S 2166 IS

To provide for greater responsibility in lending and expanded cancellation of debts owed to the United States and the international financial institutions by low-income countries, and for other purposes.CommentsClose CommentsPermalink

October 16, 2007CommentsClose CommentsPermalink

Mr. CASEY (for himself, Mr. LUGAR, Mr. DODD, Mr. BIDEN, Mr. OBAMA, and Mr. SUNUNUMr. SUNUNU, Mr. COLEMAN, Mr. BROWN, Mrs. BOXER, Mr. DURBIN, Ms. MIKULSKI, Ms. COLLINS, Mr. LIEBERMAN, Mr. ISAKSON, Ms. SNOWE, Mrs. CLINTON, Mr. LEAHY, Mr. MENENDEZ, Mr. SMITH, Mr. WYDEN, Mr. SCHUMER, Mr. KERRY, Mrs. MCCASKILL, Mr. HAGEL, Ms. KLOBUCHAR, Mr. FEINGOLD, and Mr. NELSON of Florida) introduced the following bill; which was read twice and referred to the Committee on Foreign RelationsCommentsClose CommentsPermalink

To provide for greater responsibility in lending and expanded cancellation of debts owed to the United States and the international financial institutions by low-income countries, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the `‘Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2007' [Struck out->]2007[<-Struck out] 2008’.CommentsClose CommentsPermalink

SEC. 2. FINDINGS.

Congress makes the following findings:CommentsClose CommentsPermalink





(1) Many low-income countries have been struggling under the burden of international debts for many years.CommentsClose CommentsPermalink





(2) Since 1996, when the Heavily Indebted Poor Countries Initiative (HIPC) was created, more than 30 countries have seen some form of debt relief totaling approximately $80,000,000,000.CommentsClose CommentsPermalink





(3) Congress has demonstrated its support for bilateral and multilateral debt relief through the enactment of comprehensive debt relief initiatives for heavily indebted low-income countries in--(A) title V of H.R. 3425 of the 106th Congress, as enacted into law by section 1000(a)(5) of the Act entitled `An Act making consolidated appropriations for the fiscal year ending September 30, 2000, and for other purposes', approved November 29, 1999 (Public Law 106-113; 113 Stat. 1501A-311) and the amendments made by such title;(B) title II of H.R. 5526 of the 106th Congress, as enacted into law by section 101(a) of the Act entitled `An Act making appropriations for foreign operations, export financing, and related programs for the fiscal year ending September 30, 2001, and for other purposes', approved November 6, 2000 (Public Law 106-429; 114 Stat. 1900A-5); and(C) title V of the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (Public Law 108-25; 117 Stat. 747) and the amendment made by such title.[Struck out->](13)[<-Struck out] (4) In 2005, the United States and other G-8 nations reached an agreement to provide cancellation of 100 percent of the debts owed by eligible poor nations to Paris Club members, the IMF, the World Bank, and the African Development Bank. The Inter-American Development Bank reached an agreement in early 2007 to provide similar treatment.(5) The 2005 agreement led to the creation of the Multilateral Debt Relief Initiative (MDRI). As of April 2007, 22 countries have seen the majority of their debts to the IMF, World Bank, and African Development Bank cancelled under the terms of the MDRI. In March 2007, the Inter-American Development Bank announced it would provide full debt cancellation to 5 Latin American countries on MDRI terms.(6) Resources released by debt relief efforts to date are reaching the poor. Cameroon is using the $29,800,000 of savings it will gain from the MDRI in 2006 for national poverty reduction priorities, including infrastructure, social sector and governance reforms. Uganda is using its $57,900,000 savings in 2006 on improving energy infrastructure to try to ease acute electricity shortages, as well as primary education, malaria control, healthcare and water infrastructure (specifically targeting the poor and under-served villages). Zambia is using its savings of $23,800,000 under the MDRI in 2006 to increase spending on agricultural projects, such as smallholder irrigation and livestock disease control, as well as to eliminate fees for healthcare in rural areas.(7) While debt cancellation has a record of success, there remains an unfinished agenda on international debt. There are a number of challenges to the effective implementation of existing commitments, and broader debt cancellation is needed if the global community is to reach the Millennium Development Goals.(8) 2007 marks the halfway point to the deadline set by the world's governments to reach the Millennium Development Goals.(9) A critical issue which needs to be addressed on debt is the way that non-concessional lenders stand to gain financially from lending to poor countries that have benefited from debt relief without having paid for past debt relief or facing the prospect of paying for the future relief of unsustainable and irresponsible new lending. In these cases, the gains of debt relief for poor debtor countries are at risk of being eroded. This takes the form of new lending to countries that have received debt cancellation from countries including China, as well as the threat posed by so-called `vulture funds'.(10) It is also essential that all lenders and borrowers accept co-responsibility and learn from past mistakes-as evidenced by the debt crisis itself-by making more productive investment choices and engaging in more responsible lending and borrowing in the future. In October 2006, Norway became the first creditor to accept co-responsibility for past lending mistakes and cancelled the debt of 5 countries on the grounds that the loans reflected poor development policy.(11) There is also an urgent need to look beyond the constraints of current debt relief initiatives to address the need for expanded debt cancellation. The current initiatives allow countries to qualify for relief based on economic criteria rather than human needs.(12) The Government of the United Kingdom has proposed that qualification for the MDRI be extended to the 67 countries that qualify for assistance exclusively from the International Development Association. To be eligible for cancellation, countries must meet requirements pertaining to public financial management, anti-corruption measures, and budget transparency.(13) Debt cancellation is an essential component of the United States development assistance strategy [Struck out->]and a required component to facilitate achievement of the Millennium Development Goals.(14[<-Struck out] .CommentsClose CommentsPermalink





