I 

110TH CONGRESS 

1ST SESSION H. R. 2634 

To provide for greater responsibility in lending and expanded cancellation 

of debts owed to the United States and the international financial institutions by low-income countries, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 7, 2007 

Ms. WATERS (for herself, Mr. BACHUS, Mrs. MALONEY of New York, Mr. 

GUTIERREZ, Mr. PAYNE, Ms. LEE, and Mr. CLEAVER) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To provide for greater responsibility in lending and expanded 

cancellation of debts owed to the United States and 

the international financial institutions by low-income 

countries, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Jubilee Act for Re5 sponsible Lending and Expanded Debt Cancellation of 

6 2007’’. 

7 SEC. 2. FINDINGS. 

8 The Congress finds the following: 


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1 (1) Many low-income countries have been strug2 gling under the burden of international debts for 

3 many years. 

4 (2) Since 1996, when the Heavily Indebted 

5 Poor Countries Initiative (HIPC) was created, more 

6 than 30 nations have seen some form of debt relief 

7 totaling approximately $80,000,000,000. 

8 (3) Congress has demonstrated its support for 

9 bilateral and multilateral debt relief through the en10 actment of comprehensive debt relief initiatives for 

11 heavily indebted low-income countries in— 

12 (A) title V of H.R. 3425 of the 106th Con13 gress, as enacted into law by section 1000(a)(5) 

14 of the Act entitled ‘‘An Act making consoli15 dated appropriations for the fiscal year ending 

16 September 30, 2000, and for other purposes’’, 

17 approved November 29, 1999 (Public Law 106– 

18 113; 113 Stat. 1501–311) and the amendments 

19 made by such title; 

20 (B) title II of H.R. 5526 of the 106th 

21 Congress, as enacted into law by section 101(a) 

22 of the Act entitled ‘‘An Act making appropria23 tions for foreign operations, export financing, 

24 and related programs for the fiscal year ending 

25 September 30, 2001, and for other purposes’’, 


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1 approved November 6, 2000 (Public Law 106– 

2 429; 114 Stat. 1900A–5); and 

3 (C) title V of the United States Leadership 

4 Against HIV/AIDS, Tuberculosis, and Malaria 

5 Act of 2003 (Public Law 108–25; 117 Stat. 

6 747) and the amendment made by such title. 

7 (4) In 2005, the United States and other G–8 

8 nations reached an agreement to provide cancellation 

9 of 100 percent of the debts owed by eligible poor na10 tions to Paris Club members, the IMF, the World 

11 Bank, and the African Development Bank. The 

12 Inter-American Development Bank reached an 

13 agreement in early 2007 to provide similar treat14 ment. 

15 (5) The 2005 agreement led to the creation of 

16 the Multilateral Debt Relief Initiative (MDRI). As of 

17 April 2007, 22 nations have seen the majority of 

18 their debts to the IMF, World Bank, and African 

19 Development Bank cancelled under the terms of the 

20 MDRI. In March 2007, the Inter-American Develop21 ment Bank announced it would provide full debt 

22 cancellation to 5 Latin American countries on MDRI 

23 terms. 

24 (6) Resources released by debt relief efforts to 

25 date are reaching the poor. Cameroon is using the 


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1 $29,800,000 of savings it will gain from the MDRI 

2 in 2006 for national poverty reduction priorities, in3 cluding infrastructure, social sector and governance 

4 reforms. Uganda is using its $57,900,000 savings in 

5 2006 on improving energy infrastructure to try to 

6 ease acute electricity shortages, as well as primary 

7 education, malaria control, healthcare and water in8 frastructure (specifically targeting the poor and 

9 under-served villages). Zambia is using its savings of 

10 $23,800,000 under the MDRI in 2006 to increase 

11 spending on agricultural projects, such as 

12 smallholder irrigation and livestock disease control, 

13 as well as to eliminate fees for healthcare in rural 

14 areas. 

15 (7) While debt cancellation has a record of suc16 cess, there remains an unfinished agenda on inter17 national debt. There are a number of challenges to 

18 the effective implementation of existing commit19 ments, and broader debt cancellation is needed if the 

20 global community is to reach the Millennium Devel21 opment Goals. 

