to qualify for HIPC relief, the
estimated NPV cost to all creditors would rise to $36 billion.
To fund U.S. participation, the Administration requested $120
million for debt relief programs in FY 2000 (only $70 million
of which was HIPC-related). The amended budget request for FY
2000-2004 asked for an additional $850 million. Of the total
$970 million requested for debt relief, $270 is for bilateral
relief; $650 is for the World Bank's HIPC Trust; and $50
million is for a debt-for-tropical rainforest initiative.
The Committee applauds U.S.-led efforts to strengthen the
linkage between debt relief and poverty reduction. The new
framework agreed to during the World Bank--IMF annual meetings
in September 1999 would foster a much closer collaboration
between the IMF, the World Bank, recipient governments, and
civil society. The IMF's concessional lending facility and the
vehicle for its participation in the Initiative--ESAF--will be
required to take into account more fully the potential impact
of macroeconomic reforms on programs aimed at poverty reduction
and renamed the Poverty Reduction and Growth Facility (PRGF).
Many questions have been raised about the IMF's involvement
in concessional lending. The first IMF facility to make
concessional loans to low-income countries was the Trust Fund
established in 1976, financed primarily by profits on the sale
of 25 million ounces of gold by the IMF. The Trust Fund was
terminated in 1981. Repayments of loans made by the Trust Fund
went to the Special Disbursement Account (SDA) and were used to
finance the establishment of the Structural Adjustment Facility
(SAF) in 1986. ESAF was established in 1987 and subsequently
expanded in 1993. In 1996, it was decided that the ESAF would
be a permanent, rather than a temporary, facility, as the
centerpiece of the IMF's strategy to help low-income countries.
ESAF arrangements are made available to eligible low income
countries, those with a per capita GDP of $925 or less and
eligible for borrowing under the International Development
Association (IDA), that agree to three-year macroeconomic
structural and reform plans. According to the IMF, key to the
arrangements are Policy Framework Papers (PFPs), which are
drafted by the debtor governments in collaboration with the
staffs of the IMF and world Bank. Loans under the ESAF carry an
annual interest rate of 0.5%, with repayments made
semiannually, beginning in 5\1/2\ years and ending 10 years
after disbursement.
Resources to finance lending in support of ESAF
arrangements--which consist of loans and subsidy
contributions--are administered by the IMF through the ESAF
Trust. The trust conducts its operations through three
accounts: the Loan Account, to administer the funds needed for
trust loans; the Subsidy Account, to subsidize the rate of
interest paid by borrowers on loans from the trust; and the
Reserve Account, to secure lenders' claims on the trust. The
Loan Account has received its resources from loans made to the
IMF by 12 countries at market rates. The subsidy Account has
received grants from 33 countries (including a U.S.
contribution in FY 1995 of $75 million), plus some funds from
the SDA. Reflows (repaid loans) from SDA-financed SAF and ESAF
loans go to the Reserve Account, which will become available
for future concessional operations when balances exceed the
amount owed to the creditors (about $4.3 billion by early
2007), or as agreed by the creditors.
The ESAF and other so-called ``Administered Accounts'' are
legally and financially separate from all other accounts of the
IMF. They represent resources held by the Fund for purposes,
such as financial and technical assistance, that are consistent
with the Fund's Articles.
The Committee is cognizant of the controversy surrounding
the IMF's involvement in the HIPC initiative. The IMF has been
at the center of international debt workouts since the early
1980's. Its relationship to debtor and creditor countries, as
well as other international financial institutions managing
sovereign debt workouts, is analogous to a ``hub and spoke.''
During the Latin American debt crisis, the IMF played a key
role negotiating economic reform programs with debtor countries
and in coordinating the contributions of other creditors
groups. In order to ensure that the debtor is undertaking
economic reforms, bilateral creditors insist that the country
negotiate an adjustment program with the IMF before it comes to
the Paris Club. If the debtor is a poor developing country, the
IMF adjustment program will take the form of ESAF loan. In the
same vein, the original HIPC Initiative required that eligible
countries successfully complete two successive ESAF programs in
order to receive full debt relief.
The IMF projects that by the end of this year the ESAF
Trust will reach its cumulative lending target of SDR 10.1
billion, precluding new lending. The ``Interim'' ESAF would
continue IMF concessional lending until the ``self-financed''
ESAF or its successor facility begins operations sometime
between year 2005 and 2007. The Interim ESAF faces a funding
shortfall for loan principal of between SDR 5-7 billion. The
IMF has not yet identified a source for the principal of ESAF
loans. It could seek new loans from bilateral creditors or
subsidize the interest rate on three year loans (``extended
arrangements'') made from the IMF's ordinary resources (the
General Resources Account).
The ESAF-HIPC Trust, which is separate from the ``interim''
ESAF, was established in February 1997, to finance both ESAF
grants (for debt service payments) under the HIPC Initiative
and interim ESAF subsidy operations. Disbursements to fund the
IMF contribution to the HIPC Initiative have already begun,
pre-financed by transfers from the Reserve Account (with the
permission of creditors). The ESAF-HIPC Trust currently faces a
funding shortfall of $3.5 billion (in present value terms).
About $2.3 billion is needed for HIPC operations, and about
$1.2 billion for Interim ESAF subsidies. The resources of the
ESAF-HIPC Trust (apart from the principal amount of Interim
ESAF loans) are to be derived primarily from a combination of
bilateral contributions (including foregone SCA-2 refunds) and
the income on profits from the proposed sales of gold.
Two main criticisms have been leveled against ESAF. First
is the charge that it has applied inappropriate and
counterproductive ``austerity'' policies in developing
countries. In this regard, the 1980's and the early 1990's were
a difficult period for low-income developing countries,
particularly those in Africa. Per capita incomes stagnated or
declined. This led many observers to question the effectiveness
of the remedies embodied in IMF-supported adjustment programs--
especially those backed by ESAF. Criticisms of ESAF have
continued in the context of the HIPC debt initiative, which
conditions debt relief on adherence to ESAF-supported programs.
Second, some critics suggest that ESAF represents IMF
represents IMF ``mission creep'' into areas of development
assistance that are properly the domain of the World Bank and
other multilateral development banks. On the other hand, ESAF
supporters point out that the world's poorest countries cannot
afford IMF balance of payments support at market rates of
interest, and that any fund lending operations to such members
countries should properly be concessional.
Proposals for a ``reformed ESAF'' and a new ``poverty
reduction and growth strategy'' were unveiled at the IMF--World
Bank annual meetings in September 1999. Under the new strategy,
the design of IMF-supported macroeconomic policies would take
more fully into account their potential impact on social and
sectoral programs aimed at poverty reduction while
ensuringmacroeconomic stability. The new approach envisions much closer
interaction with the World Bank in order to make the linkage to poverty
reduction an operational reality. Similar to previous Bank-Fund efforts
to produce a ``policy framework paper,'' EASF lending operations would
be guided by a comprehensive Poverty Reduction Strategy Paper (PRSP)
prepared by the national authorities with assistance from the World
Bank, the IMF and others. The PRSP would have to be endorsed by the
Executive Boards of both the World Bank and the IMF. ESAF performance
measures would explicitly incorporate a set of key poverty reduction
targets set out in the PRSP. According to Treasury Secretary Summers,
adoption of these reforms ``marks a profound change which will put
poverty reduction at the center of IMF and World Bank supported
programs in HIPC and other low income countries.''
During the World Bank--IMF annual meetings this September,
agreement was reached on the main elements of a financing
package that would allow the IMF to mobilize a portion of its
gold reserves to contribute to the HIPC Initiative and to
continue ESAF operations through at least 2005. The total to be
financed is $3.5 billion in 1998 present value terms, and is
largely composed of bilateral contributions made by member
countries as well as the use of the investment income on the
sale of a portion of up to 14 million ounces of the IMF's gold
reserves. Bilateral pledges are $1.4 billion in present value
terms while contributions from the IMF total $2.1 billion.
Because legal title to the gold resides with the Fund, IMF gold
sales do not have any budgetary implications for the U.S. and
no appropriations is required. Under the Bretton Woods
Agreement Act, however, authorization is required for any gold
sale that is to be used for the benefit of a single member or a
particular segment of the IMF's membership.
Because member countries have not pledged enough to fully
fund both debt relief and ESAF, use of IMF resources has become
an integral part of the overall financing package. In this
regard, the Treasury Department has requested congressional
authorization for: (1) approval of off-market sales of up to 14
million ounces of IMF gold, with the transfer of the earnings
on the invested profit from the sale to the ESAF; and (2)
making available to the ESAF-HIPC Trust Fund about $300 million
attributable to U.S. participation in a now unneeded IMF
reserve account called the Special Contingency Account Number 2
(SCA-2). These authorizations were included in H.R. 1095, as
amended.
The IMF originally proposed to sell at public auction
between 5-10% of its gold holdings to finance debt relief and
ESAF. The IMF would retain the book value of the gold. The net
proceeds of sale would be transferred to the Special
Disbursement Account (SDA) and be invested in low-risk
securities. The interest earnings would be used to finance IMF
participation in the HIPC Initiative. The grants for HIPC and
interest rate subsidies for the ``Interim'' ESAF would be
provided through the ESAF-HIPC Trust Fund. But with the price
of gold hovering around historic lows of $250 an ounce
throughout much of 1999, vehement opposition by the gold
industry and key Members of Congress eventually forced Treasury
and the IMF to consider alternative ways of mobilizing IMF gold
reserves.
The new plan is for the IMF to sell up to 14 million ounces
of gold without having an impact on the gold market. In
essence, it is a complicated way to revalue the IMF's gold.
There are two parts to the transaction. The first part is that
the IMF would sell gold at the market price to one or more
member countries that have obligations due to the Fund. The
Fund would then receive the full proceeds of the gold sales in
foreign currency. It would keep the book value, which is SDR 35
per ounce, on the balance sheet of its main capital account
(the General Resources Account or GRA) and transfers the
profits--the difference between the book value and the realized
price--to an account called the Special Disbursement Account
(SDA). The profits would then be invested and earn interest
over approximately the next 18 years. The interest earnings
would be transferred to the ESAF-HIPC Trust and used for
financing HIPC as well as interest rate subsidies for loans
made by the Interim ESAF. In the second part, the Fund would
simultaneously agree to accept the same amount of gold, valued
at the same price, in repayment for obligation coming due.
There would be no sale in the market; the gold would be
available to the member only to settle its obligations and thus
would effectively remain in the IMF. It is expected that the
profits would eventually be returned to the GRA.
The IMF holds 103.4 million fine ounces of gold. It values
its gold at SDR 35 per ounce (about $48 per ounce). Under its
amended charter, there are significant legal limitations on IMF
transactions in gold. The Fund can only sell gold on the basis
of market prices. It may accept gold to discharge a member's
obligations to the IMF. But it cannot engage in gold leasing or
gold lending, enter into gold swaps, utilize gold options or
other transactions (including a pure revaluation) that do not
involve the transfer of ownership of the gold. Any IMF
transactions in gold require an 85% majority of the total
voting power of the Fund. Because the United States has a 17.5%
share of the IMF's voting power, it could unilaterally block a
gold sale.
