69–010 

Calendar No. 934 

110TH CONGRESS REPORT " ! SENATE 2d Session 110–438 

JUBILEE ACT FOR RESPONSIBLE LENDING AND 

EXPANDED DEBT CANCELLATION OF 2008 

AUGUST 1, 2008.—Ordered to be printed 

Mr. BIDEN, from the Committee on Foreign Relations, 

submitted the following 

R E P O R T 

[To accompany S. 2166] 

The Committee on Foreign Relations, having had under consideration the bill (S. 2166), 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, having considered the same, reports 

the bill favorably with amendments and recommends that the bill, 

as amended, pass. 

CONTENTS 

Page 

I. Purpose ........................................................................................................... 1 

II. Committee Action .......................................................................................... 1 

III. Discussion ....................................................................................................... 2 

IV. Cost Estimate ................................................................................................. 5 

V. Evaluation of Regulatory Impact .................................................................. 8 

VI. Changes in Existing Law .............................................................................. 8 

I. PURPOSE

The purpose of 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. 

II. COMMITTEE ACTION

S. 2166 was introduced by Senator Robert P. Casey, Jr., on October 16, 2007. It is cosponsored by Senators Biden, Lugar, Dodd, 

Boxer, Coleman, Feingold, Hagel, Kerry, Obama, Menendez, 


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Isakson, Bill Nelson, Durbin, Brown, Clinton, Collins, Klobuchar, 

Leahy, Lieberman, McCaskill, Mikulski, Schumer, Smith, Snowe, 

Sununu, and Wyden. A companion bill, H.R. 2634, was introduced 

by Representatives Maxine Waters and Spencer Bacchus on June 

7, 2007, and approved by the House of Representatives by a vote 

of 285–132 on April 16, 2008. On June 24, 2008, the committee ordered S. 2166 reported favorably by voice vote with an amendment 

in the nature of a substitute. 

III. DISCUSSION

A. Overview 

S. 2166, the ‘‘Jubilee Act for Responsible Lending and Expanded 

Debt Cancellation of 2008’’ provides for greater responsibility in 

lending and expanded cancellation of debts owed to the United 

States and the international financial institutions by low-income 

countries. The legislation, building on previous rounds of bilateral 

and multilateral debt cancellation, calls upon the Treasury Department to negotiate a multilateral framework for debt cancellation 

with those countries that are eligible for financing from the International Development Association, and that meet various other criteria. This group could eventually total as many as 24 additional 

poor countries that would benefit from debt cancellation in order to 

promote economic, social, and human development goals, including 

the United Nations Millennium Development Goals. The legislation 

incorporates safeguards to help ensure that the money freed up in 

these countries by debt cancellation is used for poverty reduction 

purposes; moreover, eligible countries must meet criteria regarding 

public financial management quality controls, transparency, and 

other good governance benchmarks. The legislation calls for the development of a framework to promote more responsible future lending practices and to discourage so-called ‘‘vulture fund’’ activity. 

B. Rationale 

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 through various legislation enacted over the past decade. 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 countries 

to Paris Club members, the International Monetary Fund, the 

World Bank, and the African Development Bank. 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, the World Bank and the 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. 

Reports indicate that most resources released by debt relief efforts to date are reaching the poor. Cameroon is using the 

$29,800,000 of savings gained from the MDRI for national poverty 

reduction priorities, including infrastructure and social sector and 

governance reforms. Uganda is using its $57,900,000 in MDRI savings on improving energy infrastructure to try to ease acute elecVerDate Aug 31 2005 05:01 Aug 03, 2008 Jkt 069010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR438.XXX SR438

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tricity shortages, as well as on primary education, malaria control, 

health care and water infrastructure (specifically targeting the poor 

and underserved villages). Zambia is using its savings of 

$23,800,000 under the MDRI to increase spending on agricultural 

projects, such as small landholder irrigation and livestock disease 

control, as well as to eliminate fees for health care in rural areas. 

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 key development objectives. A critical issue 

which needs to be addressed on debt is the way that 

nonconcessional lenders stand to gain financially from lending to 

poor countries that have benefited from debt relief. Those lenders 

have not contributed to past debt relief efforts or faced the prospect 

of paying for the future relief of unsustainable new lending. In 

these cases, the gains from debt relief are at risk of being eroded 

by new, unsustainable lending to countries that have received debt 

cancellation, as well as by so-called ‘‘vulture funds.’’

It is also essential that all lenders and borrowers accept responsibility and learn from past mistakes 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 responsibility for past lending mistakes and cancelled the debt of five countries on the grounds that the loans reflected poor development policy. 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 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, anticorruption measures, and 

budget transparency. 

