I

106TH CONGRESS

1ST SESSION 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.

IN THE HOUSE OF REPRESENTATIVES

MARCH 11, 1999

Mr. LEACH (for himself, Mr. LAFALCE, Mr. BACHUS, Ms. WATERS, Mr. BEREUTER, Mr. FRANK of Massachusetts, Mr. WOLF, and Mr. HALL of

Ohio) introduced the following bill; which was referred to the Committee

on International Relations, and in addition to the Committee on Banking

and Financial Services, for a period to be subsequently determined by the

Speaker, in each case for consideration of such provisions as fall within

the jurisdiction of the committee concerned

A BILL

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.

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 ‘‘Debt Relief for Poverty

5 Reduction Act of 1999’’.
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1 SEC. 2. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF

2 AND PROCEDURES FOR NEW LOANS, CRED3 ITS, AND GUARANTEES.

4 (a) CANCELLATION AND REDUCTION OF DEBT AND

5 PROCEDURES FOR NEW LOANS, CREDITS, AND GUARAN6 TEES.—The Foreign Assistance Act of 1961 (22 U.S.C.

7 2151 et seq.) is amended by adding at the end the fol8 lowing:

9 ‘‘PART VI—CANCELLATION AND REDUCTION OF

10 DEBT OWED TO THE UNITED STATES BY

11 POOR COUNTRIES AND PROCEDURES FOR

12 NEW LOANS, CREDITS, AND GUARANTEES TO

13 DEVELOPING COUNTRIES

14 ‘‘SEC. 901. CANCELLATION AND REDUCTION OF DEBT.

15 ‘‘(a) CANCELLATION OF DEBT.—

16 ‘‘(1) IN GENERAL.—Subject to amounts pro17 vided in advance in an appropriations Act, the Presi18 dent shall, prior to September 30, 2001, cancel all

19 amounts owed to the United States (or any agency

20 of the United States) by heavily indebted poor coun21 tries described in section 902 as a result of

22 concessional loans made or credits extended prior to

23 January 1, 1996, under any of the provisions of law

24 described in paragraph (2).

25 ‘‘(2) PROVISIONS OF LAW.—The provisions of

26 law described in this paragraph are the following:
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1 ‘‘(A) Part I of this Act, chapter 4 of part

2 II of this Act, or predecessor foreign economic

3 assistance legislation.

4 ‘‘(B) Title I of the Agricultural Trade De5 velopment and Assistance Act of 1954 (7

6 U.S.C. 1701 et seq.).

7 ‘‘(b) REDUCTION OF DEBT.—

8 ‘‘(1) IN GENERAL.—Subject to amounts pro9 vided in advance in an appropriations Act, the Presi10 dent shall, prior to September 30, 2001, reduce, by

11 not less than 90 percent, amounts owed to the

12 United States (or any agency of the United States)

13 by each heavily indebted poor country described in

14 section 902 as a result of nonconcessional loans

15 made, guarantees issued, or credits extended prior to

16 January 1, 1996, under any of the provisions of law

17 described in paragraph (2).

18 ‘‘(2) PROVISIONS OF LAW.—The provisions of

19 law described in this paragraph are the following:

20 ‘‘(A) Sections 221 and 222 of this Act.

21 ‘‘(B) The Arms Export Control Act (22

22 U.S.C. 2751 et seq.).

23 ‘‘(C) Section 5(f) of the Commodity Credit

24 Corporation Charter Act.
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1 ‘‘(D)(i) Section 201 of the Agricultural

2 Trade Act of 1978 (7 U.S.C. 5621).

3 ‘‘(ii) Section 202 of such Act (7 U.S.C.

4 5622).

5 ‘‘(E) The Export-Import Bank Act of

6 1945 (12 U.S.C. 635 et seq.).

7 ‘‘SEC. 902. ELIGIBLE COUNTRIES.