22 (8) 2007 is an important year to address the 

23 unfinished agenda on international debt as the glob24 al Jubilee debt campaign has declared 2007 a ‘‘Sab25 bath year’’, 7 years after the historic Jubilee 2000 


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1 campaign. 2007 is also the halfway point to the 

2 deadline set by the world’s governments to reach the 

3 Millennium Development Goals. 

4 (9) A critical issue which needs to be addressed 

5 on debt is the way that non-concessional lenders 

6 stand to gain financially from lending to poor coun7 tries that have benefited from debt relief without 

8 having paid for past debt relief or facing the pros9 pect of paying for the future relief of unsustainable 

10 and irresponsible new lending. In these cases, the 

11 gains of debt relief for poor debtor countries are at 

12 risk of being eroded. This takes the form of new 

13 lending to countries that have received debt cancella14 tion from countries including China, as well as the 

15 threat posed by so-called ‘‘vulture funds’’. 

16 (10) It is also essential that all lenders and bor17 rowers accept co-responsibility and learn from past 

18 mistakes–as evidenced by the debt crisis itself–by 

19 making more productive investment choices and en20 gaging in more responsible lending and borrowing in 

21 the future. In October 2006, Norway became the 

22 first creditor to accept co-responsibility for past 

23 lending mistakes and cancelled the debt of 5 nations 

24 on the grounds that the loans reflected poor develop25 ment policy. 


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1 (11) A growing number of governments and 

2 intergovernmental bodies, including the United 

3 Kingdom, the European Commission, and Norway, 

4 are raising concerns about the harmful impacts of 

5 economic policy conditionality. Many impoverished 

6 countries that have received debt cancellation under 

7 the HIPC and MDRI initiatives have done so at a 

8 high social cost, because they have had to implement 

9 economic policy conditions such as privatization of 

10 public utilities and other basic services, adhere to 

11 budget ceilings imposed by the IMF, and comply 

12 with other harmful requirements. Some of these poli13 cies have had the effect of limiting fiscal space and 

14 making it more difficult for countries to meet the 

15 Millennium Development Goals. Several countries 

16 currently eligible for debt cancellation under the 

17 HIPC or MDRI programs are facing extended 

18 delays in receiving cancellation because they are 

19 struggling to comply with such requirements from 

20 the IMF and World Bank. 

21 (12) There is also an urgent need to look be22 yond the constraints of current debt relief initiatives 

23 to address the need for expanded debt cancellation. 

24 The current initiatives allow countries to qualify for 

25 relief based on economic criteria rather than human 


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1 needs. A January 2007 report by the United Na2 tions Human Rights Council found that eligibility 

3 for debt cancellation should be expanded to cover all 

4 low-income countries. 

5 (13) The government of the United Kingdom 

6 has proposed that qualification for the MDRI be ex7 tended to the 67 nations which qualify for assistance 

8 exclusively from the International Development As9 sociation. To be eligible for cancellation, countries 

10 must meet requirements pertaining to public finan11 cial management, anti-corruption measures, and 

12 budget transparency. 

13 (14) Debt cancellation is an essential compo14 nent of the United States development assistance 

15 strategy and a required component to facilitate 

16 achievement of the Millennium Development Goals. 

17 (15) The United States has been a leader in 

18 supporting debt relief efforts to date and should con19 tinue to work to improve and expand initiatives in 

20 this area. 

21 SEC. 3. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW22 INCOME COUNTRIES. 

23 Title XVI of the International Financial Institutions 

24 Act (22 U.S.C. 262p—262p–8) is amended by adding at 

25 the end the following: 


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1 ‘‘SEC. 1626. CANCELLATION OF DEBT OWED BY ELIGIBLE 

2 LOW-INCOME COUNTRIES. 

3 ‘‘(a) IN GENERAL.—The Secretary of the Treasury 

4 shall commence immediate efforts, within the Paris Club 

5 of Official Creditors, the International Monetary Fund 

6 (IMF), the International Bank for Reconstruction and De7 velopment (World Bank), and the other international fi8 nancial institutions (as defined in section 1701(c)(2)), to 

9 accomplish the following: 

10 ‘‘(1) Cancellation by each international finan11 cial institution of all debts owed to the institution by 

12 eligible low-income countries, and, to the extent pos13 sible, financing the debt cancellation from the ongo14 ing operations, procedures, and accounts of the insti15 tution. 