The IMF's gold is held in the GRA. The book value of any
sales must remain in the GRA (thus increasing the capacity of
the IMF to generate income through loans). The profits must be
placed in the SDA. Use of SDA assets for concessional
assistance to developing members is permitted, in contrast to
the general prohibition of such targeted use of GRA resources,
if approved by an 85% majority. The Fund currently invests the
assets held in so-called ``administered accounts,'' such as the
ESAF-HIPC Trust and the SDA (which holds the profits of the
gold sales), in SDR-denominated deposits at the Bank for
International Settlements.
In 1995, the IMF's Executive Board adopted a policy on
gold. The policy contains the following principles: (1) any
mobilization of IMF gold should avoid weakening its overall
financial position; (2) the IMF should continue to hold a
relatively large amount of gold among its assets; (3) the IMF
has a responsibility avoid causing disruptions to the
functioning of the gold market; and (4) the profits from any
gold sales should be retained, and only the invested income
used for IMF operations.
The IMF has established Special Contingency Accounts (SCAs)
in the GRA to serve as precautionary balances on certain IMF
lending. Resources for these SCAs are obtained by increasing
the rate of charge to borrowing countries and decreasing the
rate of remuneration to lending countries. The SCA-2 has
accumulated the SDR 1 billion (about $1.4 billion) that it was
designed to achieve, and no further funding is required.
Contributions to the SCA-2 are to be returned to Members when
no longer required for their original purpose. The U.S. share
is SDR 220 million or about $300 million.
In order to ensure that none of the earnings on the
invested profits of IM gold sales will be used to finance ESAF,
the Committee conditioned the authorization for the U.S. to
consent to the arrangement on the creation of a separate sub-
account for the interest earnings and that the earnings may
only be used to finance the IMF's contribution to debt relief
under the modified HIPC Initiative. A similar requirement was
established of the transfer of funds from the SCA-2 to the
ESAF/HIPC Trust. Under the Bretton Woods Agreements Act, as
amended (Sec. 22 U.S.C. 26(c)), congressional authorization is
required for the U.S. to approve the proposed IMF gold sales.
Hearings
On June 15, 1999 the House Banking Committee held a hearing
on debt relief. Present were Tim Geithner, Treasury Under
Secretary for International Affairs; Reverend J. Bryan Hehir,
The Center for International Affairs, Harvard University; Salih
Booker, Senior Fellow & Director of Africa Studies, Council on
Foreign Relations; Lydia Williams, Advocacy Coordinator, Oxfam
America; and Jeffrey Sachs, Director, Harvard Institute for
International Development, Harvard University; with the
testimony of The Most Reverend Frank T. Griswold, Presiding
Bishop and Primate, the Episcopal Church, submitted for the
record.
On March 21, 1999, the Subcommittee on Domestic and
International Monetary Policy, Committee on Banking and
Financial Services, held a hearing on the Administration's FY
2000 authorization requests for the international financial
institutions and related programs. Present were Lawrence
Summers, Deputy Secretary of the Treasury; Nancy Birdsall,
Senior Associate, Carnegie Endowment for International Peace;
Njoki Njehu, Coordinator, Fifty Years is Enough Network; Lydia
Williams, Advocacy Coordinator, Oxfam America; George Milling-
Stanley, Manager, Gold Market Analysis, World Gold Council; Jo
Marie Griesgraber, Director, Rethinking Bretton Woods, Center
of Concern.
Committee Consideration and Votes
On November 3, 1999, the Committee met in open session to
mark up legislation authorizing debt relief for heavily
indebted poor countries. The Committee considered as original
text for purposes of amendment a substitute amendment striking
all after the enacting clause. The Committee considered a
number of amendments to the substitute, accepting many of them
by voice vote. The following amendments passed by voice vote:
(1) an amendment offered by Rep. Frank providing that once a
country becomes eligible for bilateral debt relief that country
will not have to make debt service payments on any debt owed to
the U.S. so long as it remains in compliance with the Act; (2)
an amendment offered by Rep. Frank eliminating reference to the
``modified HIPC Initiative'' in Presidential determinations of
country eligibility for bilateral debt relief; (3) an amendment
offered by Rep. Vento inserting child labor and workers rights
as a consideration in granting bilateral debt relief; (4) an
amendment offered by Rep. Waters ensuring that countries that
support or condone the practice of slavery will not be eligible
to receive bilateral debt relief; (5) an amendment offered by
Rep. Waters (as modified by Rep. Watt) requiring the Secretary
of the Treasury to provide or arrange for technical assistance
to countries regarding the establishment and management of
Human Development Funds; (6) an amendment offered by Rep. Frank
(as modified by Rep. Watt) providing that in carrying out
bilateral debt relief under the Act, the President should seek
to leverage scarce foreign assistance dollars and give priority
to those heavily indebted poor countries with demonstrated need
and the capacity to use such relief effectively; (7) an
amendment offered by Rep. Campbell stating the sense of the
Congress providing that future bilateral assistance to poor
countries receiving debt relief should be in the form of grants
only; (8) an amendment offered by Rep. Bentsen to include in an
annual reporting requirement an additional requirement that
Congress be advised on country compliance and accomplishment in
achieving poverty reduction reform goals under the Act; (9) a
technical amendment offered by Rep. LaFalce to the
certification language on IMF gold sales; (10) and amendment
offered by Rep. Sherman inserting a requirement that Southeast
Asian countries receiving debt relief cooperate in POW/MIA
recovery efforts; (11) an amendment offered by Rep. Maloney
inserting the country's record on female genital mutilation as
a consideration in granting bilateral debt relief; (12) an
amendment offered by Rep. Waters stating that the amount of
debt relief provided to a country under the modified HIPC
Initiative should be sufficient to ensure that the size of the
country's outstanding debt does not exceed the value of its
annual exports; (13) an amendment offered by Rep. Waters
stating that the amount of debt relief provided to a country
under the modified HIPC Initiative be sufficient to reduce the
country's annual debt service payment to no greater than ten
percent of the country's annual revenues; (14) an amendment
offered by Rep. Bachus requiring the U.S. Executive Directors
at the IMF and World Bank to abolish ESAF and replace it with a
Poverty Reduction and Growth Facility; and (15) an amendment
offered by Rep. Kelly, providing for a General Accounting
Office study of U.S. and IFI lending policies to HIPC countries
to evaluate if those policies avoid moral hazard and promote
economic growth and poverty reduction.
Rollcall votes were taken on the following amendments:
The Committee rejected by recorded vote an amendment
offered by Rep. Campbell and Rep. Sanders to forgive all U.S.
bilateral assistance to Heavily Indebted Poor Countries with no
conditionality. The amendment was defeated 2-21.
YEAS NAYS
Mr. Campbell Mr. Leach
Mr. Sanders Mrs. Roukema
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. Royce
Mr. Lucas
Mrs. Kelly
Mr. Riley
Mr. Sweeney
Mrs. Biggert
Mr. Terry
Mr. Toomey
Mr. LaFalce
Mr. Vento
Mr. Frank
Mrs. Maloney
Mr. Bentsen
Mr. Inslee
Mr. Moore
Mr. Capuano
The Committee adopted by recorded vote an amendment offered
by Mr. Campbell expressing the Sense of Congress that future
U.S. assistance to heavily indebted poor countries, under
section 2 of the bill, be in the form of grants only. The
amendment passes 22 to 11.
YEAS NAYS
Mr. Leach Mrs. Roukema
Mr. Baker Mr. Royce
Mr. Lazio Mr. Ryun of Kansas
Mr. Bachus Mr. Ose
Mr. Castle Mrs. Biggert
Mr. Campbell Mr. Green
Mrs. Kelly Mr. Toomey
Dr. Paul Mr. Maloney
Mr. Manzullo Mr. Sherman
Mr. Ryan of Wisconsin Mr. Goode
Mr. LaFalce Ms. Schakowsky
Mr. Vento
Mr. Frank
Ms. Waters
Mr. Sanders
Mr. Watt
Mr. Bentsen
Ms. Hooley
Mr. Weygand
Mr. Meeks
Mr. Moore
Mr. Capuano
The Committee also adopted by recorded vote an amendment
offered by Rep. Waters to make Nigeria eligible for bilateral
debt relief as well as urging that Nigeria become eligible for
such relief under the modified HIPC Initiative. The amendment
passed 26 to 13.
YEAS NAYS
Mr. Leach Mrs. Roulema
Mr. Bachus Mr. Lucas
Mr. Campbell Mrs. Kelly
Mr. Royce Dr. Paul
Mr. Sweeney Mr. Ryun of Kansas
Mr. LaFalce Mr. Riley
Mr. Vento Mr. Manzullo
Mr. Frank Mr. Jones
Ms. Waters Mr. Ose
Mr. Sanders Mrs. Biggert
Mr. Gutierrez Mr. Terry
Mr. Watt Mr. Green
Mr. Bentsen Mr. Toomey
Mr. Maloney
Ms. Hooley
Ms. Carson
Mr. Weygand
Mr. Sherman
Mr. Sandlin
Mr. Meeks
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mr. Gonzalez
Mrs. Jones
Mr. Capuano
The Committee defeated by record vote an amendment offered
by Rep. Bentsen to require any country obtaining debt relief
under this bill to agree to a 3-year moratorium on borrowing or
assuming long-term non-concessional debt. The amendment was
defeated 21 to 11.
YEAS NAYS
Mr. Campbell Mr. Leach
Mr. Royce Mrs. Roukema
Dr. Paul Mr. Lazio
Mr. Cook Mr. Bachus
Mr. Manzullo Mrs. Kelly
Mr. Ryan of Wisconsin Mr. Ryun of Kansas
Mr. Sweeney Mr. Riley
Mr. Terry Mrs. Biggert
Mr. Toomey Mr. Green
Mr. Bentsen Mr. LaFalce
Mr. Maloney Mr. Vento
Mr. Frank
Mrs. Waters
Mr. Sanders
Mr. Watt
Mr. Sherman
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano
The Committee adopted by recorded vote an amendment offered
by Reps. Sanders, Campbell, Carson, Jones of Ohio, Meeks of New
York, Paul and Gutierrez, modified to include language offered
by Rep. Waters, that urges the President to immediately
commence efforts to achieve the modification of Heavily
Indebted Poor Countries Initiative so that debt reduction for
Heavily Indebted Poor Countries shall not be conditioned on any
country adopting or implementing any structural adjustment
program of the IMF. The amendment also strikes the waiting
period for debt reduction and the requirement that countries
seeking debt reduction enter into a program for poverty
reduction with the IMF and the IBRD. The additional language
offered by Rep. Waters urges that reform of the HIPC Initiative
include a requirement that countries adopt a Natural Resources
Development Plan as a condition of receiving full debt relief.
The amendment passed 21 to 14.
YEAS NAYS
Mr. Campbell Mr. Leach
Dr. Paul Mrs. Roukema
Mr. Manzullo Mr. Bachus
Mr. Ryan of Wisconsin Mr. Castle
Mr. Terry Mr. Royce
Mr. Toomey Mr. Barr
Mr. LaFalce Mrs. Kelly
Mr. Vento Mr. Riley
Mr. Frank Mr. Ose
Ms. Waters Mrs. Biggert
Mr. Sanders Mr. Green
Mr. Gutierrez Mr. Ackerman
Mr. Watt Mr. Maloney
Ms. Hooley Mr. Sherman
Ms. Carson
Mr. Meeks
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano
An amendment offered by Reps. Paul, Campbell, McCollum and
Jones of North Carolina to sunset the Bretton Woods Act after
three years with a report from Treasury on alternatives after
two years was defeated by a recorded vote of 22 to 12.