8 ‘‘(a) HEAVILY INDEBTED POOR COUNTRIES.—Ex9 cept as provided in subsection (b) and subject to the fulfill10 ment of the additional requirement in subsection (c), a

11 country shall be considered to be a heavily indebted poor

12 country and eligible for cancellation or reduction of debt

13 under section 901 if the country—

14 ‘‘(1) is eligible to borrow from the International

15 Development Association;

16 ‘‘(2) is not eligible to borrow from the Inter17 national Bank for Reconstruction and Development;

18 and

19 ‘‘(3) has outstanding public and publicly guar20 anteed debt, the net present value of which on De21 cember 31, 1996, was at least 150 percent of the av22 erage annual value of the exports of the country for

23 the period 1994 through 1996.
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1 ‘‘(b) EXCEPTIONS.—A country shall not be eligible

2 for cancellation or reduction of debt under section 901 if

3 the government of the country—

4 ‘‘(1) has an excessive level of military expendi5 tures;

6 ‘‘(2) has repeatedly provided support for acts of

7 international terrorism, as determined by the Sec8 retary of State under section 6(j)(1) of the Export

9 Administration Act of 1979 (50 U.S.C. app.

10 2405(j)(1)) or section 620A(a) of the Foreign As11 sistance Act of 1961 (22 U.S.C. 2371(a));

12 ‘‘(3) is failing to cooperate on international nar13 cotics control matters; or

14 ‘‘(4) (including its military or other security

15 forces) engages in a consistent pattern of gross vio16 lations of internationally recognized human rights.

17 ‘‘(c) ADDITIONAL REQUIREMENT.—A country which

18 is otherwise eligible to receive cancellation or reduction of

19 debt under section 901 may receive such cancellation or

20 reduction, as the case may be, only if the government of

21 the country has established, through transparent and

22 participatory processes, including participation of civil

23 society—

24 ‘‘(1) a human development fund (hereinafter re25 ferred to as the ‘Human Development Fund’)—
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1 ‘‘(A) the resources of which shall be dedi2 cated to reducing the number of persons living

3 in poverty, expanding access of the poorest

4 members of society to basic social services, in5 cluding education, health, clean water and sani6 tation, and preventing the degradation of the

7 environment; and

8 ‘‘(B) into which shall be deposited all sav9 ings generated by debt reduction received under

10 the Heavily Indebted Poor Countries (HIPC)

11 Initiative of the International Bank for Recon12 struction and Development and the Inter13 national Monetary Fund and other debt reduc14 tion programs;

15 ‘‘(2) arrangements to ensure that all expendi16 tures from the Human Development Fund during a

17 year will be used to increase annual expenditures for

18 human development by the government above the

19 greater of—

20 ‘‘(A) the total amount of annual expendi21 tures for human development by the govern22 ment for the preceding year; or

23 ‘‘(B) the average total amount of such ex24 penditures for the 3 years immediately pre-
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1 ceding the year in which such fund is estab2 lished; and

3 ‘‘(3) arrangements for monitoring the oper4 ations and financial transactions and accounts of the

5 Human Development Fund by an oversight body

6 which includes representatives of civil society.

7 ‘‘SEC. 903. PRIORITY.

8 ‘‘In canceling or reducing debt under section 901, the

9 President shall give priority to heavily indebted poor coun10 tries that have demonstrated a sustained commitment to

11 poverty alleviation or have recently suffered a major nat12 ural disaster.

13 ‘‘SEC. 904. SPECIAL PROVISIONS.

14 ‘‘(a) CANCELLATION OR REDUCTION OF DEBT NOT

15 CONSIDERED TO BE ASSISTANCE.—Except as the Presi16 dent may otherwise determine for reasons of national se17 curity, a cancellation or reduction of debt under section

18 901 shall not be considered to be assistance for purposes

19 of any provision of law limiting assistance to a country.

20 ‘‘(b) INAPPLICABILITY OF CERTAIN PROHIBITIONS

21 RELATING TO CANCELLATION OR REDUCTION OF

22 DEBT.—The authority to provide for cancellation or re23 duction of debt under section 901 may be exercised not24 withstanding section 620(r) of this Act.
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1 ‘‘SEC. 905. ANNUAL REPORTS TO THE CONGRESS.

2 ‘‘(a) IN GENERAL.—Not later than December 31 of

3 each year, the President shall prepare and transmit to the

4 appropriate congressional committees a report, which shall

5 be made available to the public, concerning the cancella6 tion and reduction of debt under section 901, determina7 tions made under section 904(a), activities undertaken

8 under section 2(b) of the Debt Relief for Poverty Reduc9 tion Act of 1999, and the progress made in accomplishing

10 the purposes of such section 2(b), for the prior fiscal year.