16 ‘‘(2) Cancellation by the United States of all 

17 debts owed to it by eligible low-income countries. 

18 ‘‘(3) Ensuring that any waiting period for the 

19 enhanced debt cancellation is not excessive. 

20 ‘‘(4) Requiring the government of each eligible 

21 low-income country to— 

22 ‘‘(A) allocate the savings from debt can23 cellation towards poverty-reducing expenditures; 

24 ‘‘(B) engage interested parties, including a 

25 broad cross-section of civil society groups, in 

26 the allocation determination process; and 


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1 ‘‘(C) produce an annual report disclosing 

2 how the savings from debt cancellation were 

3 used, and make the report publicly available 

4 and easily accessible to all interested parties, 

5 including civil society groups and the media. 

6 ‘‘(5) Ensuring that the provision of debt can7 cellation to eligible low-income countries is not fol8 lowed by a reduction in the provision of any other 

9 development assistance to the countries by inter10 national financial institutions and bilateral creditors. 

11 ‘‘(6) Encouraging the government of each eligi12 ble low-income country to allocate at least 20 per13 cent of its national budget towards poverty-allevi14 ation programs such as the provision of basic health 

15 care services, education services, and clean water 

16 services to all individuals in the country. 

17 ‘‘(b) ESTABLISHMENT OF FRAMEWORK FOR CRED18 ITOR TRANSPARENCY.—The Secretary of the Treasury 

19 shall commence immediate efforts, within the Paris Club 

20 of Official Creditors, the International Monetary Fund, 

21 the World Bank, and the other international financial in22 stitutions (as so defined), to ensure that each of the insti23 tutions— 

24 ‘‘(1) continues to make efforts to promote 

25 greater transparency regarding the activities of the 


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1 institution, including credit, grant, guarantee, and 

2 technical assistance operations, following a policy of 

3 maximum disclosure; and 

4 ‘‘(2) supports continued efforts to allow in5 formed participation and input by affected commu6 nities, including translation of information on pro7 posed projects, provision of information (including 

8 draft documents) through information technology 

9 application, oral briefings, and outreach to and dia10 logue with community organizations and institutions 

11 in affected areas. 

12 ‘‘(c) ESTABLISHMENT OF FRAMEWORK FOR RESPON13 SIBLE LENDING.—The Secretary of the Treasury shall 

14 commence immediate efforts to— 

15 ‘‘(1) develop and promote policies to ensure all 

16 creditors, with no distinction, will contribute to pre17 serving the gains of debt relief for low-income debtor 

18 countries; 

19 ‘‘(2) collaborate with appropriate government 

20 agencies to prevent private investors from profiting 

21 from buying low-income country debts at market 

22 value and attempting to recover their original value 

23 or more (commonly known as ‘vulture funds’), in24 cluding by— 


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1 ‘‘(A) designing legal remedies to curtail or 

2 realign the incentives for this activity; 

3 ‘‘(B) identifying avenues to provide legal 

4 support to countries being sued by ‘vulture 

5 funds’; and 

6 ‘‘(C) providing technical assistance to ad7 vise possible targeted governments on measures 

8 to take to prevent ‘vulture funds’ from success9 fully taking them to court; 

10 ‘‘(3) provide that the external financing needs 

11 of low-income countries are met primarily through 

12 grant financing rather than new lending; 

13 ‘‘(4) seek the international adoption of a bind14 ing legal framework that— 

15 ‘‘(A) guarantees that no creditor can take 

16 or expect to take financial advantage of ac17 quired or newly awarded debt relief through the 

18 terms and rates of their new lending to bene19 ficiary countries; 

20 ‘‘(B) is binding on all creditors, whether 

21 multilateral, bilateral or private; 

22 ‘‘(C) foresees, as a sanction for creditors 

23 who violate it, an equitable share in the burden 

24 of the losses from any future debt relief needed 


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1 by the sovereign debtor to whom lending was ir2 responsibly provided; 

3 ‘‘(D) provides for decisions on irresponsible 

4 lending to be made by an entity independent 

5 from the creditors; and 

6 ‘‘(E) enables fair opportunities for the peo7 ple of the affected country to be heard; and 

8 ‘‘(5) support the development of responsible fi9 nancing standards where creditors and aid/loan re10 cipients alike adhere to standards to assure trans11 parency and accountability to citizens, human rights, 

12 and the avoidance of new odious debt, while encour13 aging the development of renewable energy and help14 ing countries to transition away from dependence on 

15 oil. 