[Struck out->](14)[<-Struck out] (5) The United States has been a leader in supporting debt relief efforts to date and should continue to work to improve and expand initiatives in this area.CommentsClose CommentsPermalink

SEC. 3. SENSE OF CONGRESS ON NEED TO FULLY FUND EXISTING UNITED STATES ARREARS ON UNITED STATES COMMITMENTS TO DEBT RELIEF.

SEC. [Struck out->]3[<-Struck out] 4. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW-INCOME COUNTRIES.

Title XVI of the International Financial Institutions Act (22 U.S.C. 262p--262p-8) is amended by adding at the end the following:CommentsClose CommentsPermalink

`‘SEC. 1626. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW-INCOME COUNTRIES.

`‘(a) In General- The Secretary of the Treasury shall commence immediate efforts, within the Paris Club of Official Creditors, the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (World Bank), and the other international financial institutions (as defined in section 1701(c)(2)), to accomplish the following:CommentsClose CommentsPermalink





`‘(1) Cancellation by each international financial institution of all existing debts owed to the institution by eligible low-income countries, and, to the extent possible, financing the debt cancellation from the ongoing operations, procedures, and accounts of the institution.CommentsClose CommentsPermalink





`‘(2) Cancellation by the United States of all existing debts owed to it by eligible low-income countries.CommentsClose CommentsPermalink





`‘(3) Ensuring that any waiting period for the enhanced debt cancellation is not excessive.CommentsClose CommentsPermalink





`‘(4) Requiring the government of each eligible low-income country to--CommentsClose CommentsPermalink





`‘(A) allocate the savings from debt cancellation towards poverty-reducing expenditures;CommentsClose CommentsPermalink





`‘(B) engage interested parties, including a broad cross-section of civil society groups, in the allocation determination process;` [Struck out->]the[<-Struck out] that allocation [Struck out->]determination[<-Struck out] process;CommentsClose CommentsPermalink





‘(C) develop and implement effective policy reforms to ensure that savings from debt cancellation are redirected to poverty reduction efforts and that any future borrowing be conducted in a responsible fashion; andCommentsClose CommentsPermalink





`‘(D) produce an annual report disclosing [Struck out->]disclosing[<-Struck out] during the period beginning when debt relief is granted and ending 5 years after the debt relief is completed that discloses how the savings from debt cancellation were used, and make the report [Struck out->]make the report[<-Struck out] which is made publicly available and easily accessible to all interested parties, including civil society groups and the media.CommentsClose CommentsPermalink





`‘ [Struck out->](6)[<-Struck out] (5) Ensuring that the provision of debt cancellation to eligible low-income countries is not followed by a reduction in the provision of any other development assistance to the countries by international financial institutions and bilateral creditors.`(6) Encouraging the government of each eligible low-income country to allocate at least 20 percent of its national budget towards poverty-alleviation programs such as the provision of basic health care services, education services, and clean water services to all individuals in the country.CommentsClose CommentsPermalink





