69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 110–575 

JUBILEE ACT FOR RESPONSIBLE LENDING AND 

EXPANDED DEBT CANCELLATION OF 2008 

APRIL 10, 2008.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 2634] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred 

the bill (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, having considered the same, report favorably thereon with an amendment and recommend that the bill as 

amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 1 

Purpose and Summary ............................................................................................ 6 

Background and Need for Legislation .................................................................... 7 

Hearings ................................................................................................................... 14 

Committee Consideration ........................................................................................ 14 

Committee Votes ...................................................................................................... 14 

Committee Oversight Findings ............................................................................... 15 

Performance Goals and Objectives ......................................................................... 15 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 15 

Committee Cost Estimate ....................................................................................... 15 

Congressional Budget Office Estimate ................................................................... 15 

Federal Mandates Statement ................................................................................. 16 

Advisory Committee Statement .............................................................................. 16 

Constitutional Authority Statement ...................................................................... 16 


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Applicability to Legislative Branch ........................................................................ 17 

Earmark Identification ............................................................................................ 17 

Section-by-Section Analysis of the Legislation ...................................................... 17 

Changes in Existing Law Made by the Bill, as Reported ..................................... 20 

Additional Views ...................................................................................................... 25 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Jubilee Act for Responsible Lending and Expanded 

Debt Cancellation of 2008’’. 

SEC. 2. FINDINGS. 

The Congress finds the following: 

(1) Many low-income countries have been struggling under the burden of 

international debts for many years. 

(2) Since 1996, when the Heavily Indebted Poor Countries Initiative (HIPC) 

was created, more than 30 nations have seen some form of debt relief totaling 

approximately $80,000,000,000. 

(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. 1501–

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. 

(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 nations 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 both 

the effective reduction of poverty and inequality and the achievement of broader 

debt cancellation. 

(8) 2007 is an important year to address the unfinished agenda on international debt as the global Jubilee debt campaign has declared 2007 a ‘‘Sabbath 

year’’, 7 years after the historic Jubilee 2000 campaign. 

(9) 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 without having paid for past debt relief or 


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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. 

(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 nations on the grounds that the loans reflected poor development policy. 

(11) A growing number of governments and intergovernmental bodies, including the United Kingdom, the European Commission, and Norway, are raising 

concerns about the harmful impacts of economic policy conditionality. Many impoverished countries that have received debt cancellation under the HIPC and 

MDRI initiatives have done so at a high social cost, because they have had to 

implement economic policy conditions such as privatization of public utilities 

and other basic services, adhere to budget ceilings imposed by the IMF, and 

comply with other harmful requirements. Some of these policies have had the 

effect of limiting fiscal space for productive investment and threatening growth 

and human development. Several countries currently eligible for debt cancellation under the HIPC or MDRI programs are facing extended delays in receiving 

cancellation because they are struggling to comply with such requirements from 

the IMF and World Bank. 

(12) 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. A January 2007 report by the United Nations 

Human Rights Council found that eligibility for debt cancellation should be expanded to cover all low-income countries. 

(13) The government of the United Kingdom has proposed that qualification 

for the MDRI be extended to the 67 nations which 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. 

(14) Since debt cancellation is an essential component of the United States 

development assistance strategy and the United States has been able to lead 

the debt cancellation efforts of the international community by example, the 

United States should continue to work to improve and expand initiatives in this 

area. 

(15) 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. 

SEC. 3. 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: 

‘‘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 negotiate an agreement to accomplish the following: 

‘‘(1) Cancellation by each international financial institution of all 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. 

‘‘(2) Cancellation by the United States of all debts owed to it by eligible lowincome countries. 

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

not excessive. 

‘‘(4) 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. 

‘‘(5) 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. 