11 ‘‘(b) DEFINITION.—In this section, the term ‘appro12 priate congressional committees’ means—

13 ‘‘(1) the committee on Banking and Financial

14 Services and the Committee on International Rela15 tions of the House of Representatives; and

16 ‘‘(2) the committee on Foreign Relations of the

17 Senate.

18 ‘‘SEC. 906. SENSE OF THE CONGRESS.

19 ‘‘It is the sense of the Congress that the amounts

20 that would otherwise be provided by the United States for

21 development aid or other debt relief should not be reduced

22 on account of any appropriations made pursuant to sec23 tion 907.

24 ‘‘SEC. 907. AUTHORIZATION OF APPROPRIATIONS.

25 ‘‘For the cost (as defined in section 502(5) of the

26 Federal Credit Reform Act of 1990) of the cancellation
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1 or reduction of any debt under section 901 of this Act,

2 there are authorized to be appropriated to the President

3 such sums as may be necessary for each of the fiscal years

4 2000 and 2001.

5 ‘‘SEC. 908. PROCEDURES FOR NEW LOANS, CREDITS, AND

6 GUARANTEES.

7 ‘‘The President shall, to the extent appropriate, en8 sure that all decisions by the Government of the United

9 States (or any agency of the United States) to make new

10 loans, extend new credits or issue new guarantees to the

11 governments (or any agency of the governments) of, or

12 private parties in, any developing country shall be subject

13 to transparent and participatory processes, including giv14 ing due notice to the public in advance of such decisions

15 of the proposed purposes, terms, and conditions of such

16 loans, credits, and guarantees.’’.

17 (b) ENSURING BURDENSHARING BY OTHER CRED18 ITOR COUNTRIES.—In order to accelerate bilateral debt

19 relief and promote economic and human development and

20 poverty alleviation in heavily indebted poor countries, the

21 Congress urges the President, immediately after the date

22 of the enactment of this Act, to establish diplomatic ef23 forts with countries that are members of the Paris Club

24 of Official Creditors, and, if necessary, with other credi25 tors, to accomplish the following by September 30, 2001:
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1 (1) The cancellation of all amounts owed to

2 each such country by heavily indebted poor countries

3 described in section 902 of the Foreign Assistance

4 Act of 1961 (as added by subsection (a)) as a result

5 of concessional loans made or credits extended prior

6 to January 1, 1996, by each such country.

7 (2) The reduction, by not less than 90 percent,

8 of amounts owed to each such country by heavily in9 debted poor countries described in section 902 of the

10 Foreign Assistance Act of 1961 (as added by sub11 section (a)) as a result of nonconcessional loans

12 made, guarantees issued, or credits extended prior to

13 January 1, 1996, by each such country.

14 (3) The establishment of procedures by the

15 Club to ensure greater transparency in the decision16 making process, including publication of each deci17 sion and its rationale, on all applications to the Club

18 for debt reduction by heavily indebted poor countries

19 described in section 902 of the Foreign Assistance

20 Act of 1961 (as added by subsection (a)).
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1 SEC. 3. ACTIONS TO IMPROVE THE PROVISION OF MULTI2 LATERAL DEBT RELIEF AND PROCEDURES

3 FOR NEW LENDING.

4 Title XVI of the International Financial Institutions

5 Act (22 U.S.C. 262p–262p–5) is amended by adding at

6 the end the following:

7 ‘‘SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED

8 POOR COUNTRIES INITIATIVE; ENSURING EQ9 UITABLE BURDEN SHARING.

10 ‘‘(a) IMPROVEMENT OF THE HIPC INITIATIVE.—In

11 order to accelerate multilateral debt relief and promote

12 economic and human development and poverty alleviation

13 in heavily indebted poor countries the Congress urges the

14 President to commence immediately diplomatic efforts,

15 within the Paris Club of Official Creditors, as well as the

16 International Bank for Reconstruction and Development

17 (World Bank), the International Monetary Fund (IMF),

18 and other appropriate multilateral development institu19 tions to accomplish the following modifications in the

20 Heavily Indebted Poor Countries Initiative:

21 ‘‘(1) LIMIT ON MAXIMUM WAITING PERIOD BE22 FORE RECEIVING DEBT RELIEF.—The period of sat23 isfactory implementation of economic and social re24 forms which a country may need to establish in

25 order to receive bilateral and multilateral debt re-
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1 duction under the HIPC Initiative shall not exceed

2 3 years.