16 ‘‘(d) GAO AUDIT OF DEBT PORTFOLIOS OF COUN17 TRIES WITH QUESTIONABLE LOANS.— 

18 ‘‘(1) IN GENERAL.—The Comptroller General of 

19 the United States shall undertake an audit of the 

20 debt portfolios of previous governments in countries 

21 such as the Democratic Republic of Congo and 

22 South Africa, where there is significant evidence 

23 that odious, onerous, or illegal loans were made to 

24 the government. Each such audit shall— 


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1 ‘‘(A) consider debt owed to the World 

2 Bank, the IMF, and the other international fi3 nancial institutions (as so defined), export cred4 it debts owed to governments, and debts owed 

5 to commercial creditors, and assess whether or 

6 not past investments produced the intended re7 sults; 

8 ‘‘(B) investigate the process by which the 

9 loans were contracted, how the funds were used, 

10 and determine whether United States or inter11 national laws were violated in the contraction of 

12 these loans, and whether any of the loans were 

13 odious or onerous; and 

14 ‘‘(C) be planned and executed in a trans15 parent and consultative manner, engaging con16 gressional bodies and civil society groups in the 

17 countries. 

18 ‘‘(2) REPORT.—Within 2 years after the date of 

19 the enactment of this section, the Comptroller Gen20 eral of the United States shall prepare and submit 

21 to the Committees on Financial Services and on 

22 Foreign Affairs of the House of Representatives and 

23 the Committees on Banking, Housing, and Urban 

24 Affairs and on Foreign Relations of the Senate a reVerDate Aug 31 2005 20:02 Jun 09, 2007 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634

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1 port that contains the results of the audits under2 taken under paragraph (1). 

3 ‘‘(e) AVAILABILITY ON TREASURY DEPARTMENT

4 WEBSITE OF REMARKS OF UNITED STATES EXECUTIVE

5 DIRECTORS AT MEETINGS OF INTERNATIONAL FINAN6 CIAL INSTITUTIONS’ BOARDS OF DIRECTORS.—The Sec7 retary of the Treasury shall make available on the website 

8 of the Department of the Treasury the full record of the 

9 remarks of the United States Executive Director at meet10 ings of the boards of directors of the International Mone11 tary Fund, the World Bank, and the other international 

12 financial institutions (as so defined), about cancellation or 

13 reduction of debts owed to the institution involved, with 

14 redaction by the Secretary of the Treasury of material 

15 deemed too sensitive for public distribution, but showing 

16 the topic, amount of material redacted, and reason for the 

17 redaction. 

18 ‘‘(f) REPORT FROM THE COMPTROLLER GENERAL.— 

19 Within 1 year after the date of the enactment of this sec20 tion, the Comptroller General of the United States shall 

21 prepare and submit to the Committees on Financial Serv22 ices and on Foreign Affairs of the House of Representa23 tives and the Committees on Banking, Housing, and 

24 Urban Affairs and on Foreign Relations of the Senate a 

25 report on the availability of the ongoing operations, proceVerDate Aug 31 2005 20:02 Jun 09, 2007 Jkt 059200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634

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1 dures, and accounts of the IMF, the World Bank, and the 

2 other international financial institutions (as so defined) 

3 for canceling the debt of eligible low-income countries. 

4 ‘‘(g) ANNUAL REPORTS FROM THE PRESIDENT.— 

5 Not later than December 31 of each year, the President 

6 shall submit to the Committees on Financial Services and 

7 on Foreign Affairs of the House of Representatives and 

8 the Committees on Foreign Relations and on Banking, 

9 Housing, and Urban Affairs of the Senate a report, which 

10 shall be made available to the public, on the activities un11 dertaken under this section, and other progress made in 

12 accomplishing the purposes of this section, for the prior 

13 fiscal year. The report shall include a list of the countries 

14 that have received debt cancellation, a list of the countries 

15 whose request for debt cancellation has been denied and 

16 the reasons therefor, and a list of the countries whose re17 quests for debt cancellation are under consideration. 