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This subsection shall not be interpreted to authorize the Secretary of the Treasury 

to enter into an agreement to accomplish any of the foregoing without express congressional authorization to do so. ‘‘(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, 

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) provide that the external financing needs of low-income countries are met 

primarily through grant financing rather than new lending; 

‘‘(3) seek the international adoption of a binding legal framework on new 

lending that—

‘‘(A) guarantees that no creditor can take or expect to take financial advantage of acquired or newly awarded debt relief through the terms and 

rates of such 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 irresponsibly provided; 

‘‘(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; and 

‘‘(4) support the development of responsible financing standards where creditors and aid/loan recipients alike adhere to standards to assure transparency 

and accountability to citizens, human rights, and the avoidance of new odious 

debt, while encouraging the development of renewable energy and helping countries to transition away from dependence on oil. 

‘‘(d) GAO AUDIT OF DEBT PORTFOLIOS OF COUNTRIES WITH QUESTIONABLE

LOANS.—

‘‘(1) IN GENERAL.—The Comptroller General of the United States shall undertake an audit of the debt portfolios of previous governments in countries such 

as the Democratic Republic of Congo and South Africa, where there is significant evidence that odious, onerous, or illegal loans were made to the government. Each such audit shall—

‘‘(A) consider debt owed to the World Bank, the IMF, and the other international financial institutions (as so defined), export credit debts owed to 

governments, and debts owed to commercial creditors, and assess whether 

or not past investments produced the intended results; 

‘‘(B) 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). 

‘‘(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 


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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 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 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 of each 

year, the President 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, and does not qualify for debt relief under the Enhanced HIPC Initiative (as defined in section 1625(e)(3)) and under the Multilateral Debt Relief Initiative; 

‘‘(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) the government of which does not have an excessive level of military expenditures; 

‘‘(4) 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)), or 

section 620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)); 

‘‘(5) the government of which is cooperating on international narcotics control 

matters; and 

‘‘(6) 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.’’. 

SEC. 4. LIMITATION ON CONDITIONALITY OF DEBT RELIEF FOR ELIGIBLE LOW-INCOME 

COUNTRIES. 

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: 

‘‘SEC. 1627. LIMITATION ON CONDITIONALITY OF DEBT RELIEF FOR 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 ensure that debt cancellation is provided to eligible low-income countries (as defined in section 1626(h)) without any conditions except requiring the government of 

such a country to—

‘‘(1) take steps so that the financial benefits of debt relief are applied to programs to combat poverty (in particular through concrete measures to improve 

economic infrastructure, basic services in education, nutrition, and health, particularly treatment and prevention of the leading causes of mortality) and to redress environmental degradation; 

‘‘(2) make policy decisions through transparent and participatory processes; 

‘‘(3) adopt an integrated development strategy to support poverty reduction 

through economic growth, that includes monitorable poverty reduction goals; 

‘‘(4) implement transparent policy making and budget procedures, good governance, and effective anticorruption measures; 


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‘‘(5) broaden public participation and popular understanding of the principles 

and goals of poverty reduction, particularly through economic growth, and good 

governance; ‘‘(6) promote the participation of citizens and nongovernmental organizations 

in the economic policy choices of the government; and ‘‘(7) produce an annual report disclosing how the savings from debt cancellation were used, and make the report publicly available and easily accessible to 

all interested parties, including civil society groups and the media. ‘‘(b) ANNUAL REPORTS TO THE CONGRESS.—Not later than December 31 of each 

year, the President shall submit to the Committees on Financial Services and on 

International Relations of the House of Representatives and the Committees on Foreign Relations and on Banking, Housing, and Urban Affairs of the Senate 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.’’. 

SEC. 5. SENSE OF THE CONGRESS. 

It is the sense of the Congress that to further the goals of debt reduction for lowincome countries, in addition to the efforts described in this Act, the United States 

should pay off outstanding arrearages of $595,800,000 to the International Development Association and regional development banks, and become current on all debt 

reduction efforts, including those carried out by the International Development Association and under the Enhanced Heavily Indebted Poor Countries Initiative and 

the Multilateral Debt Relief Initiative. 