YEAS NAYS
Mr. Campbell Mr. Leach
Mr. Barr Mrs. Roukema
Dr. Paul Mr. Lazio
Mr. Ryun of Kansas Mr. Bachus
Mr. Riley Mrs. Kelly
Mr. Manzullo Mr. Ose
Mr. Ryan of Wisconsin Mr. Terry
Mr. Sweeney Mr. LaFalce
Mrs. Biggert Mr. Vento
Mr. Green Mr. Frank
Mr. Toomey Ms. Waters
Mr. Goode Mr. Sanders
Mr. Watt
Mr. Maloney
Ms. Hooley
Ms. Carson
Mr. Sherman
Mr. Meeks
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano
The Committee adopted the substitute amendment as amended
and then brought up H.R. 1095, struck everything after the
enacting clause, and inserted in lieu thereof the substitute
amendment, as amended. The motion passed by voice vote.
The Committee favorably reported H.R. 1095 as amended to
the full House by a vote of 23 to 16.
YEAS NAYS
Mr. Leach Mrs. Roukema
Mr. Lazio Mr. Royce
Mr. Bachus Mr. Ney
Mr. Campbell Mr. Barr
Mrs. Kelly Dr. Paul
Mr. LaFalce Mr. Ryun of Kansas
Mr. Vento Mr. Riley
Mr. Frank Mr. Manzullo
Ms. Waters Mr. Ryan of Wisconsin
Mr. Sanders Mr. Ose
Mr. Gutierrez Mr. Sweeney
Mr. Watt Mrs. Biggert
Mr. Ackerman Mr. Terry
Mr. Bentsen Mr. Green
Mr. Maloney Mr. Toomey
Ms. Hooley Mr. Goode
Ms. Carson
Mr. Sherman
Mr. Meeks
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform
In compliance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, no oversight findings have
been submitted to the Committee by the Committee on Government
Reform.
Constitutional Authority
In compliance with clause 3(d)(1) of rule XIII of the Rules
of the House of Representatives, the Constitutional Authority
for Congress to enact this legislation is derived from Article
I, section 8, clause 1 (relating to the general welfare of the
Untied States): Article I, section 8, clause 3 (relating to
Congressional power to regulate commerce); Article 1, section
8, clause 5 (relating to the power ``to coin money'' and
``regulate the value thereof''); Article I, section 8, clause
18 (relating to making all laws necessary and proper for
carrying into execution powers vested by the Constitution in
the government of the United States).
New Budget Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, please see the attached
Congressional Budget Office cost estimate.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Congressional Accountability Act
The reporting requirement under section 102(b)(3) of the
Congressional Accountability Act (P.L. 104-1) is inapplicable
because this legislation does not relate to terms and
conditions of employment or access to public services or
accommodations.
Congressional Budget Office Cost Estimate and Unfunded Mandates
Analysis
The cost estimate in compliance with clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives and Section
402 of the Congressional Budget Act of 1974 has been requested
but is not yet available.
Section-by-Section Analysis of the Debt Relief for Poverty Reduction
Act of 1999
Sec. 1. Short title this section designates the bill as the ``Debt
Relief for Poverty Reduction Act of 1999''.
Sec. 2. Actions to provide bilateral debt relief and procedures for new
loans, credits, and guarantees
Subsection (a) amends the Foreign Assistance Act of 1961
(``the Act'') by adding new sections 901-907.
Sec. 901--Cancellation of Debt. Section 901(a) amends the
Act to require the President to cancel, prior to September 30,
2004, all amounts owed to the U.S. or any agency thereof by
eligible countries described in section 902 as a result of
concessional loans made or credits extended prior to June 20,1
999. This section includes bilateral economic assistance,
including loans made under Title I of the PL 480 Food for Peace
program. Section 901(b) amends the Act to require the President
to cancel, prior to September 30, 2004, all amounts owed to the
U.S. or any agency thereof by eligible countries under section
902 as a result of nonconcessional loans, guarantees or
insurance, or credits provided prior to June 20, 1999. This
section includes housing guarantees and loans made to finance
defense sales under the Arms Export Control Act. Sections
901(a) and 901(b) are subject to amounts provided in advance in
appropriations acts. Section 901(c) amends the Act by requiring
the U.S. to provide immediate relief form debt service payments
with respect to amounts owed to the U.S. for which debt
cancellation is to be provided beginning on the date on which
the country is determined to be so eligible under sec. 902 so
long as the country remains in compliance with the eligibility
criteria and maintains the link to poverty reduction described
below. None of the provisions of sec. 901 are intended to apply
to the U.S. Overseas Private Investment Corporation.
Sec. 902--Eligible Countries. Section 902(a) amends the Act
by establishing eligibility criteria for cancellation of debts
owed to the Untied States, First, the President must be
satisfied that thecountry is performing satisfactorily under an
economic program. Second, as of December 31, 2000, the country must be
eligible to borrow from the International Development Association (the
concessional lending facility of the World Bank Group) and must be
ineligible to borrow from the International Bank for Reconstruction and
Development (the market rate lending facility of the World Bank Group)
or is Nigeria. If the country meets the general eligibility criteria
established above, it must also meet one of two indebtedness tests.
Section 902(a)(3)(A) defines an indebtedness test that would make the
original 41 HIPC countries including Bangladesh, Cambodia, Comoros, and
Haiti eligible for U.S. debt cancellation. Section 902(a)(3)(B) states
the revised debt sustainability targets agreed to by the G-7 at Cologne
in June 1999. However, the determination of country eligibility under
Section 902(a)(3)(B) is to be made by the President and is not linked
to the modified HIPC Initiative. Current estimates are that between 33-
37 countries will ultimately qualify for enhanced relief under the
Cologne criteria.
Section 902(b) establishes six exceptions to country
eligibility: (1) excessive military spending; (2) support for
acts of international terrorism; (3) failure to cooperate on
international narcotics control matters; (4) gross violations
of internationally recognized human rights; (5) support for the
practice of slavery or failing to make a concerted effort to
eradicate the practice; or (6) if the country is located in
Southeast Asia and is failing to fully cooperate with the U.S.
on POW/MIA issues.
Section 902(c) establishes an additional requirement to
strengthen the linkage between debt relief and poverty
reduction. Eligible countries have the choice of either
establishing this linkage, through transparent and
participatory processes, through one of two mechanisms: a Human
Development Fund or Integrated Poverty Reduction Strategy.
Section 902(c)(1) elaborates the requirements for Human
Development Fund (HDF), the resources of which shall be
dedicated reducing poverty and expanding access to the poorest
members of society to basic social services, including
education, health, clean water, and sanitation. There is no
requirement that the country be performing satisfactorily under
IMF or World Bank economic and social reform programs. Section
902(c)(2) elaborates the requirements of an integrated strategy
for poverty reduction, developed in cooperation with the World
Bank and IMF. On the request of the country, the Secretary of
the Treasury is required to provide or otherwise arrange for
technical assistance to the country to help establish and
manage a HDF. Similarly, the Secretary is urged to encourage
the international financial institutions to provide funds for
the country to hire technical assistance in the establishment
and management of the HDF. Section 902(d) defines the modified
HIPC Initiative.
Sec. 903--Priority. This section provides that in carrying
out debt relief under the Act, the President should seek to
leverage scarce foreign assistance dollars and give priority to
those heavily indebted poor countries with demonstrated need
and the capacity to use such relief effectively.
Sec. 904--Special Provisions. Section 904(a) provides that
a cancellation of debt under section 901 shall not be
considered to be assistance for any provision of law that
limits assistance to a country, except as the President may
determine for reasons of national security. Section 904(b)
states that the authority to provide for debt cancellation may
be exercised notwithstanding sec. 620(r) of the Act, which
provides that no recipient of a loan made under the Act shall
be relieved of liability for the repayment of any part of the
principal of or interest on such loan. Section 904(c) states
that cancellation of debt under section 901 is an additional
authority and does not limit the authority to cancel debt under
any other provision of law. Section 904(d) states that in
exercising the authority under sec. 901, the President shall
take into account the country's record on child labor and
workers rights. Section 904(e) further states that in
exercising his authority under section 901, the President shall
take into account the country's record with regard to female
genital mutilation.
Sec. 905--Annual Reports to Congress. This provision
requires the President to issue a comprehensive public report
to the appropriate congressional committees regarding U.S.
bilateral debt relief for eligible heavily indebted poor
countries. The report shall be completed by not later than
December 31 of each year. Appropriate committees are the
Banking, Appropriations, and International Relations Committees
of the House, and the Banking, Foreign Relations, and
Appropriations Committees of the Senate.
Sec. 906--Sense of the Congress. This section states that
it is the sense of the Congress that the amounts that would
otherwise be provided by the U.S. for development aid or other
debt relief should not be reduced on account of any
appropriations made pursuant to section 907.
Sec. 907--Authorization of Appropriations. For the cost (as
defined in section 502(5) of the Federal Credit Reform Act of
1990) of the cancellation or reduction of any debt under
section 901 of this Act, the section authorizes to be
appropriated to the President such sums as may be necessary for
each of the fiscal years 2000 and 2001.
(b) Annual Report on Paris Club Debt Rescheduling Actions
and Cancellations. This provision requires an annual report by
the Secretary of the Treasury on Paris Club debt restructuring
actions and cancellations shall be prepared no later than Jan.
1, 2000. The report submitted to Congress shall contain (1) a
description of debt restructuring actions and cancellations
undertaken the U.S. in the Paris Club for the prior fiscal year
and (A)(i) describe the amount of debt restructured with
respect to each member country; (ii) the new maturity of each
such debt restructured; (iii) the new interest rates and other
costs of such restructured; (iv) any other terms and conditions
of each such debt restructured; and (B) an assessment of the
debt restructuring, including an assessment of the effect of
the restructuring on the debt service payments of the debtor
country; and (2) a description of all amounts owed to the U.S.
Government by foreign countries as a result of loans,
guarantees or insurance, or credits extended.
(c) Cancellation of Debt Owed to the Export-Import Bank or
the Commodity Credit Corporation.--Subsection (c)(1)(A) states
that subject to amounts provided in advance in appropriations
Acts, the President shall cancel all amounts owed to the Ex-Im
Bank of the U.S. by each country eligible for debt reduction as
a result of loans, guarantees, or insurance, provided prior to
June 20, 1999. This provision covers the Export-Import Bank and
the Commodity Credit Corporation. Subsections (c)(2)-(c)(4)
repeat provisions on country eligibility, exceptions, and in
the Foreign Assistance Act. Section (c)(5) defines the
``modified HIPCInitiative.'' Subsections (c)(6)--(c)(8) restate
the funding priority, requirement on child labor and workers rights,
and female genital mutilation as in sections 903 and 904 amending the
Foreign Assistance Act. Subsection (c)(9) states that the authority to
reduce debt is an additional authority. Subsection (c)(10) states that
for the cost of the reduction of debt, there are authorized to be
appropriated to the President such sums as may be necessary for each of
the fiscal years 2000 through 2004.