`‘(b) Establishment of Framework for Creditor Transparency- The Secretary of the Treasury shall commence immediate efforts, within the Paris Club of Official Creditors, the International Monetary Fund, the World Bank, and the other international financial institutions (as so defined), to ensure that each of the institutions--CommentsClose CommentsPermalink





`‘(1) continues to make efforts to promote greater transparency regarding the activities of the institution, including credit, grant, guarantee, and technical assistance operations, following a policy of maximum disclosure; andCommentsClose CommentsPermalink





`‘(2) supports continued efforts to allow informed participation and input by affected communities, including translation of information on proposed projects into official languages, provision of information (including draft documents) through information technology application, oral briefings, and outreach to and dialogue with community organizations and institutions in affected areas.CommentsClose CommentsPermalink





`‘(c) Establishment of Framework for Responsible Lending- The Secretary of the Treasury shall commence immediate efforts to--CommentsClose CommentsPermalink





`‘(1) develop and promote policies to ensure all creditors, with no distinction, will contribute to preserving the gains of debt relief for low-income debtor countries;CommentsClose CommentsPermalink





`‘(2) collaborate with appropriate government agencies to discourage ‘vulture fund’ activity [Struck out->]prevent private investors from profiting from buying low-income country debts at market value and attempting to recover their original value or more (commonly known as `vulture funds'), including by--`(A) designing legal remedies to curtail or realign the incentives for this activity;`(B) identifying avenues to provide legal support to countries being sued by `vulture funds'; and`(C‘vulture funds’)[<-Struck out] , including by--CommentsClose CommentsPermalink





‘(A) seeking commitments from non-Paris Club bilateral creditors not to on-sell their debt claims on low-income countries to creditors who do not intend to provide debt relief under the HIPC initiative, and working with finance ministers from other G8 countries to achieve the same goal; and CommentsClose CommentsPermalink





‘(B) providing technical assistance to advise possible targeted governmentsrecipient governments to advise on measures to take to prevent `vulture funds' from successfully taking them to court;`address ‘vulture fund’ activity; CommentsClose CommentsPermalink





‘(3) provide that the external financing need [Struck out->]needs[<-Struck out] from official creditors of low-income countries are met primarily through grant financing rather than new lending;CommentsClose CommentsPermalink





`‘(4) seek the international adoption of a binding legal framework that--CommentsClose CommentsPermalink





`‘(A) guarantees that no creditor can take [Struck out->]or expect to take undue financial advantage of [<-Struck out] financial advantage of [Struck out->]acquired or newly awarded[<-Struck out] debt relief through the terms and rates of their new lending to beneficiary countries;CommentsClose CommentsPermalink





`‘(B) is binding on all creditors, whether multilateral, bilateral or private;CommentsClose CommentsPermalink





`‘(C) foresees, as a sanction for creditors who violate it, an equitable share in the burden of the losses from any future debt relief needed by the sovereign debtor to whom lending was irresponsibly provided;` [Struck out->]irresponsibly[<-Struck out] provided; andCommentsClose CommentsPermalink





‘ [Struck out->](E)[<-Struck out] (D) provides for decisions on irresponsible lending to be made by an entity independent from the creditors; and`(E) enables fair opportunities for the people of the affected country to be heard; andCommentsClose CommentsPermalink





`‘(5) support the development of responsible financing standards where [Struck out->]where[<-Struck out] by which creditors and aid/ [Struck out->]/[<-Struck out] or loan recipients alike [Struck out->]adhere to standards to assure transparency and accountability to citizens[<-Struck out] promote transparency, [Struck out->]and[<-Struck out] accountability [Struck out->]to citizens[<-Struck out] , human rights, and the avoidance of new odious [Struck out->]odious[<-Struck out] unsustainable debt, while encouraging the development of renewable energy [Struck out->]and helping countries to transition away from dependence on oil.`[<-Struck out] .CommentsClose CommentsPermalink