PURPOSE AND SUMMARY

H.R. 2634, the ‘‘Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008,’’ authorizes the Secretary of the 

Treasury to commence immediate efforts to negotiate with the 

Paris Club and the international financial institutions to establish 

an agreement that provides full cancellation of the debts of eligible 

low-income countries, including those owed to the United States. 

Provisions of the bill stipulate that the agreement shall finance 

debt cancellation from the ongoing operations and accounts of the 

international financial institutions in a timely way and without a 

reduction in any other development assistance to the countries by 

these institutions or bilateral creditors. They also stipulate that the 

Secretary shall work to require the government of each eligible 

low-income country to allocate the savings from debt cancellation 

towards poverty-reducing expenditures, and engage a broad crosssection of civil society groups in determining how the funds should 

be allocated. The legislation requires an annual public report disclosing how the savings from debt cancellation were used. It also 

requires that, once a multilateral agreement is reached, Congress 

will have to authorize it. 

The legislation requires the Secretary of the Treasury to commence efforts to achieve multilateral agreements on creditor transparency and responsible lending. In addition, the Secretary of the 

Treasury shall promote greater transparency regarding the operations of the international financial institutions by, for instance, 

disclosing to the public a maximum level of information and supporting enhanced participation of, and input by, communities affected by these operations. 

The legislation defines eligibility for debt cancellation and requires that debt cancellation to eligible low-income governments is 

not conditioned on any agreement by such a government to implement policies except those explicitly outlined in the bill, such as 

those that foster transparent and participatory policies to achieve 

poverty reduction through economic growth; ensure sound budget 

procedures, good governance and effective anticorruption measures; 


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and produce and disclose to the public an annual report disclosing 

how the savings from debt cancellation were used. 

The legislation requires Government Accountability Office (GAO) 

audits of the debt portfolios of countries where there is evidence 

that odious, onerous, or illegal loans were made to the government, 

and a GAO report financing sourcing for debt cancellation. The legislation requires annual reports from the President on the progress 

toward achieving debt cancellation and requires that the Treasury 

Department make public its comments in the international financial institutions’ boards of directors as they pertain to debt cancellation. 

Finally, the legislation expresses the sense of the Congress that 

to further the goals of debt reduction for low-income countries, in 

addition to the efforts described in this Act, the United States 

should pay off outstanding arrearages of $595.8 million to the multilateral development banks and debt reduction efforts. 

BACKGROUND AND NEED FOR LEGISLATION

This Committee has for a number of years worked in a very bipartisan way on the issue of debt relief for the world’s poorest 

countries as an essential component in the overall effort to help alleviate the desperate poverty and misery that exists in many parts 

of the world. Reducing debt and freeing resources from debt service 

for investment in basic human needs are not just a moral or humanitarian imperative; they can be good economic policy. Debt reduction can complement development assistance by reducing the 

overhang of debt permanently. By contributing to a more sustainable debt profile, carefully designed debt reduction can help improve the capacity of governments to meet the needs of their people. It can help create a more attractive environment for private investment and improve the conditions for sustainable development 

in general. 

Millions of the world’s poor live in countries where crushing foreign debt obligations, almost exclusively to official bilateral and 

multilateral creditors, stand in the way of economic growth and 

poverty reduction. While there has been much progress made here, 

there are still millions of children and other vulnerable people in 

Africa, Latin America and Asia—in the poorest countries in the 

world—who continue to go without food, sanitation, or basic medical care. By directing the Administration to begin advocacy within 

the international community to provide complete debt cancellation 

for an additional group of the world’s poorest countries, the Committee believes that H.R. 2634, the Jubilee Act for Responsible 

Lending and Expanded Debt Cancellation of 2008, reflects the compassion and understanding that good policy calls for. 