(d) Ensuring Burdensharing by Other Creditor Countries.--
This section urges the President to establish efforts,
immediately after enactment of this Act, with other countries
that are members of the Paris Club and other creditors to
accomplish by September 30, 2004 the following: (1)
cancellation of all concessional debts owed by eligible
countries as of their respective decision points; (2)
cancellation of nonconcessional loans, guarantees or insurance
owed by eligible countries eligible as of their respective
decision points; and (3) the establishment of procedures by the
Club to ensure greater transparency in the decisionmaking
process, including publication of information for each
restructuring action undertaken by the Club as to the amount of
sovereign debt restructured, as to whom amounts are owed and by
how much each is owed, disaggregated by each country, as to how
much each debtor country owes each international financial
institution (IFI), as to new maturity or maturities of the
restructured debts, as to new interest rate and other costs
associated with the restructured debts, and as to any other new
terms. Such information shall be contrasted with such amounts
and terms in effect before the restructuring and offer an
assessment of the effects the restructuring will have on the
country's debt servicing.
(e) Definition of Decision Point.--This provision defines
the term ``decision point'' as it is used in the modified HIPC
Initiative.
(f) Sense of Congress.--This provision states the Sense of
the Congress that U.S. bilateral assistance to a country that
receives cancellation of debt should be in the form of grants
only.
Sec. 3. Actions to improve the provision of multilateral debt relief
and procedures for new lending
Section 3 adds new sections 1623--1625 to amend title XVI
of the International Financial Institutions Act.
Sec. 1623--Improvement of the Heavily Indebted Poor
Countries Initiative; Ensuring Equitable Burden Sharing.
Section 1623(a) urges the President to commence efforts to
accomplish the following modifications in the HIPC Initiative:
(1) de-linking debt reduction from IMF programs; (2) promoting
poverty alleviation and environmental protection; (3) revising
the Cologne eligibility criteria to include Nigeria; (4)
requiring as a condition of debt relief an action plan for
human development that includes a HDF; (5) requiring as a
condition of debt relief a requirement that Southeast Asian
countries cooperate with the U.S. on POW/MIA issues; (6)
requiring a natural resources development plan, which (A)
covers at least a 5-year period for the development of the
country's natural resources in a manner that will benefit the
people of the country, (B) includes provisions for transparency
of government contracts with foreign or multinational
corporations, and (c) provides technical assistance from the
IFIs to countries in developing such plans and negotiating or
renegotiating contract with foreign or multinational
corporations for the development of natural resources; (7)
provides an amount of debt reduction sufficient to reduce the
net present value of country's debt to less than 100% of its
annual exports and annual debt service payments not greater
than 10% of government revenues; (8) provides greater
transparency and participation in HIPC decision making; (9)
fosters additional or faster relief for countries with a
sustained commitment to poverty reduction and special
consideration for a country emerging from civil conflict or
that has recently suffered a natural disaster; (10) requires an
external assessment of the modified HIPC Initiative, including
the reformed ESAF as it relates to that Initiative, by December
31, 2001; and (11) terminating of the HIPC Initiative when all
contemplated debt relief is accomplished. In addition, a
freestanding provision is added stating that on the request of
the country, the World Bank should provide technical assistance
to the country regarding the establishment and management of
the HDF.
Sec. 1623(b)--Promotion of Equitable Burden Sharing.--This
subsection urges the President to commence efforts to ensure
that creditors draw upon their own resources to finance debt
reduction under the modified HIPC Initiative without diverting
funds from other high priority poverty alleviation programs.
Sec. 1623(c)--Contributions to the HIPC Trust Fund.--This
subsection authorizes such sums as may be necessary for the
World Bank's HIPC Trust Fund, but only for the purposes of debt
relief, for FY 2000-2004, except that no sums are authorized
for such purpose for the fiscal year unless the President
determines that, during the preceding fiscal year (1)
satisfactory progress was made in accomplishing improvements in
the HIPC Initiative and (2) the United States' contributions to
multilateral debt relief under the Initiative were matched, by
a ratio of at least two to one by resources provided in the
aggregate by all other donors.
Sec. 1623(e)--Report to Congress.--This subsection requires
that not later than December 31 of each year, the President
shall submit to the appropriate congressional committees a
public report on the progress made in reforming the HIPC
Initiative and achieving multilateral debt relief.
Sec. 1623(f)--Definitions.--This subsection repeats the
definition of ``modified HIPC Initiative'' and ``decision
point.''
Sec. 1624--Reform of the Enhanced Structural Adjustment
Facility. This section requires the Secretary of the Treasury
to instruct the U.S. Executive Directors at the World Bank and
IMF to use their voice and vote to promote the establishment of
poverty reduction strategy policies and procedures at those
institutions which have the following components: (1) the
development of country-specific poverty reduction strategies,
that (A) will be set out in poverty reduction strategy papers
(PRSPs); (B) will reflect the relevant expertise of the World
Bank and IMF; (C) will make Fund and Bank advice and operations
fully consistent with the objectives of poverty reduction and
broad-based growth; (D) should include a participatory poverty
assessment, social impact assessments, a balance between
poverty reduction and macroeconomic objectives, and transparent
budget procedures; (2) the adoption of periodic comprehensive
reviews of ESAF and IDA programs; (3) the publication of PRSPs;
(4) the establishment of a standing evaluation unit at the IMF,
similar to the Operations Evaluation Department at the World
Bank, that wouldreport directly to the Executive Board of the
Fund and that would undertake periodic reviews of IMF operations,
including ESAF, with all such reports released promptly to the public;
(5) the promotion of simpler and clearer conditionality in IDA and ESAF
programs; (6) the reform of ESAF programs that are consistent with the
Poverty Reduction Strategies; (7) policies that ensure that IDA lending
operations in HIPC countries are consistent with the Poverty Reduction
Strategies; (8) strengthening the linkage between borrower country
performance and lending operations by IDA and ESAF; (9) the full public
disclosure of the proposed objectives, financial organization and
operations of the successor to ESAF at least 90 days before any
decision by the Executive Board to consider its adoption; and (10) the
abolishment of ESAF, and its replacement with a Poverty Reduction and
Growth Facility, which will be a subordinate part of a new approach to
defining the economic framework for low-income countries.
Sec. 1625--Transparency and Participation of Civil Society
in new IFI Lending. This section requires the Secretary of the
Treasury to instruct the U.S. Executive Directors at the
international financial institutions to use their voice and
votes to vigorously encourage their respective institutions to
adopt transparency and other measures to facilitate
participation of civil society in developing countries in the
design of poverty reduction strategies and in decisions to
borrow from such institutions in support of such strategies,
including: (1) the disclosure of Policy Framework Papers,
Public Expenditure Reviews, Country Assistance Strategies, IMF
Letters of Intent, appraisal documents and other similar
reports; and (2) the provision of detailed information to the
Board of Directors of such an institution and to the public,
prior to the approval of a lending operation for a developing
country, as to the nature and extent of civil society
participation in the design of, and approval process for, such
operation.
Sec. 4. Enhanced Structural Adjustment Facility/HIPC Trust Fund
Section 4 amends the Bretton Woods Agreements by adding at
the end the following new Section 62.
Sec. 62--Approval of Contributions to the ESAF/HIPC Trust
Fund. Subsection (a)(1) authorizes the Secretary of the
Treasury to instruct the U.S. Executive Director of the IMF to
vote to approve the sale of up to 14 million ounces at a
market-related price to a member of members that have large
repayment obligations to the IMF. Simultaneously, the IMF
agrees to accept the same amount of gold, valued at the same
market-related price, in settlement of some or all of the
member's repayment obligations. It is the Committee's
understanding that under the mechanics of the contemplated
transaction, the IMF's gold would be available to the member
only to settle its obligations and thus would effectively
remain in the IMF's possession. This provision further requires
that the earnings on the invested profits of such sales be
placed within a separate subaccount within the ESAF/HIPC Trust,
and used only for providing debt relief from the Fund under the
modified HIPC Initiative. Subsection (a)(2) authorizes the U.S.
to support the transfer of resources from the SCA-2 to the
ESAF/HIPC Trust, including some $330 million attributable to
the United States, which funds shall be used only for debt
relief. Section 62(b) adds a requirement that within 15 days
after the U.S. Executive Director consents to mobilizing IMF
gold holds and the SCA-2 transfer, the Secretary of the
Treasury shall certify to the appropriate congressional
committees that: (1) the IMF's estimate of the net present
value of the interest earnings on the total amount of gold sold
shall not be greater than the net present value of the costs of
the Fund's participation in the modified HIPC Initiative; (2)
the interest earnings on the invested profits shall be
deposited in a separate subaccount and used only for debt
relief from the Fund under the Initiatives; and (3) any funds
attributable to the U.S. participation in the transfer of
resources from SCA-2 shall be used only for debt relief from
the Fund under the Initiative.
Sec. 5. U.S. international financial agreements; transmission to
Congress
Section 5 amends Sec. 112b of Title 1, U.S.C., the so-
called ``Case Act,'' to require the Treasury Department to
transmit to the House and Senate Banking Committees a copy of
any international financial agreements entered into by the
government of the United States. The Committee is seriously
disturbed that the Department of the Treasury has failed to
notify it of international financial agreements, most recently
the renewal of the North American Framework Agreement. This
provision is intended to remedy that egregious lack of
consultation and notice with this Committee and, more
generally, the Congress as a coequal branch of government on
fundamental issues of U.S. international economic and financial
policy.
Sec. 6. Corruption in foreign governments
Subsection (a) states the Sense of the Congress with
respect to U.S. government policies to prevent money laundering
and systemic corruption in other countries, and (b) amends
Title XV of the International Financial Institutions Act to add
a new section 1504. Section 1504 requires the Secretary of the
Treasury to instruct the U.S. Executive Directors of the
multilateral development banks to use aggressively their voice
and vote to promote policies that would make their institutions
more effective mechanisms for promoting good governance and
anti-corruption principles within recipient countries. An
identical statutory provision already applies to the IMF.
Subsection (c) adds an annual reporting requirement on U.S.
efforts consistent with the above objectives.
Sec. 7. Safeguards on the use of IMF resources
The Bretton Woods Agreements Act, (22 U.S.C. 286-286mm) is
amended by adding a new Section 63.
Section 63 requires the Secretary of the Treasury to
instruct the U.S. Executive Director at the IMF to use their
voice and vote to: (1) require independent audits of central
banks on a more systematic basis; (2) ensure such audits occur
before IMF financing is disbursed; (3) develop a systematic
approach to reducing inappropriate uses of foreign exchange
reserves; and (4) strongly encourage countries receiving
exceptional levels of financial support to adopt and comply
with Fund standards on foreign reserve management. In the wake
of the FIMACO scandal involving efforts by the Central Bank of
Russia to mislead the IMF, these provisions reflect the
Committee's deep concern that safeguards should be
significantly strengthened on the use of IMF resources by
borrowing countries.
Sec. 8. U.S. lending policies toward countries receiving debt relief
This section of the bill requires the GAO to prepare a
report on efforts to ensure that the lending policies of the
U.S. and the IFIs toward countries eligible for debt relief
avoid moral hazard and promote economic growth and poverty
reduction. The report shall be submitted to the appropriate
congressional committees not later than September 30, 2000.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
PART VI OF THE FOREIGN ASSISTANCE ACT OF 1961
PART VI--CANCELLATION OF DEBT OWED TO THE UNITED STATES BY POOR
COUNTRIES
SEC. 901. CANCELLATION OF DEBT.