‘(d) GAO Audit of Debt Portfolios of Countries With Questionable Loans-` [Struck out->](1) IN GENERAL[<-Struck out] - The Comptroller General of the United States shall undertake an audit of the [Struck out->]shall[<-Struck out] should undertake an audit of the multilateral debt portfolios of previous governments in countries such as the Democratic Republic of Congo and South Africa where [Struck out->]there are allegations that odious[<-Struck out] significant concern exists that unsustainable loans were made to the government. Each such audit shall--CommentsClose CommentsPermalink





`(A) consider debt owed to the ‘ [Struck out->](A)[<-Struck out] (1) consider debt owed to the World Bank, the IMF, and the other international financial institutions (as so defined) [Struck out->], export credit debts owed to governments, and debts owed to commercial creditors,[<-Struck out] and debt owed to the United States Government and assess whether or not past investments produced the intended results;`(B andCommentsClose CommentsPermalink





‘ [Struck out->](B)[<-Struck out] (2) investigate the process by which the loans were contracted, how the funds were used, and determine whether United States or international laws were violated in the contraction of these loans, and whether any of the loans were odious or onerous; and`(C) be planned and executed in a transparent and consultative manner, engaging congressional bodies and civil society groups in the countries.`(2) REPORT- Within 2 years after the date of the enactment of this section, the Comptroller General of the United States shall prepare and submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and on Foreign Relations of the Senate a report that contains the results of the audits undertaken under paragraph (1).` [Struck out->]; and[<-Struck out] .CommentsClose CommentsPermalink





‘(e) Availability on Treasury Department Website of Remarks of United States Executive Directors at Meetings of International Financial Institutions'’ Boards of Directors- The Secretary of the Treasury shall make available on the website of the Department of the Treasury the full record of the remarks of the United States Executive Director at meetings of the boards of directors of the International Monetary Fund, the World Bank, and the other international financial institutions (as so defined), about cancellation or reduction of debts owed to the institution involved, with redaction by the Secretary of the Treasury of material deemed too sensitive for public distribution, but showing the topic, amount of material redacted, and reason for the redaction.CommentsClose CommentsPermalink





`‘(f) Report From the Comptroller General- Within 1 year after the date of the enactment of this section, the Comptroller General of the United States shall prepare and submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and on Foreign Relations of the Senate a report on the availability of [Struck out->]the availability of[<-Struck out] the ongoing operations, procedures, and accounts of the IMF, the World Bank, and the other international financial institutions (as so defined) for canceling the debt of eligible low-income countries.CommentsClose CommentsPermalink





`‘(g) Annual Reports From the President- Not later than December 31, 2008, and annually thereafter for 4 years, the Secretary of the Treasury shall submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the Committees on Foreign Relations and on Banking, Housing, and Urban Affairs of the Senate a report, which shall be made available to the public, on the activities undertaken under this section, and other progress made in accomplishing the purposes of this section, for the prior fiscal year. The report shall include a list of the countries that have received debt cancellation, a list of the countries whose request for debt cancellation has been denied and the reasons therefor, and a list of the countries whose requests for debt cancellation are under consideration.CommentsClose CommentsPermalink





`‘(h) Eligible Low-Income Country Defined- In this section, the term `‘eligible low-income country'’ means a country--CommentsClose CommentsPermalink





`‘(1) that is eligible for financing from the International Development Association but not the World Bank;CommentsClose CommentsPermalink





`‘(2) that has transparent and effective budget execution and public financial management systems which ensure that the savings from debt relief are spent on reducing poverty;CommentsClose CommentsPermalink





`(3 ‘(3) that has demonstrated democratic governance and transparency of decision-making; CommentsClose CommentsPermalink





‘ [Struck out->](3)[<-Struck out] (4) the government of which does not have an excessive level of military expenditures;CommentsClose CommentsPermalink





`(4‘ [Struck out->](4)[<-Struck out] (5) the government of which has not repeatedly provided support for acts of international terrorism, as determined by the Secretary of State under section 6(j)(1) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)), section 40 of the Arms Export Control Act (22 U.S.C. 2780), or section 620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a));CommentsClose CommentsPermalink





`(5‘ [Struck out->](5)[<-Struck out] (6) the government of which is cooperating on international narcotics control matters;CommentsClose CommentsPermalink





`(6‘ [Struck out->](6)[<-Struck out] (7) the government of which (including its military or other security forces) does not engage in a consistent pattern of gross violations of internationally recognized human rights; andCommentsClose CommentsPermalink





`(7‘ [Struck out->](7)[<-Struck out] (8) the government of which is not engaged in, and has taken effective action to prevent entities in its jurisdiction from engaging in, the proliferation of weapons of mass destruction, related materials and components, or associated delivery systems.'.SEC. 4’.CommentsClose CommentsPermalink

SEC. [Struck out->]4[<-Struck out] 5. PROHIBITION OF HARMFUL ECONOMIC AND POLICY CONDITIONS.