The committee affirms that debt cancellation is an important 

component of the United States development assistance strategy. 

The United States has been a leader in supporting debt relief efforts to date and should continue to work to improve and expand 

appropriate initiatives in this area. 

C. Summary of major provisions 

Sense of Congress on Fully Funding Existing U.S. Arrears on 

Previous Debt Relief Commitments 

Section 3 recognizes that the United States has fallen behind in 

funding its appropriate share of previous multilateral commitments 

on debt cancellation for low-income countries. It expresses the 

sense of Congress in support of a renewed commitment to fund existing U.S. arrears related to debt relief. This section also expresses 

the sense of Congress that any additional commitments made by 

the United States to fund debt cancellation for additional low-income countries should not come at the expense of existing U.S. development assistance to those countries; likewise, the U.S. Government should encourage other countries to adopt a similar principle 

when agreeing upon debt cancellation. 


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Cancellation of Debt Owed by Eligible Low-Income Countries 

Section 4 calls upon the Treasury Department to commence multilateral negotiations to achieve cancellation for eligible countries of 

their respective debts held by international financial institutions 

and individual countries, including the United States. Each eligible 

country benefiting from debt cancellation would be required to allocate the savings from debt cancellation toward poverty reduction 

expenditures and produce an annual report documenting how the 

savings were used. The section calls upon the Secretary of the 

Treasury to commence efforts to establish a framework for creditor 

transparency, including greater openness surrounding the activities 

of each creditor institution that makes loans to low-income countries. 

Definition of Eligible Low-Income Countries 

Section 4 defines an eligible low-income nation as any country 

that is eligible for financing from the International Development 

Association, has transparent and effective budget execution and 

public financial management systems, has demonstrated democratic governance and transparency of decisionmaking, does not 

have an excessive level of military expenditures, has not repeatedly 

provided support for acts of international terrorism, is cooperating 

on international narcotics control matters, is not engaging in a consistent pattern of gross violations of internationally recognized 

human rights, and is not engaged in the proliferation of weapons 

of mass destruction or related materials and components. 

A Framework for Responsible Lending 

Section 4 calls upon the Treasury Department to commence efforts to establish a framework for responsible lending, including 

the development of policies to ensure that all creditors contribute 

to the preservation of gains of debt relief for low-income debtor 

countries. This framework would also include appropriate mechanisms to discourage so-called ‘‘vulture fund’’ activity. The section 

calls upon the Government Accountability Office to undertake an 

audit of multilateral loans extended to previous governments in 

countries such as the Democratic Republic of Congo and South Africa, where significant concerns existed towards those loans at the 

time they were made, and complete a report on the operations and 

procedures undertaken by the World Bank, the IMF, and other 

international financial institutions for debt cancellation. 

Prohibition of Harmful Economic and Policy Conditions 

Section 5 calls on the Treasury Department to commence efforts 

within international financial institutions to ensure that the provision of debt cancellation to eligible low-income countries 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. Examples of such policies include: Implementing or 

extending user fees for primary education or primary health care, 

and increasing the costs of basic public services, such as education, 

health care, drinking water, or sanitation, for low-income households. The section calls on the Treasury Department to submit a 

report on the degree and extent to which previous rounds of debt 


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cancellation for recipient countries were accompanied by such conditions. 

Cancellation of Haiti’s Debts 

Section 6 states the sense of Congress that, due to the current 

humanitarian and political instability in Haiti, including food 

shortages and political turmoil, the Secretary of the Treasury 

should use his influence to expedite the complete and immediate 

cancellation of Haiti’s debts to all international financial institutions, or at a minimum, urge those institutions to immediately suspend the requirement that Haiti make further debt service payments on that debt. 

Temporary Financing to Respond to Temporary Economic 

Shocks 

Section 7 calls on the Treasury Department to prepare a report 

on the feasibility and design of a potential facility, based at the 

International Monetary Fund or another international financial institution, to provide temporary financing to relieve debt service 

burdens in the case of shocks to the economies of low-income countries beyond their control, including natural disasters and sharp 

spikes in commodity prices. The committee determined that such 

a report would be appropriate in light of testimony to members at 

the April hearing that such a facility could supplement debt cancellation activities in boosting the prospects of low-income countries. 

IV. COST ESTIMATE

In accordance with rule XXVI, paragraph 11(a) of the Standing 

Rules of the Senate, the committee provides this estimate of the 

costs of this legislation prepared by the Congressional Budget Office. 

UNITED STATES CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 18, 2008. 