(a) Cancellation of Concessional Debt.--
(1) In general.--Subject to amounts provided in
advance in appropriations Acts, the President shall,
prior to September 30, 2004, cancel all amounts owed to
the United States (or any agency of the United States)
by countries eligible under section 902 as a result of
concessional loans made or credits extended prior to
June 20, 1999, under any of the provisions of law
described in paragraph (2).
(2) Provisions of law.--The provisions of law
described in this paragraph are the following:
(A) Part I of this Act, including chapter 4
of part II of this Act, or predecessor foreign
economic assistance legislation.
(B) Title I of the Agricultural Trade
Development and Assistance Act of 1954 (7
U.S.C. 1701 et seq.).
(b) Cancellation of Nonconcessional Debt.--
(1) In general.--Subject to amounts provided in
advance in appropriations Acts, the President shall,
prior to September 30, 2004, cancel all amounts owed to
the United States (or any agency of the United States)
by countries eligible under section 902 as a result of
nonconcessional loans made, guarantees or insurance
issued, or credits extended prior to June 20, 1999,
under any of the provisions of law described in
paragraph (2).
(2) Provisions of law.--The provisions of law
described in this paragraph are the following:
(A) Sections 221 and 222 of this Act.
(B) The Arms Export Control Act (22 U.S.C.
2751 et seq.).
(c) Immediate Relief from Debt Service Payments.--A country
eligible under section 902 for debt cancellation under this
section shall not be obligated to make debt service payments
with respect to amounts owed to the United States for which
debt cancellation is to be provided beginning on the date on
which the country is determined to be so eligible under section
902 so long as the country remains in compliance with the other
provisions of this part.
SEC. 902. ELIGIBLE COUNTRIES.
(a) In General.--Except as provided in subsection (b) and
subject to the fulfillment of the additional requirement in
subsection (c), a country that is performing satisfactorily
under an economic reform program shall be eligible for
cancellation of debt under section 901 if the country--
(1) as of December 31, 2000, is eligible to borrow
from the International Development Association;
(2) as of December 31, 2000, is not eligible to
borrow from the International Bank for Reconstruction
and Development, or is Nigeria; and
(3)(A) has outstanding public and publicly guaranteed
debt, the net present value of which on December 31,
1996, was at least 150 percent of the average annual
value of the exports of the country for the period 1994
through 1996; or
(B) has outstanding public and publicly guaranteed
debt, the net present value of which, as of the date
the President determines that the country is eligible
for debt relief under all the criteria set forth in
this section, is--
(i) at least 150 percent of the annual value
of the exports of the country, for the most
recent year for which such information is
available; or
(ii) at least 250 percent of the annual
fiscal revenues of the country, and the country
has a minimum ratio of exports to gross
domestic product of 30 percent and a minimum
ratio of fiscal revenues of the country to
gross domestic product of 15 percent, for the
most recent year for which such information is
available.
(b) Exceptions.--A country shall not be eligible for
cancellation of debt under section 901 if--
(1) the government of the country has an excessive
level of military expenditures;
(2) the government of the country has 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));
(3) the government of the country is failing to
cooperate on international narcotics control matters;
(4) the government of the country (including its
military or other security forces) engages in a
consistent pattern of gross violations of
internationally recognized human rights;
(5) the government of the country supports or
condones the practice of slavery or there is documented
evidence of the existence of slavery in the country and
the government is not making a concerted effort to
eradicate the practice; or
(6) the country is located in Southeast Asia, and the
government of the country is failing to fully cooperate
with the United States on all issues involving United
States prisoners of war/missing in action (POW/MIA), as
determined by the Secretary of State.
(c) Additional Requirement.--A country which is otherwise
eligible to receive cancellation of debt under section 901 may
receive such cancellation only if--
(1) the government of the country has established,
through transparent and participatory processes,
including participation of civil society--
(A) a human development fund (hereinafter
referred to as the ``Human Development
Fund'')--
(i) the resources of which shall be
dedicated to reducing the number of
persons living in poverty, expanding
access of the poorest members of
society to basic social services,
including education, health, clean
water and sanitation, and preventing
the degradation of the environment; and
(ii) into which shall be deposited
all savings generated by debt reduction
pursuant to section 901 and section
2(c) of the Debt Relief for Poverty
Reduction Act of 1999;
(B) arrangements to ensure that all
expenditures from the Human Development Fund
during a year will be used to the extent
possible to increase annual expenditures for
human development by the government above the
greater of--
(i) the total amount of annual
expenditures for human development by
the government for the preceding year;
or
(ii) the average total amount of such
expenditures for the 3 years
immediately preceding the year in which
such fund is established; and
(C) arrangements for monitoring the
operations and financial transactions and
accounts of the Human Development Fund by an
oversight body which includes representatives
of civil society; or
(2) the country has developed and committed to an
integrated strategy, of the type described in section
1624(a)(1) of the International Financial Institutions
Act, for poverty reduction developed in cooperation
with the International Bank for Reconstruction and
Development and the International Monetary Fund, and in
consultation with civil society, which--
(A) uses economic reform and technical
assistance programs developed and jointly
administered by the International Bank for
Reconstruction and Development and the
International Monetary Fund;
(B) includes monitorable poverty reduction
goals (such as increasing literacy, reducing
infant and child mortality, lowering the
incidence of AIDS, and improving environmental
conditions) developed in cooperation with the
International Bank for Reconstruction and
Development, relevant agencies of the United
Nations, civil society groups, and other
appropriate organizations;
(C) takes steps so that the financial
benefits from debt relief pursuant to the
modified Heavily Indebted Poor Countries (HIPC)
Initiative, including savings realized as a
result of debt relief pursuant to section 901
and section 2(c) of the Debt Relief for Poverty
Reduction Act of 1999, are applied to poverty
reduction programs dedicated to achieving the
goals described in subparagraph (B);
(D) includes transparent policymaking and
budget procedures, good governance, and anti-
corruption measures; and
(E) broadens public participation and popular
understanding of the principles and goals of
poverty reduction, sustainable development, and
good governance.
On request of the country, the Secretary of the Treasury shall
provide or otherwise arrange for technical assistance to the
country regarding the establishment and management of the Human
Development Fund in accordance with paragraph (1) of this
subsection. The Secretary of the Treasury should also encourage
international financial institutions to provide funds for the
country to hire technical assistance consultants regarding the
establishment and management of the Human Development Fund in
accordance with paragraph (1) of this subsection.
(d) Definition.--In this section, the term ``modified Heavily
Indebted Poor Countries Initiative'' means the multilateral
debt initiative presented in the Report of G-7 Finance
Ministers on the Koln Debt Initiative to the Koln Economic
Summit, Cologne, Germany, held from June 18-20, 1999.
SEC. 903. PRIORITY.
In carrying out section 901, the President should seek to
leverage scarce foreign assistance dollars and give priority to
those heavily indebted poor countries with demonstrated need
and the capacity to use such relief effectively.
SEC. 904. SPECIAL PROVISIONS.
(a) Cancellation of Debt Not Considered To Be Assistance.--
Except as the President may otherwise determine for reasons of
national security, a cancellation of debt under section 901
shall not be considered to be assistance for purposes of any
provision of law limiting assistance to a country.
(b) Inapplicability of Certain Prohibitions Relating to
Cancellation of Debt.--The authority to provide for
cancellation of debt under section 901 may be exercised
notwithstanding section 620(r) of this Act or any similar
provision of law.
(c) Other Debt Cancellation Authorities.--The authority to
cancel debt under section 901 is in addition to the authority
to cancel debt under any other provision of law and does not in
any way limit or otherwise affect such other authority.
(d) Child Labor and Workers Rights.--In exercising the
authority under section 901, the President shall take into
account the country's record on international child labor and
international workers rights.
(e) Female Genital Mutilation.--In exercising the authority
under section 901, the President shall take into account the
country's record with regard to female genital mutilation.
SEC. 905. ANNUAL REPORTS TO THE CONGRESS.
(a) In General.--Not later than December 31 of each year, the
President shall prepare and transmit to the appropriate
congressional committees a report, which shall be made
available to thepublic, concerning the cancellation of debt
under section 901 and section 2(c) of the Debt Relief for Poverty
Reduction Act of 1999, determinations made under section 904(a),
activities undertaken under section 2(d) of the Debt Relief for Poverty
Reduction Act of 1999, the progress made in accomplishing the purposes
of such section 2(d), and other debt restructuring activities for the
prior fiscal year. The report shall also include a list of the
countries that have received debt cancellation under section 901 and a
list of the countries that, although eligible under section
902(a)(3)(A), have been denied debt cancellation under section 902 and
the reasons therefor. The report shall also include a description of
the extent to which countries that receive debt cancellation under
section 901 or under section 2(c)(1) of the Debt Relief for Poverty
Reduction Act of 1999 have complied with the requirements described in
section 902(c) or section 2(c)(4) of such Act, respectively.
(b) Definition.--In this section, the term ``appropriate
congressional committees'' means--
(1) the Committee on Banking and Financial Services,
the Committee on Appropriations, and the Committee on
International Relations of the House of
Representatives; and
(2) the Committee on Banking, Housing, and Urban
Affairs, the Committee on Foreign Relations, and the
Committee on Appropriations of the Senate.
SEC. 906. SENSE OF THE CONGRESS.
It is the sense of the Congress that the amounts that would
otherwise be provided by the United States for development aid
or other debt relief should not be reduced on account of any
appropriations made pursuant to section 907.
SEC. 907. AUTHORIZATION OF APPROPRIATIONS.
For the cost (as defined in section 502(5) of the Federal
Credit Reform Act of 1990) of the cancellation of any debt
under section 901 of this Act, there are authorized to be
appropriated to the President such sums as may be necessary for
each of the fiscal years 2000 through 2004.
----------
INTERNATIONAL FINANCIAL INSTITUTIONS ACT
* * * * * * *
TITLE XV--OTHER POLICIES
* * * * * * *
SEC. 1504. UNITED STATES VOTES IN INTERNATIONAL FINANCIAL INSTITUTIONS.
The Secretary of the Treasury shall instruct the United
States Executive Director at each multilateral development bank
(as defined in section 1701(c)(4)) to use aggressively the
voice and vote of the United States to promote vigorously
policies that would make the institution more effective
mechanisms, in concert with appropriate international
authorities and other international financial institutions (as
defined in section 1701(c)(2)), for promoting good governance
principles within recipient countries by fostering structural
reforms, including procurement reform, that reduce
opportunities for corruption and bribery, and drug-related
money laundering. In addition, the Secretary of the Treasury
shall instruct the United States Executive Director at each
multilateral development bank (as defined in section
1701(c)(4)) to use aggressively the voice and vote of the
United States to oppose loans or other assistance by such bank
to a country located in Southeast Asia if the government of
such country is failing to fully cooperate with the United
States on all issues involving United States prisoners of war/
missing in action (POW/MIA), as determined by the Secretary of
State.
* * * * * * *
TITLE XVI--HUMAN WELFARE
* * * * * * *
SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED POOR COUNTRIES
INITIATIVE; ENSURING EQUITABLE BURDEN SHARING.
(a) Improvement of the HIPC Initiative.--In order to
accelerate multilateral debt relief and promote human and
economic development and poverty alleviation in heavily
indebted poor countries the Congress urges the President to
commence immediately efforts, within the Paris Club of Official
Creditors, as well as the International Bank for Reconstruction
and Development (World Bank), the International Monetary Fund
(IMF), and other appropriate multilateral development
institutions to accomplish the following modifications in the
Heavily Indebted Poor Countries (HIPC) Initiative:
(1) Prohibition on structural adjustment programs.--
The provision of debt reduction under the modified HIPC
Initiative shall not be conditioned on any country
adopting or implementing any structural adjustment or
stabilization program of the Enhanced Structural
Adjustment Facility of the IMF or any other structural
adjustment or stabilization program operated solely or
jointly by the IMF, or any other program of the IMF.