HIGHLY INDEBTED POOR COUNTRIES INITIATIVE (HIPC)

The international financial institutions such as the International 

Monetary Fund (IMF) and the World Bank used to object to the 

idea that any debts owed to them should be forgiven at all. But in 

1996, at the urging of the G8, the World Bank and the IMF 

launched the first ‘‘Highly Indebted Poor Countries Initiative 

(HIPC),’’ which identified 41 of the world’s poorest countries—many 

of them in Africa, many ravaged by AIDS—for debt relief in order 


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to help alleviate the suffering and misery of millions of the world’s 

most vulnerable people. 

The HIPC Initiative was the first coordinated effort to include all 

creditors, particularly the international financial institutions, in 

addressing the debt problems of poor developing countries. The 

goal of the original HIPC Initiative was solely to bring countries’

debts to ‘‘sustainable’’ levels, which was defined mainly in terms of 

the net present value of a country’s debt in relation to its exports. 

As a condition of receiving debt relief under the initial HIPC program, a country had to establish a 6-year record of macroeconomic 

policy reform under existing IMF and World Bank lending arrangements before it received any relief. Once the World Bank and IMF 

determined that a country had successfully established a satisfactory track record of policy reform implementation, their overall 

debt burden was reduced to a ‘‘sustainable’’ level, meaning that in 

the future, it was assumed that they would be able to make debt 

payments on time and without rescheduling. 

This approach of making desperately impoverished countries continue debt service payments on a so-called ‘‘sustainable’’ level of 

debt was viewed by many as misguided on both theoretical and 

practical grounds. Not only did this approach pay little attention 

to the negative human consequences of a government’s continued 

payments on its remaining debt, but a government’s ability to pay 

back its ‘‘sustainable debt’’ was also based on overly optimistic, 

often flawed assumptions by the international financial institutions 

about a country’s future economic growth, external trade dynamics, 

and the availability of financial resources. 

THE ‘‘ENHANCED’’ HIPC INITIATIVE

In response to widespread criticism of the original program, in 

June 1999 at the G–7 summit in Cologne, Germany, the World 

Bank and IMF endorsed proposals to modify the HIPC Initiative. 

The ‘‘enhanced’’ HIPC Initiative represented a major advance over 

the original HIPC program, promising much more debt relief, more 

rapidly, and to more countries. Also, in response to concerns that 

the original Initiative was insufficiently linked to poverty reduction, the modified HIPC incorporated a new framework to strengthen the poverty focus of development programs and to promote country ownership, transparency and civil society participation in their 

design and implementation 

This Committee worked very closely with the Administration to 

assure that the Enhanced HIPC Initiative included a greater focus 

on poverty reduction efforts. Countries receiving debt relief were 

now be required to use money freed up by debt relief for poverty 

reduction as specified in a three-year national Poverty Reduction 

Strategy approved by its lenders. 

Before the HIPC Initiative, eligible African countries were, on average, spending slightly more on debt service than on health and 

education combined. Now they have markedly increased their 

spending on health, education, and other social services, and, on 

average, such spending is more than 5 times the amount of debtservice payments. 


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MULTILATERAL DEBT RELIEF INITIATIVE (MDRI)

Despite these gains, after nearly a decade of HIPC, many of the 

participating countries continued to suffer under excessive debt 

burdens. Thus, in 2005, the G8 countries agreed to tackle this residual debt through the MDRI by canceling 100 percent of debts 

owed by the HIPC countries to the IMF, the World Bank and the 

African Development Fund. In March 2007, the Inter-American Development Bank has agreed to cancel the debts of the five Latin 

American countries. 

In fact, most of these countries are servicing their obligations, 

but only because the multilateral institutions have offered them 

new grants and loans to help them repay their old ones. Many have 

argued that the current cycle of defensive lending—in which a 

chunk of new money lent by the World Bank is sent straight back 

to Washington as debt-service payments on old debt—is absurd. 