3 ‘‘(2) PROMOTION OF POVERTY ALLEVIATION

4 AND ENVIRONMENTAL PROTECTION.—The economic

5 and social reforms on which HIPC debt relief is con6 ditioned shall incorporate effective measures for pov7 erty reduction and environmental protection.

8 ‘‘(3) REVISION OF COUNTRY ELIGIBILITY RE9 QUIREMENT.—A country shall be regarded as having

10 an unsustainable debt burden for purposes of quali11 fying for debt reduction (or for further debt reduc12 tion) under the HIPC Initiative if the net present

13 value of the outstanding public and publicly guaran14 teed debt of the country at the end of 1996 was at

15 least 150 percent of the average annual value of the

16 exports of the country for the period 1994 through

17 1996.

18 ‘‘(4) ADDITIONAL REQUIREMENT.—Debt reduc19 tion under the HIPC Initiative shall not be provided

20 for the benefit of a country unless the government

21 of the country has established, through transparent

22 and participatory processes, including the participa23 tion of civil society—

24 ‘‘(A) a plan of action for human develop25 ment (in this section referred to as the ‘Action
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1 Plan’) which includes policies, programs, and

2 projects designed to reduce the number of per3 sons living in poverty, expand access of the

4 poorest members of society to basic social serv5 ices, including health, education, clean water,

6 and sanitation, and prevent the degradation of

7 the environment;

8 ‘‘(B) a human development fund (in this

9 section referred to as the ‘Human Development

10 Fund’)—

11 ‘‘(i) the resources of which are dedi12 cated to achieving the purposes of the Ac13 tion Plan; and

14 ‘‘(ii) into which are required to be de15 posited all savings generated by debt re16 duction provided for the benefit of the

17 country under the Heavily Indebted Poor

18 Countries (HIPC) Initiative and under

19 other debt reduction programs;

20 ‘‘(C) arrangements to ensure that all ex21 penditures from the Human Development Fund

22 during a year will be used to increase annual

23 expenditures for human development by the

24 government above the greater of—
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1 ‘‘(i) the total amount of annual ex2 penditures for human development by the

3 government for the preceding year; or

4 ‘‘(ii) the average total amount of such

5 expenditures for the 3 years immediately

6 preceding the year in which such fund is

7 established; and

8 ‘‘(D) arrangements for monitoring the op9 erations, financial transactions, and accounts of

10 the Human Development Fund by an oversight

11 body which includes representatives of civil soci12 ety.

13 ‘‘(5) AMOUNT OF DEBT REDUCTION.—The

14 amount of the debt reduction provided under the

15 HIPC Initiative for the benefit of a country with an

16 unsustainable debt burden shall be sufficient to

17 reduce—

18 ‘‘(A) the net present value of the out19 standing public and publicly guaranteed debt of

20 the country to less than 150 percent of the

21 value of the annual exports of the country; and

22 ‘‘(B) the amount of annual payments due

23 on such public and publicly guaranteed debt to

24 not more than 10 percent of the amount of an-
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1 nual current revenue received by the govern2 ment of the country from internal sources.

3 ‘‘(6) TRANSPARENCY AND PARTICIPATION IN

4 HIPC DECISION MAKING.—All decisions under the

5 HIPC Initiative concerning the amount, terms and

6 conditions, and timing of debt relief for a country,

7 and the processes by which such decisions are made,

8 shall be subject to procedures which are—

9 ‘‘(A) transparent, including publication of

10 the content of the decisions and of all relevant

11 analytical, legal, and policy documents, includ12 ing Debt Sustainability Analyses, Policy Frame13 work Papers, debt relief agreements, and na14 tional development programs and budgets; and

15 ‘‘(B) participatory, including the participa16 tion of civil society.

17 ‘‘(7) SPECIAL PROVISIONS.—

18 ‘‘(A) Debt reduction under the HIPC Ini19 tiative for the benefit of a country that has

20 demonstrated a sustained commitment to pov21 erty alleviation or has recently suffered a major

22 natural disaster shall be provided in a greater

23 amount or more quickly than would otherwise

24 be the case under the HIPC Initiative.
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1 ‘‘(B) Notwithstanding any longer period of

2 satisfactory performance required pursuant to

3 paragraph (1), in the case of a country emerg4 ing from civil conflict which has an economic

5 performance agreement with the IMF and is

6 otherwise entitled to begin receiving enhanced

7 bilateral and multilateral debt reduction under

8 the HIPC Initiative, the lack of a 3-year period

9 of satisfactory performance under such IMF

10 agreement shall not cause a delay in the provi11 sion of debt reduction for the benefit of the

12 country under the HIPC Initiative.