(2) Promotion of poverty alleviation and
environmental protection.--The social and economic
reforms on which debt reduction under the modified HIPC
Initiative is conditioned shall incorporate effective
measures for poverty reduction and environmental
protection.
(3) Revision of country eligibility requirement.--A
country shall be regarded as having an unsustainable
debt burden for purposes of qualifying for debt
reduction (or for further debt reduction) under the
modified HIPC Initiative if the country is Nigeria or
has outstanding public and publicly guaranteed debt,
the net present value of which at the decision point,
is--
(A) at least 150 percent of the annual value
of the exports of the country for the most
recent year for which such information is
available; or
(B) at least 250 percent of the annual fiscal
revenues of the country, and the country has
aminimum ratio of exports to gross domestic product of 30 percent, and
a minimum ratio of fiscal revenues to gross domestic product of 15
percent, for the most recent year for which such information is
available.
(4) Requirement for an action plan for human
development.--Debt reduction under the modified HIPC
Initiative shall not be provided for the benefit of a
country unless the government of the country has
established, through transparent and participatory
processes, including the participation of civil
society--
(A) a plan of action for human development
(in this section referred to as the ``Action
Plan'') which includes policies, programs, and
projects designed to reduce the number of
persons living in poverty, expand access of the
poorest members of society to basic social
services, including health, education, clean
water, and sanitation, and prevent the
degradation of the environment;
(B) a human development fund (in this section
referred to as the ``Human Development
Fund'')--
(i) the resources of which are
dedicated to achieving the purposes of
the Action Plan; and
(ii) into which are required to be
deposited all savings generated by debt
reduction provided for the benefit of
the country under the modified HIPC
Initiative and under other debt
reduction programs;
(C) arrangements to ensure that all
expenditures from the Human Development Fund
during a year will be used, to the extent
possible, to increase annual expenditures for
human development by the government above the
greater of--
(i) the total amount of annual
expenditures for human development by
the government for the preceding year;
or
(ii) the average total amount of such
expenditures for the 3 years
immediately preceding the year in which
such fund is established; and
(D) arrangements for monitoring the
operations, financial transactions, and
accounts of the Human Development Fund by an
oversight body which includes representatives
of civil society, and a majority of the members
of which are citizens of the country.
On request of the country, the World Bank should
provide technical assistance to the country regarding
the establishment and management of the Human
Development Fund in accordance with the preceding
sentence.
(5) Requirement of southeast asian countries to
cooperate with united states on pow/mia issues.--Debt
reduction under the modified HIPC Initiative shall not
be provided for the benefit of a country located in
Southeast Asia if the government of the country is
failing to fully cooperate with the United States on
all issues involving United States prisoners of war/
missing in action (POW/MIA), as determined by the
Secretary of State.
(6) Requirement for a natural resources development
plan.--
(A) In general.--Debt reduction under the
modified HIPC Initiative shall not be provided
for the benefit of a country unless the
government of the country has established
through transparent and participatory processes
(including the participation of civil society)
a plan (in this section referred to as the
``Natural Resources Development Plan''),
covering at least a 5-year period, for the
development of the country's natural resources
in a manner that will benefit the population of
the country. The plan shall specify at least
the following:
(i) The natural resources that are
being developed or will be developed in
the country.
(ii) The profits and other benefits
that the government estimates will
accrue to the companies involved in the
development of such natural resources.
(iii) The corporate tax revenues,
land use fees, resource extraction
fees, export tariffs, and other
revenues that the government estimates
will be raised as a result of the
development and extraction of such
natural resources.
(iv) The plans of the government for
the use of the revenues so raised.
(v) The plans of the government to
conserve such natural resources and
protect the environment of the country.
(vi) The plans of the government to
protect public health and safety and
the rights of workers.
(vii) The plans of the government to
provide for the training and education
of the local population and to ensure
that the companies involved in the
development of such natural resources
provide members of the local population
opportunities for employment and
advancement.
(viii) Any other plans of the
government to ensure a fair return to
the country and its people for the
development of such natural resources.
(B) Transparency.--All contracts between the
government (including any enterprise owned or
controlled by the government) and a foreign or
multinational corporation for the development
of natural resources of the country shall be
made available to the public.
(C) Assistance.--The World Bank, the African
Development Bank, the IMF, or other appropriate
multilateral development institutions shall,
under the modified HIPC Initiative, provide
assistance to countries in developing their
Natural Resources Development Plans and in
negotiating or renegotiating equitable
contracts with foreign or multinational
corporations for the development of natural
resources.
(7) Amount of debt reduction.--The amount of debt
reduction provided under the modified HIPC Initiative
for the benefit of a country with an unsustainable debt
burden shall be sufficient to help catalyze sustainable
growth and poverty reduction, by reducing--
(A) the net present value of the outstanding
public and publicly guaranteed debt of the
country to less than 100 percent of the value
of the annual exports of the country; and
(B) the amount of annual payments due on such
public and publicly guaranteed debt to a
percentage of government revenues, not greater
than 10 percent, that will facilitate higher
levels of expenditure in areas that have been
identified as key to accelerated poverty
reduction as well as ensure that the country is
able to meet its current and future external
debt-service obligations in full, without
recourse to debt relief, rescheduling, or the
accumulation of arrears.
(8) Transparency and participation in hipc decision
making.--All decisions under the modified HIPC
Initiative concerning the amount, terms and conditions,
and timing of debt relief for a country, and the
processes by which such decisions are made, shall be
subject to procedures which--
(A) are transparent, including publication of
the content of the decisions and of all
relevant analytical, legal, and policy
documents, including Debt Sustainability
Analyses, Policy Framework Papers, debt relief
agreements, and national development programs
and budgets;
(B) are participatory, including the
participation of civil society and
organizations with social sector expertise,
including United Nations agencies; and
(C) require that the published content of the
decisions and documents described in
subparagraph (A) of this paragraph that affect
or pertain to debt relief for the country to be
provided to the relevant oversight body
referred to in paragraph (4), and require that
such oversight body be consulted in the making
of key decisions regarding such debt relief.
(9) Special provisions.--
(A) Debt reduction under the modified HIPC
Initiative for the benefit of a country that
has demonstrated a sustained commitment to
poverty alleviation shall be provided in a
greater amount or more quickly than would
otherwise be the case under that Initiative.
(B) A country that is emerging from civil
conflict or that has recently suffered a major
natural disaster should receive special
consideration for debt relief under the
modified HIPC Initiative, notwithstanding the
country's record of performance under the
country's program of social and economic
reform.
(10) HIPC review.--The Secretary of the Treasury,
after consulting with the Committees on Banking and
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, shall make every effort
(including instructing the United States Executive
Directors at the IMF and the World Bank) to ensure that
an external assessment of the modified HIPC Initiative,
including the reformed ESAF program as it relates to
that Initiative, take place by December 31, 2001,
incorporating the views of debtor governments and civil
society, and that such assessment be made public and
include--
(A) an analysis of the contribution of the
modified HIPC Initiative to the poverty
reduction and social development goals for the
21st century established by the Development
Assistance Committee of the Organization for
Economic Cooperation and Development; and
(B) recommendations to the IMF, World Bank,
and the governments of the United States and
other creditor countries that may be necessary
to strengthen the contribution of the modified
HIPC Initiative to the poverty reduction and
social goals referred to in subparagraph (A).
(11) Termination of the modified hipc initiative.--
The modified HIPC Initiative shall not terminate until
all the debt reduction contemplated by this section has
been carried out.
(b) Promotion of Equitable Burden Sharing.--In order to
promote equitable burden-sharing by bilateral, multilateral,
and private creditors under the modified HIPC Initiative, the
Congress urges the President to commence immediately efforts to
ensure that such creditors draw upon their own resources to
finance debt reduction under the modified HIPC Initiative to
the extent possible without diverting funds from other high
priority poverty alleviation programs.
(c) Contributions to the HIPC Trust Fund.--For payment to the
Heavily Indebted Poor Countries Trust Fund of the International
Bank for Reconstruction and Development, but only for purposes
of debt relief, there are authorized to be appropriated to the
President such sums as may be necessary for fiscal years 2000
through 2004, except that if, with respect to fiscal year 2001,
2002, 2003, or 2004, the President has not determined that,
during the then preceding fiscal year--
(1) satisfactory progress was made in accomplishing
the improvements in the HIPC initiative described in
subsections (a) and (b); and
(2) the United States' contributions to the reduction
of multilateral debt pursuant to the modified HIPC
Initiative were matched, by a ratio of at least two to
one, by resources provided in the aggregate by all
other donors,
then no sums are authorized to be appropriated for such purpose
for the fiscal year.
(d) Sense of Congress.--It is the sense of Congress that the
amounts that would otherwise be provided by the United States
for development aid or other debt relief should not be reduced
on account of any appropriations pursuant to subsection (c).
(e) Report to the Congress.--Not later than December 31 of
each year, the President shall submit to the Committees on
Banking and Financial Services, on Appropriations, and on
International Relations of the House of Representatives and the
Committees on Foreign Relations, on Banking, Housing, and Urban
Affairs, and on Appropriations of the Senate a report, which
shall be made available to the public, on the activities
undertaken under this section, and on the 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 relief under the original or
modifiedHIPC Initiative, a list of the countries whose request for such
debt relief has been denied and the reasons therefor, and a list of the
countries whose requests for such debt relief are under consideration.
The report shall also include a description of the extent to which
countries that receive debt relief under the modified HIPC Initiative
have complied with the requirements described in subsection (a)(4).
(f) Definitions.--In this section:
(1) Modified hipc initiative.--The term ``modified
HIPC Initiative'' means the multilateral debt
initiative presented in the Report of the G-7 Finance
Ministers on the Koln Debt Initiative to the Koln
Economic Summit, Cologne, 18-20 June, 1999.
(2) Decision point.--The term ``decision point''
means the point in time at which the Executive Boards
of the International Bank for Reconstruction and
Development and the International Monetary Fund review
the debt sustainability analysis for a country and
decide that the country is eligible for debt relief
under the modified Heavily Indebted Poor Countries
Initiative.
SEC. 1624. REFORM OF THE ENHANCED STRUCTURAL ADJUSTMENT FACILITY.