18 ‘‘(h) ELIGIBLE LOW-INCOME COUNTRY DEFINED.— 

19 In this section, the term ‘eligible low-income country’ 

20 means a country— 

21 ‘‘(1) that is eligible for financing from the 

22 International Development Association but not the 

23 World Bank; 

24 ‘‘(2) that has transparent and effective budget 

25 execution and public financial management systems 


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1 which ensure that the savings from debt relief are 

2 spent on reducing poverty; and 

3 ‘‘(3) the government of which does not have an 

4 excessive level of military expenditures; 

5 ‘‘(4) the government of which has not repeat6 edly provided support for acts of international ter7 rorism, as determined by the Secretary of State 

8 under section 6(j)(1) of the Export Administration 

9 Act of 1979 (50 U.S.C. App. 2405(j)(1)), or section 

10 620A(a) of the Foreign Assistance Act of 1961 (22 

11 U.S.C. 2371(a)); 

12 ‘‘(5) the government of which is cooperating on 

13 international narcotics control matters; and 

14 ‘‘(6) the government of which (including its 

15 military or other security forces) does not engage in 

16 a consistent pattern of gross violations of inter17 nationally recognized human rights.’’. 

18 SEC. 4. PROHIBITION OF HARMFUL ECONOMIC AND POLICY 

19 CONDITIONS. 

20 Title XVI of the International Financial Institutions 

21 Act (22 U.S.C. 262p—262p–8) is further amended by 

22 adding at the end the following: 


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1 ‘‘SEC. 1627. PROHIBITION OF HARMFUL ECONOMIC AND 

2 POLICY CONDITIONS. 

3 ‘‘(a) IN GENERAL.—The Secretary of the Treasury 

4 shall commence immediate efforts within the Paris Club 

5 of Official Creditors, the International Monetary Fund 

6 (IMF), the International Bank for Reconstruction and De7 velopment (World Bank), and the other international fi8 nancial institutions (as defined in section 1701(c)(2)), to 

9 ensure that the provision of debt cancellation to eligible 

10 low-income countries (as defined in section 1626(h)) is not 

11 conditioned on any agreement by such a country to imple12 ment or comply with policies that deepen poverty or de13 grade the environment, including any policy that— 

14 ‘‘(1) implements or extends user fees on pri15 mary education or primary health care, including 

16 prevention and treatment efforts for HIV/AIDS, tu17 berculosis, malaria, and infant, child, and maternal 

18 well-being; 

19 ‘‘(2) provides for increased cost recovery from 

20 low-income people to finance basic public services 

21 such as education, health care, or sanitation; 

22 ‘‘(3) would have the effect of increasing the cost 

23 to consumers with incomes of less than $2 per day 

24 of access to clean drinking water through— 


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1 ‘‘(A) decreased public subsidies for water 

2 supply, treatment, disposal, distribution, or 

3 management; 

4 ‘‘(B) reduced intrasectoral or intersectoral 

5 subsidization of residential water consumers 

6 with incomes of less than $2 per day; 

7 ‘‘(C) reduced government ability to regu8 late; or 

9 ‘‘(D) mandated privatization of water re10 sources; 

11 ‘‘(4) undermines workers’ ability to exercise ef12 fectively their internationally recognized worker 

13 rights, as defined under section 526(e) of the For14 eign Operations, Export Financing and Related Pro15 grams Appropriations Act, 1995 (22 U.S.C. 262p– 

16 4p); or 

17 ‘‘(5) does not exempt increased government 

18 spending on essential healthcare or education ex19 penditures from national budget caps or restraints, 

20 hiring or wage bill ceilings, or other limits imposed 

21 by the IMF. 

22 ‘‘(b) ANNUAL REPORTS TO THE CONGRESS.—Not 

23 later than December 31 of each year, the President shall 

24 submit to the Committees on Financial Services and on 

25 International Relations of the House of Representatives 


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1 and the Committees on Foreign Relations and on Bank2 ing, Housing, and Urban Affairs of the Senate a report, 

3 which shall be made available to the public, on the activi4 ties undertaken under this section, and other progress 

5 made in accomplishing the purposes of this section, for 

6 the prior fiscal year.’’. 

Æ 


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