13 ‘‘(8) HIPC REVIEW.—The Secretary of the

14 Treasury shall make every effort (including instruct15 ing the United States Executive Directors at the

16 IMF and the World Bank) to ensure that a com17 prehensive external assessment of the HIPC Initia18 tive shall take place by December 31, 2001, shall in19 corporate the views of debtor governments and civil

20 society, shall be made public, and shall include—

21 ‘‘(A) an analysis of the contribution of the

22 HIPC Initiative to the poverty reduction and

23 social development goals for the 21st century

24 established by the Development Assistance
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1 Committee of the Organization for Economic

2 Cooperation and Development; and

3 ‘‘(B) recommendations to the IMF, World

4 Bank, and the governments of the United

5 States and other creditor countries that may be

6 necessary to strengthen the contribution of the

7 HIPC Initiative to the poverty reduction and

8 social goals referred to in subparagraph (A).

9 ‘‘(9) TERMINATION OF THE HIPC INITIATIVE.—

10 The HIPC Initiative shall not terminate until all the

11 debt reduction contemplated by this section has been

12 carried out.

13 ‘‘(b) PROMOTION OF EQUITABLE BURDEN SHAR14 ING.—In order to promote equitable burden-sharing by bi15 lateral, multilateral, and private creditors under the HIPC

16 initiative, the Congress urges the President to commence

17 immediately diplomatic efforts to ensure that such credi18 tors draw upon their own resources to finance debt reduc19 tion under the HIPC Initiative to the extent possible with20 out diverting funds from other high priority poverty allevi21 ation programs.

22 ‘‘(c) CONTRIBUTIONS TO THE HIPC TRUST FUND.—

23 For payment to the Heavily Indebted Poor Countries

24 Trust Fund of the International Bank for Reconstruction

25 and Development, there are authorized to be appropriated
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1 to the President such sums as may be necessary for fiscal

2 years 2000, 2001, and 2002, except that if, with respect

3 to fiscal year 2001 or 2002, the President has not deter4 mined that, during the then preceding fiscal year, satisfac5 tory progress was made in accomplishing the improve6 ments in the HIPC initiative described in subsections (a)

7 and (b), then no sums are authorized to be appropriated

8 for such purpose for the fiscal year.

9 ‘‘(d) SENSE OF CONGRESS.—It is the sense of Con10 gress that the amounts that would otherwise be provided

11 by the United States for development aid or other debt

12 relief should not be reduced on account of any appropria13 tions pursuant to subsection (c).

14 ‘‘(e) REPORT TO THE CONGRESS.—Not later than

15 December 31 of each year, the President shall submit to

16 the Committees on Banking and Financial Services and

17 on International Relations of the House of Representa18 tives and the Committee on Foreign Relations of the Sen19 ate a report, which shall be made available to the public,

20 on the activities undertaken under this section, and on the

21 progress made in accomplishing the purposes of this sec22 tion, for the prior fiscal year.
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1 ‘‘SEC. 1624. IMPROVEMENT OF PROCEDURES FOR NEW

2 LENDING.

3 ‘‘The President, acting through the Secretary of the

4 Treasury, shall work with the member countries of the

5 international financial institutions (as defined in section

6 1701(c)(2)) to ensure transparency and public participa7 tion in decisions to make new loans, and the terms and

8 conditions of such loans, to developing countries,

9 including—

10 ‘‘(1) disclosure of Policy Framework Papers,

11 Public Expenditure Reviews, Country Assistance

12 Strategies, International Monetary Fund Letters of

13 Intent, appraisal documents, and other reports rel14 evant to proposed lending operations;

15 ‘‘(2) participation of civil society in developing

16 countries in the design of national development pro17 grams and in decisions to borrow from such institu18 tions in support of such programs; and

19 ‘‘(3) provision of detailed information to the

20 Board of Directors of such an institution and to the

21 public, prior to the approval of a lending operation

22 for a developing country, as to the nature and extent

23 of civil society participation in the design of, and ap24 proval process for, such operation.’’.

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