Hon. JOSEPH R. BIDEN, JR., Chairman, Committee on Foreign Relations, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2166, the Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Sunita D’Monte. 

Sincerely, 

PETER R. ORSZAG. 


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CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

July 18, 2008. 

S. 2166 

JUBILEE ACT FOR RESPONSIBLE LENDING AND EXPANDED DEBT

CANCELLATION OF 2008 

AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN

RELATIONS ON JUNE 24, 2008

Summary 

S. 2166 would require the Secretary of the Treasury to cancel all 

debts owed by certain low-income countries to the United States 

and to work toward cancelling debt owed by those countries to 

international financial institutions (IFIs). Countries that received 

debt relief under this proposal would be required to use their savings to fund programs to reduce poverty. 

CBO estimates that implementing S. 2166 would result in discretionary outlays of $625 million over the 2009–2013 period, assuming appropriation of the estimated amounts. (Additional amounts 

would be spent after 2013.) In addition, enacting S. 2166 would increase direct spending by the amount of the subsidy cost of loan 

modifications, as defined by the Federal Credit Reform Act. CBO 

estimates that forgiving direct loans and loan guarantees made to 

other countries would cost $1.1 billion over the 2009–2018 period. 

Enacting S. 2166 would have no effect on revenues. 

S. 2166 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would not affect the budgets of state, local, or tribal governments. 

Estimated Cost to the Federal Government 

The estimated budgetary impact of S. 2166 is shown in the following table. The costs of this legislation fall within budget function 150 (international affairs). 

CHANGES IN SPENDING DUE TO S. 2166 

[By fiscal year, in million of dollars] 

2009 2010 2011 2012 2013 2008– 

2013 

Changes In Spending Subject To Appropriation: 

Estimated Authorization Level .................................... 0 250 250 250 250 1,000 

Estimated Outlays ...................................................... 0 63 125 188 250 625 

Changes In Direct Spending: 

Estimated Budget Authority ....................................... 367 367 367 0 0 1,100 

Estimated Outlays ...................................................... 367 367 367 0 0 1,100 

Note: Components may not sum to totals because of rounding. 

Basis of Estimate 

For this estimate, CBO assumes that the bill will be enacted 

near the start of fiscal year 2009, that the necessary amounts will 

be appropriated (over a 40-year period beginning in 2010), and that 


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outlays will follow historical spending patterns for similar programs. 

Spending Subject to Appropriation 

Section 4 would require the Secretary of the Treasury to work 

with IFIs to cancel debt owed to them by certain low-income countries and to absorb the related costs within their existing resources. 

According to the Department of Treasury, those countries owe a 

total of $50 billion to the World Bank, the International Monetary 

Fund, the African Development Bank, and the Asian Development 

Bank. 

In recent negotiations regarding the Multilateral Debt Relief Initiative (MDRI)—an effort to provide debt relief to certain poor, 

heavily indebted nations—the United States was unable to achieve 

its goal of funding debt relief from the resources of the IFIs. The 

United States is now responsible for 20 percent of the costs of 

MDRI debt relief at the World Bank, to be paid over about 40 years 

to match the loan repayments that would otherwise have been 

made. Assuming negotiations for the debt relief that would be authorized by S. 2166 would lead to a similar result, CBO expects 

that negotiations would take about a year, that the United States 

would contribute about 20 percent (or $10 billion) of the costs of 

debt cancellation, and that those contributions would be made over 

a 40-year period. Therefore, CBO estimates that the United States 

would contribute $250 million a year or about $10 billion in total 

to replenish IFIs and that implementing this provision would cost 

about $625 million over the 2009–2013 period, assuming appropriation of $1 billion over that period. The remaining $9 billion would 

be provided and spent after 2013. 

Direct Spending 

In addition to cancelling multilateral debt, section 4 would require the Secretary to cancel all debt owed to the United States by 

low-income countries that meet certain qualifications. Recent data 

from the Department of Treasury on direct loans and loan guarantees made to those countries indicate that their outstanding loans 

total about $2.5 billion. Cancelling those loans would constitute 

loan modifications (as defined by the Federal Credit Reform Act) 

and would require the federal government to write off the net 

present value of the expected stream of loan repayments, which 

would reflect the current likelihood of each country repaying its 

loans. 

CBO estimates that such countries would become eligible for 

debt cancellation over the 2009–2011 period and assumes the costs 

would be spread evenly across that period. Based on information 

from the department, CBO further estimates that roughly 45 percent of the outstanding loan amounts will be repaid (with interest) 

under current law and that enacting the bill would increase direct 

spending by about $1.1 billion over both the 2009–2013 and 2009–

2018 periods. That estimate is an estimated subsidy cost-calculated 

as a net present value of forgone principal and interest paymentsfor the debt forgiveness. 