Title XVI of the International Financial Institutions Act (22 U.S.C. 262p--262p-8) is further amended by adding at the end the following:CommentsClose CommentsPermalink

`‘SEC. 1627. PROHIBITION OF HARMFUL ECONOMIC AND POLICY CONDITIONS.

`‘(a) In General- The Secretary of the Treasury shall commence immediate efforts within the Paris Club of Official Creditors, the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (World Bank), and the other international financial institutions (as defined in section 1701(c)(2)), to ensure that the provision of debt cancellation to eligible low-income countries (as defined in section 1626(h)) is not conditioned on any agreement by such a country to implement or comply with policies that deepen poverty, significantly increase the costs of public services for low-income households, or degrade the environment., including any policy that--CommentsClose CommentsPermalink





`(1) implements or extends ‘(b) Report on Previous Rounds of Debt Cancellation- Not later than December 31, 2009, the Secretary of the Treasury shall submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the Committees on Foreign Relations and on Banking, Housing, and Urban Affairs of the Senate a report, which shall be made available to the public, on the degree and extent to which previous rounds of debt cancellation for recipient nations were accompanied by the following conditions: CommentsClose CommentsPermalink





‘(1) Implementation or extension of user fees on primary education or primary health care, including prevention and treatment efforts for HIV/AIDS, tuberculosis, malaria, and infant, child, and maternal well-being;`(2) provides for i. CommentsClose CommentsPermalink





‘(2) Increased costs for low-income households to pay for basic public services such as education, health care, drinking water, or sanitation;`(3) undermines workers' ability to exercise effectively their internationally recognized worker rights, as defined under section 526(e) of the Foreign Operations, Export Financing and Related Programs Appropriations Act, 1995 (22 U.S.C. 262p-4p); or`(4) does not exempt. CommentsClose CommentsPermalink





‘(3) A prohibition on exempting increased government spending on essential health care or education expenditures from required conditions imposed by the IMF, including national budget caps or restraints, and hiring or wage bill ceilings, or other limits imposed by the IMF.`.’. CommentsClose CommentsPermalink

(a) Finding- Congress finds that Haiti is scheduled to send $48,700,000 in debt payments to international financial institutions in 2008. CommentsClose CommentsPermalink





(b) Annual Reports to theSense of Congress- It is the sense of Congress that-- CommentsClose CommentsPermalink





(1) due to the current humanitarian and political instability in Haiti, including food shortages and political turmoil, the Secretary of the Treasury should use the Secretary’s influence to expedite the complete and immediate cancellation of Haiti’s debts to all international financial institutions; and CommentsClose CommentsPermalink





(2) if Haiti’s debt to those institutions cannot be cancelled, the Secretary of the Treasury should urge those institutions to immediately suspend the requirement that Haiti make further debt service payments on that debt. CommentsClose CommentsPermalink

(a) In General- Not later than December 31, 2008, and annually thereafter for 4 yearsJune 30, 2009, the Secretary of the Treasury shall submit to the Committees on Financial Services and on International RelationForeign Affairs of the House of Representatives and the Committees on Foreign Relations and on Banking, Housing, and Urban Affairs of the Senate a report, which shall be made available to the public, on the activities undertaken under this section, and other progress made in accomplishing the purposes offeasibility and design of a potential facility, based at the International Monetary Fund or another international financial institution, to provide temporary financing to relieve debt service burdens in the case of shocks to the economies of low income countries beyond their control, including natural disasters and sharp spikes in commodity prices. CommentsClose CommentsPermalink





(b) Basis for Financing Under Potential Facility- The report required under this section, for the prior fiscal year.'. shall assume that such a facility would be designed to allow low-income countries with good growth prospects to borrow reasonable amounts on reasonable terms and thereby minimize the risk of the need for additional debt relief in the future. CommentsClose CommentsPermalink