The Secretary of the Treasury shall instruct the United
States Executive Directors at the International Bank for
Reconstruction and Development and the International Monetary
Fund to use the voice and vote of the United States to promote
the establishment of poverty reduction strategy policies and
procedures at the International Bank for Reconstruction and
Development and the International Monetary Fund which support
countries' efforts to honor the commitments as set forth in
lending operations under programs developed and jointly
administered by the International Bank for Reconstruction and
Development and the International Monetary Fund that have the
following components:
(1) The development of country-specific poverty
reduction strategies (Poverty Reduction Strategies)
under the leadership of such countries, that--
(A) will be set out in poverty reduction
strategy papers (PRSPs) to provide the basis
for the lending operations of the International
Development Association (IDA) and the Enhanced
Structural Adjustment Facility and its
successors (ESAF);
(B) will reflect the role of the
International Bank for Reconstruction and
Development in social sector development,
structural policies, and poverty reduction, and
the role of the International Monetary Fund in
macroeconomic issues; and
(C) will make the advice and operations of
the International Monetary Fund and the
International Bank for Reconstruction and
Development fully consistent with the
objectives of poverty reduction and broad-based
growth; and
(D) should include--
(i) a participatory poverty
assessment, undertaken as a systematic
part of the design of the Poverty
Reduction Strategy, involving
collaboration between the government,
civil society, the International Bank
for Reconstruction and Development,
organizations with expertise in the
social sector, including United Nations
agencies, and donors, which analyzes,
among other things, the economic and
social needs of the poor and the policy
reforms and public investments that
will best address these needs;
(ii) social impact assessments,
undertaken as a systematic part of the
design of the Poverty Reduction
Strategy, involving collaboration
between the government, civil society,
the International Bank for
Reconstruction and Development, and
organizations with expertise in the
social sector, including United Nations
agencies, and donors, which analyze the
impact of policies implemented under
the Poverty Reduction Strategy and
related lending operations and which
are completed before International Bank
for Reconstruction and Development and
International Monetary Fund Executive
Board consideration of such operations;
(iii) explicit consideration of the
short- and long-term tradeoffs between
alternative policy decisions, such as
the distributional, equity, and poverty
reduction implications of monetary and
fiscal policies or the pace and
sequencing of structural reforms;
(iv) implementation of transparent
budget procedures and mechanisms to
help ensure that the financial benefits
of debt relief under the modified HIPC
Initiative result in increased national
expenditures on poverty reduction
programs; and
(v) monitorable indicators of
progress in poverty reduction;
(2) the adoption of procedures for periodic
comprehensive reviews of ESAF and IDA programs to help
ensure progress toward poverty goals outlined in the
Poverty Reduction Strategies and to allow adjustments
in such programs;
(3) the publication of the PRSPs (including social
impact assessments) prior to Executive Board review of
related programs under IDA and the ESAF;
(4) the establishment of a standing evaluation unit
at the International Monetary Fund, similar to the
Operations Evaluation Department of the International
Bank for Reconstruction and Development, that would
report directly to the Executive Board of the
International Monetary Fund and that would undertake
periodic reviews of International Monetary Fund
operations, including the operations of the ESAF,
including--
(A) assessments of experience under the ESAF
programs in the areas of poverty reduction,
rapid growth, and access to basic social
services;
(B) assessments of the extent and quality of
participation in program design by civil
society; and
(C) verifications that ESAF programs are
designed in a manner consistent with the
Poverty Reduction Strategies; and
(D) prompt release to the public of all
reviews by the standing evaluation unit;
(5) the promotion of simpler and clearer
conditionality in IDA and ESAF programs that focuses on
reforms most likely to support poverty reduction and
broad-based growth;
(6) the adoption by the International Monetary Fund
of policies aimed at reforming the Enhanced Structural
Adjustment Facility so that ESAF programs are
consistent with the Poverty Reduction Strategies;
(7) the adoption by the International Bank for
Reconstruction and Development of policies to ensure
that International Bank for Reconstruction and
Development lending operations in HIPC countries are
consistent with the Poverty Reduction Strategies;
(8) strengthening the linkage between borrower
country performance and lending operations by IDA and
the ESAF on the basis of clear and monitorable
indicators;
(9) full public disclosure of the proposed
objectives, financial organization and operations of
the successor to the Enhanced Structural Adjustment
Facility of the International Monetary Fund at least 90
days before any decision by the Executive Board of the
International Monetary Fund to consider its adoption;
and
(10) the abolishment of ESAF, and its replacement
with a Poverty Reduction and Growth Facility (PRGF),
which will be a subordinate part of a new approach to
defining the economic framework for low-income
countries, in that the new approach will give to the
government of a borrowing country the ability to
construct its own comprehensive development strategy,
and will allow the borrowing country government, at its
sole discretion, to request technical assistance, in
creating the comprehensive development strategy, from
international institutions, such as the World Health
Organization, the Food and Agricultural Organization,
the International Bank for Reconstruction and
Development, and the International Monetary Fund, and
from private organizations, businesses, or civil
society organizations.
SEC. 1625. TRANSPARENCY AND PARTICIPATION OF CIVIL SOCIETY IN NEW
INTERNATIONAL FINANCIAL INSTITUTION LENDING.
The Secretary of the Treasury shall instruct the United
States Executive Directors at the international financial
institutions (as defined in section 1701(c)(2)) to use the
voice and votes of the Executive Directors to encourage
vigorously that their respective institutions adopt
transparency and other measures that will facilitate
participation of civil society in developing countries in the
design of poverty reduction strategies and in decisions to
borrow from such institutions in support of such strategies,
including--
(1) disclosure of Policy Framework Papers, Public
Expenditure Reviews, Country Assistance Strategies,
International Monetary Fund Letters of Intent,
appraisal documents, and other reports relevant to
proposed lending operations; and
(2) provision of detailed information to the Board of
Directors of such an institution and to the public,
prior to the approval of a lending operation for a
developing country, as to the nature and extent of
civil society participation in the design of, and
approval process for, such operation.
----------
BRETTON WOODS AGREEMENTS ACT
* * * * * * *
Section 1. This Act may be cited as the ``Bretton Woods
Agreements Act''.
* * * * * * *
SEC. 62. APPROVAL OF CONTRIBUTIONS TO THE ENHANCED STRUCTURAL
ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR COUNTRIES
TRUST FUND.
(a) In General.--For the purpose of mobilizing the resources
of the Fund in order to help reduce poverty and improve the
lives of residents of poor countries and, in particular, to
allow those poor countries with unsustainable debt burdens to
receive deeper, broader, and faster debt relief, without
allowing gold to reach the open market or otherwise adversely
affecting the market price of gold, the Secretary of the
Treasury may instruct the United States Executive Director of
the Fund to vote--
(1) to approve an arrangement whereby the Fund--
(A) sells not more than a total of 14,000,000
ounces of its gold at prevailing market prices
to a member or members in non-public
transactions;
(B) immediately after, and in conjunction
with, each such sale, accepts payment by such
member or members of such gold to satisfy
existing repurchase obligations of such member
or members so that the Fund retains ownership
of the gold at the conclusion of such payment;
and
(C) transfers the earnings on the investment
of the profits of such sales to the Trust for
Special ESAF Operations for the Heavily
Indebted Poor Countries and Interim ESAF
Subsidy Operations (ESAF/HIPC Trust Fund),
provided that such earnings shall be used,
through a separate subaccount, only for the
purpose of providing debt relief from the Fund
under the modified HIPC Initiative; and
(2) to support a decision that would make available
to the ESAF/HIPC Trust Fund resources in Special
Contingency Account 2 (SCA-2) of the Fund derived from
the extended burdensharing arrangements adopted
pursuant to IMF Decision No. 9471-(90/98), as amended,
including any funds attributable to the United States
participation in such arrangements, which funds shall
be used only for debt relief under the original or
modified HIPC Initiative (within the meaning of section
1623 of the International Financial Institutions Act).
(b) Certification.--Within 15 days after the United States
Executive Director casts the votes necessary to carry out with
the instruction provided pursuant to subsection (a), the
Secretary of the Treasury shall certify to the Committee on
Banking and Financial Services of the House of Representatives
and the Committee on Foreign Relations of the Senate that the
Fund has stated that--
(1) when gold is sold pursuant to the authorization
provided under subsection (a), the estimated net
present value (as determined by the Fund) of the
earnings on the investment of profits from the total
amount of gold that has been sold shall not be greater
than the estimated net present value (as determined by
the Fund) of the cost of the modified HIPC Initiative
(within the meaning of section 1623 of the
International Financial Institutions Act);
(2) the earnings on the invested profits of such gold
sales shall be deposited in a separate sub-account and
used only for the purpose of providing debt relief from
the Fund under the original or modified HIPC
Initiative; and
(3) any funds attributable to United States
participation in the arrangements referred to in
subsection (a)(2) shall be used only for debt relief
from the Fund under the original or modified HIPC
Initiative.
SEC. 63. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.
The Secretary of the Treasury shall instruct the United
States Executive Director at the Fund to use the voice and vote
of the Executive Director to vigorously encourage the Fund to--
(1) require independent audits of central bank and
other relevant entities on a more systematic basis by
developing objective criteria to assist in determining
when audits are warranted;
(2) ensure that such audits occur before Fund
financing is disbursed;
(3) develop a systematic approach to reducing
inappropriate uses of foreign exchange reserves through
laws, regulations, and procedures, by means including
the requirement of arms length transactions and the
prohibition of preferential access to foreign exchange
on a nontransparent basis; and
(4) strongly encourage all countries receiving
exceptional levels of financial support to adopt and
comply with Fund standards applicable to management of
foreign exchange reserves, particularly with respect to
the nature and location of the institutions where such
reserves are placed.
----------
SECTION 112b OF TITLE 1, UNITED STATES CODE
Sec. 112b. United States international agreements; transmission to
Congress
(a) * * *
* * * * * * *
(f) The Secretary of the Treasury shall transmit to the
Committee on Banking and Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a copy of any international
financial agreement to which this section applies. Any such
agreement the immediate public disclosure of which would, in
the opinion of the President, be prejudicial to the national
security of the United States, shall be so transmitted under an
injunction of secrecy to be removed only upon due notice by the
President.
ADDITIONAL VIEWS
Debt relief for heavily indebted poor countries is one of
the most important matters before Congress this year. The
governments of these countries have been forced to make drastic
cuts in essential social services such as health and education
in order to make payments on their debts. In Mozambique, debt
service payments in 1997 absorbed about half of all government
revenue or $7 per person, while only $3 per person was spent on
health services. In Tanzania, 1997 debt service payments
equaled nine times the spending on basic health services and
four times the spending on basic education. In Nicaragua, over
half of the government's revenue was allocated to debt service
payments in 1997. This was equivalent to two and a half times
the spending on health and education combined.
H.R. 1095, the Debt Relief for Poverty Reduction Act of
1999, as passed by the Committee on Banking and Financial
Services of the House of Representatives, requires the complete
cancellation of debts owed by heavily indebted poor countries
to the United States and makes substantial improvements in the
Heavily Indebted Poor Countries (HIPC) Initiative of the
International Monetary Fund (IMF). The bill requires that poor
countries establish Human Development Funds or develop
Integrated Poverty Reduction Strategies to target the savings
from debt relief to HIV/AIDS treatment and prevention, health
care, education and poverty reduction programs. The bill also
includes several amendments that were offered during committee
consideration to expand and improve bilateral and multilateral
debt relief programs.
the inclusion of nigeria
H.R. 1095 includes an important amendment that I offered to
include Nigeria in bilateral and multilateral debt relief
programs. Nigeria is currently in the process of making a
transition to democracy and would receive tremendous benefits
from debt relief. Under the authoritarian rule of General Sani
Abacha, Nigeria's resources were depleted and the human rights
of the Nigerian people were routinely violated. Now Nigeria is
at a turning point and support from the international community
could make a crucial difference in Nigeria's future.
Although Nigeria is currently eligible to borrow from the
International Bank for Reconstruction and Development, it is a
deeply impoverished country. Nigeria's per capita income is
only $300 per year and the country spends no more than $5 per
person per year on health services. Nevertheless, Nigeria owes
$871 million in debts to the United States and the country's
total debt stock is over $28 billion. Debt relief will give
Nigeria a fresh start and a sound basis for a democratic
future.