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Intergovernmental and Private-Sector Impact 

S. 2166 contains no intergovernmental or private-sector mandates as defined in UMRA and would not affect the budgets of 

state, local, or tribal governments. 

Previous CBO Estimate 

On April 9, 2008, CBO transmitted a cost estimate for H.R. 2634, 

an identically titled act that was ordered reported by the House 

Committee on Financial Services on April 3, 2008. The House legislation would require the Secretary to begin negotiations to cancel 

debt, but agreements to cancel debt could not be finalized without 

further authorization from the Congress. CBO estimated that enacting H.R. 2634, by itself, would have no budgetary impact. 

Estimate Prepared By: 

Federal Costs: SUNITA D’MONTE

Impact on State, Local, and Tribal Governments: NEIL HOOD

Impact on the Private Sector: JACOB KUIPERS

Estimate Approved By: 

PETER H. FONTAINE, Assistant Director for Budget Analysis 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to rule XXVI, paragraph 11(b) of the Standing Rules of 

the Senate, the committee has determined that there is no regulatory impact as a result of this legislation. 

VI. CHANGES IN EXISTING LAW

In compliance with rule XXVI, paragraph 12 of the Standing 

Rules of the Senate, 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). 

International Financial Institutions Act 

* * * * * * * 

SEC. 1625. IMPROVEMENT OF THE ENHANCED HIPC INITIATIVE. 

* * * * * * * 

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

COUNTRIES. 

(a) IN GENERAL.—The Secretary of the Treasury shall commence 

immediate efforts, within the Paris Club of Official Creditors, the 

International Monetary Fund (IMF), the International Bank for Reconstruction and Development (World Bank), and the other international financial institutions (as defined in section 1701(c)(2)), to 

accomplish the following: 

(1) Cancellation by each international financial institution of 

all existing debts owed to the institution by eligible low-income 

countries, and, to the extent possible, financing the debt cancellation from the ongoing operations, procedures, and accounts 

of the institution. 


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(2) Cancellation by the United States of all existing debts 

owed to it by eligible low-income countries. 

(3) Ensuring that any waiting period for the enhanced debt 

cancellation is not excessive. 

(4) Requiring the government of each eligible low-income 

country to—

(A) allocate the savings from debt cancellation towards 

poverty-reducing expenditures; 

(B) engage interested parties, including a broad cross-section of civil society groups, in that allocation process; 

(C) develop and implement effective policy reforms to ensure that savings from debt cancellation are redirected to 

poverty reduction efforts and that any future borrowing be 

conducted in a responsible fashion; and 

(D) produce an annual report 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 which is made publicly available and easily accessible to all interested parties, 

including civil society groups and the media. 

(5) Encouraging the government of each eigible low-income 

country to allocate at least 20 percent of its national budget towards poverty-alleviation programs such as the provision of 

basic health care services, education services, and clean water 

services to all individuals in the country. 

(b) ESTABLISHMENT OF FRAMEWORK FOR CREDITOR TRANSPARENCY.—The Secretary of the Treasury shall commence immediate efforts, within the Paris Club of Official Creditors, the International Monetary Fund, the World Bank, and the other international financial institutions (as so defined), to ensure that each 

of the institutions—

(1) continues to make efforts to promote greater transparency 

regarding the activities of the institution, including credit, 

grant, guarantee, and technical assistance operations, following 

a policy of maximum disclosure; and 

(2) supports continued efforts to allow informed participation 

and input by affected communities, including translation of information on proposed projects into official languages, provision 

of information (including draft documents) through information 

technology application, oral briefings, and outreach to and dialogue with community organizations and institutions in affected 

areas. 

(c) ESTABLISHMENT OF FRAMEWORK FOR RESPONSIBLE LENDING.—The Secretary of the Treasury shall commence immediate efforts to—

(1) develop and promote policies to ensure all creditors, with 

no distinction, will contribute to preserving the gains of debt relief for low-income debtor countries; 

(2) collaborate with appropriate government agencies to discourage ‘‘vulture fund’’ activity, including by—

(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 


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ministers from other G8 countries to achieve the same goal; 

and 

(B) providing technical assistance to recipient governments to advise on measures to address ‘‘vulture fund’’ activity; 

(3) provide that the external financing from official creditors 

of low-income countries are met primarily through grant financing rather than new lending; 

(4) seek the international adoption of a binding legal framework that— (A) guarantees that no creditor can take financial advantage of debt relief through the terms and rates of their new 

lending to beneficiary countries; 

(B) is binding on all creditors, whether multilateral, bilateral or private; 

(C) foresees, as a sanction for creditors who violate it, an 

equitable share in the burden of the losses from any future 

debt relief needed by the sovereign debtor to whom lending 

was provided; and 

(D) enables fair opportunities for the people of the affected country to be heard; and 

(5) support the development of responsible financing standards by which creditors and aid or loan recipients alike promote transparency, accountability, human rights, and the 

avoidance of new odious unsustainable debt, while encouraging 

the development of renewable energy. 

(d) GAO AUDIT OF DEBT PORTFOLIOS OF COUNTRIES WITH QUES- TIONABLE LOANS.—The Comptroller General of the United States 

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 significant concern exists that 

unsustainable loans were made to the government. Each such audit 

shall—

(1) consider debt owed to the World Bank, the IMF, and the 

other international financial institutions (as so defined) and 

debt owed to the United States Government and assess whether 

or not past investments produced the intended results; and 

(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. 

(e) AVAILABILITY ON TREASURY DEPARTMENT WEBSITE OF REMARKS OF UNITED STATES EXECUTIVE DIRECTORS AT MEETINGS OF

INTERNATIONAL FINANCIAL INSTITUTIONS’ BOARDS OF DIRECTORS.—

The Secretary of the Treasury shall make available on the website 

of the Department of the Treasury the full record of the remarks of 

the United States Executive Director at meetings of the boards of directors of the International Monetary Fund, the World Bank, and 

the other international financial institutions (as so defined), about 

cancellation or reduction of debts owed to the institution involved, 

with redaction by the Secretary of the Treasury of material deemed 

too sensitive for public distribution, but showing the topic, amount 

of material redacted, and reason for the redaction. 

(f) REPORT FROM THE COMPTROLLER GENERAL.—Within 1 year 

after the date of the enactment of this section, the Comptroller GenVerDate Aug 31 2005 05:01 Aug 03, 2008 Jkt 069010 PO 00000 Frm 00010 Fmt 6659 Sfmt 6603 E:\HR\OC\SR438.XXX SR438

wwoods2 on PRODPC68 with REPORTS
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eral 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 ongoing operations, procedures, and accounts of the IMF, the 

World Bank, and the other international financial institutions (as 

so defined) for canceling the debt of eligible low-income countries. 

(g) ANNUAL REPORTS FROM THE PRESIDENT.—Not later than December 31, 2008, and annually thereafter for 4 years, the Secretary 

of the Treasury shall submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the 

Committees on Foreign Relations and on Banking, Housing, and 

Urban Affairs of the Senate a report, which shall be made available 

to the public, on the activities undertaken under this section, and 

other progress made in accomplishing the purposes of this section, 

for the prior fiscal year. The report shall include a list of the countries that have received debt cancellation, a list of the countries 

whose request for debt cancellation has been denied and the reasons 

therefor, and a list of the countries whose requests for debt cancellation are under consideration. 

(h) ELIGIBLE LOW-INCOME COUNTRY DEFINED.—In this section, 

the term ‘‘eligible low-income country’’ means a country—

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

(2) that has transparent and effective budget execution and 

public financial management systems which ensure that the 

savings from debt relief are spent on reducing poverty; 

(3) that has demonstrated democratic governance and transparency of decision-making; 

(4) the government of which does not have an excessive level 

of military expenditures; 

(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)); 

(6) the government of which is cooperating on international 

narcotics control matters; 

(7) the government of which (including its military or other 

security forces) does not engage in a consistent pattern of gross 

violations of internationally recognized human rights; and 

(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. 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 


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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. 

(b) REPORT ON PREVIOUS ROUNDS OF DEBT CANCELLATION.—Not 

later than December 31, 2009, the Secretary of the Treasury shall 

submit to the Committees on Financial Services and on Foreign Affairs of the House of Representatives and the Committees on Foreign 

Relations and on Banking, Housing, and Urban Affairs of the Senate a report, which shall be made available to the public, on the degree and extent to which previous rounds of debt cancellation for recipient nations were accompanied by the following conditions: 

(1) Implementation or extension of user fees on 2 primary 

education or primary health care, including 3 prevention and 

treatment efforts for HIV/AIDS, tuberculosis, malaria, and infant, child, and maternal well-being. 

(2) Increased costs for low-income households to pay for basic 

public services such as education, health care, drinking water, 

or sanitation. 

(3) A prohibition on exempting increased government spending on essential health care or education expenditures from required conditions imposed by the IMF, including national 

budget caps or restraints and hiring or wage bill ceilings. 

Æ 


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