The United States has a history of providing assistance to
countries overcoming crises and building democracies. Earlier
this year, the United States led the world in providing
assistance to the people of Kosovo as they struggled against
genocide. The United States also provided considerable economic
assistance and debt relief to Poland, other countries in
Eastern Europe and the newly independent states of the former
Soviet Union following the fall of communism. Now the United
States has an historic opportunity to set an example to the
rest of the world and support Nigeria's transition to
democracy.
conditions for bilateral debt relief
I am also pleased that H.R. 1095 includes two amendments
offered by Congressman Barney Frank to improve the conditions
for bilateral debt relief. One amendment assures that a
country's eligibility for bilateral relief is determined by the
government of the United States and does not depend on terms
set by the IMF. The other provides that eligible countries will
not have to make payments on their debts while they are
implementing policies on which bilateral debt relief is
conditioned.
technical assistance
H.R. 1095 includes important provisions to ensure that
technical assistance is available to countries that request it.
Specifically, the bill requires the Secretary of the Treasury
to provide or arrange for technical assistance to countries
regarding the establishment and management of their Human
Development Funds. The bill also states that Treasury should
encourage international financial institutions to provide funds
for countries to hire technical consultants. Finally, the bill
states that the World Bank should provide technical assistance
to countries that request it. Many poor countries may not have
the technical knowledge necessary to comply with the conditions
in this bill. If poor countries are going to be required to
establish Human Development Funds or develop Integrated Poverty
Reduction Strategies in order to receive debt relief, it is
only reasonable that they be provided technical assistance to
enable them to do so.
amount of multilateral debt relief
H.R. 1095 includes several provisions to urge the President
to commence efforts within the Paris Club of Official
Creditors, the IMF and the World Bank to make several important
changes in the Heavily Indebted Poor Countries (HIPC)
Initiative.
One of these changes would require deeper multilateral debt
relief for poor countries. Specifically, the bill states that
the amount of debt relief provided to a country should be
sufficient to ensure that the value of the country's
outstanding debts does not exceed the value of the country's
annual exports. The bill also states that poor countries should
not have to spend more than ten percent of their annual
revenues on debt service payments.
elimination of structural adjustment programs
H.R. 1095 also urges the President to support the
elimination of the requirement that countries complete a
structural adjustment program approved by the IMF as a
condition for receiving debt relief under the HIPC Initiative.
Under the current HIPC Initiative, poor countries are required
to adopt structural adjustment programs as a condition for debt
relief and implement them over a six-year period. These
programs usually require cuts in health care, education and
other social services. Most poor countries have been unable to
implement the economic reforms required by these programs.
Many poor countries have become even more impoverished as a
result of structural adjustment programs. Zimbabwe, for
example, began implementation of a structural adjustment
program in 1991. Between 1991 and 1996, manufacturing output in
Zimbabwe declined by 14% and real gross domestic product (GDP)
per capita declined by 5.8%. Furthermore, spending on health
care declined as a share of the budget from 6.4% to 4.3% and as
a share of GDP from 3.1% to 2.1%. The real wages of health care
workers in the public sector were reduced, causing many doctors
to move to the private sector. As a result, the quality of
public health care dropped and health services became less
accessible to the poor. Government spending on education was
also drastically reduced. Between 1991 and 1994, real per
capita expenditures on primary education were cut by 36%.
The inability of poor countries to implement painful
structural adjustment programs should not be an impediment to
their ability to receive debt relief. Once poor countries have
made a commitment to use the savings from debt relief to
provide health care, education and other vital social services
to their impoverished populations, they should be able to
receive immediate debt relief.
oversight panels
H.R. 1095 includes a requirement that poor countries
establish oversight panels to monitor the use of their Human
Development Funds. The bill also includes a provision to ensure
that these oversight panels will be consulted by the IMF and
the World Bank in the making of key decisions regarding debt
relief in their respective countries and will be given the
opportunity to review the published content of these decisions
as well as all relevant analytical, legal, and policy
documents. The bill also states that each oversight panel shall
include representatives of civil society and a majority of its
members shall be citizens of that country.
The oversight panels should include representatives of
civil society such as individuals representing labor unions,
environmental organizations, human rights organizations,
religious organizations, farmers' organizations, women's
organizations, indigenous people's organizations and other
community organizations. The oversight panels may also include
representatives of UNICEF or other United Nations agencies.
Each oversight panel should review all conditions for debt
relief imposed by the United States, other creditor
governments, the IMF or the World Bank; all actions of its own
government to comply with those conditions, including the
establishment and use of the country's Human Development Fund;
and all actions by its own government, other creditor
governments and all international financial institutions
affecting the progress of the country's debt relief program.
The oversight panel should meet regularly to evaluate and
report on the progress of the country's debt relief program,
and its reports should be made available to the public. The IMF
or the World Bank should provide travel and administrative
expenses to each oversight panel to allow the panel to fulfill
its functions.
These oversight panels will ensure that debt relief
programs will be participatory and transparent and the people
that are the most directly affected by these programs will be
consulted regarding the conditions for debt relief.
conclusion
H.R. 1095, the Debt Relief for Poverty Reduction Act, as
passed by the Committee on Banking and Financial Services of
the House of Representatives, will break the cycle of debt and
enable the world's poorest countries to invest in health care,
education and other essential services for their impoverished
populations. I am proud to support this landmark legislation to
wipe away the debts of heavily indebted poor countries
throughout the world.
Maxine Waters.
DISSENTING VIEWS
I am a cosponsor of H.R. 1095, the Debt Relief for Poverty
Reduction Act, and have been a consistent advocate for
international debt relief in the past. However, I have two
particular concerns about the current version of H.R. 1095 as
passed by the House Banking Committee. Due to my attendance at
University of Nebraska Master's Week activities in Lincoln,
Nebraska, on November 3, 1999, I was unable to voice these two
particular concerns at the Banking Committee markup of H.R.
1095. My two concerns with the Committee markup of H.R. 1095.
My two concerns with the Committee-passed version of H.R. 1095
are as follows:
1. I am opposed to the amendment, adopted at the House
Banking Committee markup, which provides that Nigera is
eligible to receive Highly Indebted Poor Countries (HIPC) debt
relief. My opposition to this inclusion is based upon Nigeria's
wealth of oil reserves. Nigeria is the world's 6th largest
exporter of oil, producing over 2.012 million bbl/day (barrels
of oil a day). In addition, given the rise in price in oil over
the past year, Nigeria's oil earnings are estimated to be up
29% in 1999 over 1998.
Nigeria's overall bilateral debt to the United States is
$871 million. This equals a mere 22 days of gross oil exports
at the current rate of production with the current price of
$23/bbl. Moreover, Nigeria has already received substantial US
debt relief. In 1990-91, Nigeria received $64.8 million in
bilateral debt cancellation through Section 572 Debt Relief.
Furthermore, Western officials believe that the corrupt
government of General Sani Abacha of Nigeria may have stolen
over $3.5 billion. Since Abacha's death, $750 million of this
has been successfully recovered from the Abacha family and more
than $250 million has been recovered from Abacha's former
national security adviser. This recovery alone ($1 billion)
represents $129 million more than Nigeria's outstanding $871
million in bilateral debt to the United States.
On January 25, 1999, Nigeria and the IMF reached an
agreement that paved the way for debt rescheduling and the
resumption of World Bank funding. I do believe that the answer
for Nigeria is debt rescheduling, which is outside the scope of
H.R. 1095, not HIPC debt relief. Including Nigeria in HIPC will
result in the failure of other poor countries in Africa and
elsewhere to receive sufficient debt relief. The choice here,
for example, is between Nigeria and Tanzania, Madagascar, Niger
or the Central African Republic. There will not be enough
appropriated funds to cover Nigeria and the other HIPC
countries.
2. My second concern regarding H.R. 1095, as amended by the
House Banking Committee, relates to Section 903 which sets
priorities for providing bilateral debt relief by the United
States. Using the current definition in H.R. 1095, I am
concerned that a very deserving Bangladesh, which is one of 45
countries eligible for debt relief under H.R. 1095, will be put
at the end of the line for HIPC debt relief. My concern is
based on the limited resources for overall debt relief and
suggestions from the Administration that Bangladesh, given its
responsible handling of its debt, would not be considered as a
priority for debt relief.
I was ready to offer a prepared amendment at the markup,
which I was unable to offer for the reason stated above, that
would have amended the priority section of H.R. 1095. This
amendment would have required the President to give debt relief
priority to the HIPC countries. Then, after a reasonable two
year period, it allows Bangladesh to be equally considered for
debt relief with the HIPC countries. Designating Bangladesh in
this manner is justified both because it is one of the few
countries that has already undertaken the kind of forward-
looking, poverty alleviation and human development reforms
called for in H.R. 1095 and it has acted responsibly in paying
its debt. Its failure to receive debt relief previously really
is the result of errors and failures: it is deserving but its
case has previously ``fallen through the cracks.'' Without my
amendment, H.R. 1095 seems to penalize--or at least disregard--
one of only a few countries whose actions should serve as a
model development partner for other very poor, indebted
countries.
Since the House International Relations Committee has
subject matter jurisdiction over bilateral debt relief, I plan
to offer amendments to remedy my two concerns at a future H.R.
1095 markup by the House International Relations Committee.
Doug Bereuter.
DISSENTING VIEWS
This bill confirms what opponents of the International
Monetary Fund and World Bank have been saying for some time:
more money for these institutions is the wrong medicine for a
serious problem. Every dollar the IMF lends to a poor country
adds to that country's debt burden. The IMF policy of lending
new money to pay the debt due by a developing country (plus
additional interest) is the root of the problem.
Decades of misguided ``development'' policies have resulted
in poverty for masses of people and increasing debt burdens for
developing countries. These policies have finally become
unsustainable. The jig is up. These policies do not work--not
for the poor, at least.
For a select few (politically well connected) officials,
these policies are working just fine. According to Macroscope,
``Au Revoir,'' Investor's Business Daily, November 11, 1999,
IMF bureaucrats average about $114,000 a year (with staffing
growing five percent annually over the past decade). The agency
has more than 80 division directors, each making more than
$180,000 a year--plus benefits. Since 1990, IMF lending has
soared by about 100 percent. Its assets now total more than $80
billion. These policies work well for them.
IMF largesse feeds corruption in developing countries as
well. The Bank Bali scandal in Indonesia and the ever-unfolding
embarrassment in Russia are but the latest examples. IMF money
feeds this endemic corruption that sustains inept governments.
Propping up unpopular governments postpones economic policies
that promote growth and prosperity. These policies then trap
the poor in a vicious cycle.
The best way to help the poor and encourage economic growth
and prosperity is to end this damaging cycle. This bill throws
more money at the cause of the problem. Such an approach will
only begin a new cycle of indebtedness and renew the poverty
trap.
The amendment I offered with Representatives Tom Campbell,
Bill McCollum and Walter Jones to sunset the Bretton Woods Act
(after three years with a report from Treasury on alternatives
after two years) was the best way to stop the cycle of ever-
greater debt burdens of poor countries. Through the IMF and
World Bank, we take money from the working poor of rich
countries to give to the rich people in poor countries. The
poor everywhere deserve better.
Ron Paul.