This recycling of funds keeps up appearances on the balance sheets 

of the Bank and the Fund, making bad loans look better than they 

really are. But it is also complicated and inefficient, consuming the 

time and energy of creditors and debtors. It is far better to write 

off the debts altogether, cleaning up the accounts for both creditors 

and debtors alike. 

The Bush Administration played a critical and leading role in 

creating the Multilateral Debt Relief Initiative at the G–8 Summit 

in 2005. President Bush highlighted the efficacy of debt relief in his 

2007 State of the Union speech, stating ‘‘let us continue to support 

the expanded trade and debt relief that are the best hope for lifting 

lives and eliminating poverty.’’

Under the MDRI agreement, no additional net assistance is provided because any savings from forgiven multilateral debt service 

obligations will be netted out of future International Development 

Association (IDA) flows to that country. So the effect on cash flow 

for debtor countries would be neutral because the World Bank will 

simply net out any debt service from new IDA credits to each country. 

PURPOSE AND NEED FOR LEGISLATION

Debt cancellation is a proven means to reduce poverty. In recent 

years, recipient governments have invested released funds in 

health care, education, infrastructure, job creation and economic 

development programs. Debt relief under two international initiatives has helped reduce significantly the debt burden of heavily indebted poor countries in Africa and freed up additional resources 

for poverty-reducing and social expenditures 

Before the HIPC Initiative and the MDRI, eligible countries 

were, on average, spending slightly more on debt service than on 

health and education combined. To date, 23 countries have reached 

their completion points and have received irrevocable debt relief. 

Ten other countries have reached the first step in the process and 

are receiving interim relief on its debt service falling due. Together, 

these countries have increased markedly their expenditures on 

health, education and other social services and, on average, such 

spending is about five times the amount of debt-service payments. 


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H.R. 2634, THE JUBILEE ACT FOR RESPONSIBLE LENDING AND

EXPANDED DEBT CANCELLATION OF 2008. 

This legislation instructs the Secretary of Treasury to commence 

negotiations within the international financial institutions to negotiate comprehensive debt cancellation for an additional 24 of the 

world’s poorest countries that are not already eligible for the debt 

cancellation approved under the current initiatives. The bill explicitly states that the Act authorizes the Secretary of the Treasury to 

commence immediate efforts to negotiate an agreement, but it does 

not authorize the implementation of any agreement. Once a multilateral agreement is reached, Congress will have to authorize it by 

law. 

The Act would make 24 additional low-income nations not currently eligible for the HIPC/MDRI initiatives potentially eligible for 

debt cancellation from the United States and the international financial institutions, provided they meet human rights, public financial management, and budget transparency criteria and demonstrate their ability to use the money well. To benefit, countries 

would also have to engage interested parties, including a broad 

cross-section of civil society groups, in the spending allocation process and produce an annual report on this spending, making it publicly available and easily accessible. Countries would be excluded 

from receiving the debt cancellation under the Jubilee Act if they: 

• have an excessive level of military expenditures; 

• have repeatedly provided support for acts of international 

terrorism; 

• fail to cooperate on international narcotics control matters; 

or 

• engage in a consistent pattern of gross human rights violations. 

EXPANDED DEBT CANCELLATION FOR QUALIFIED COUNTRIES

Some members of the committee have wondered why additional 

debt cancellation is necessary when so much debt relief is already 

being provided under HIPC and the more recent Multilateral Debt 

Relief Initiative. Others have long argued that the eligibility criteria for the HIPC Initiative fails to take into account one key critical factor—poverty. That is, the HIPCs do not include all the poorest countries, just the ones that are both poor and heavily indebted. 

The disparity of treatment between HIPC countries and non-HIPC 

countries became clear when the World Bank and IMF conducted 

an examination of so-called ‘‘debt sustainability’’ in the poorest 

countries, the so-called IDA-only countries, which are only allowed 

to receive from the World Bank funds from their most concessionary arm. The primary objective of the exercise was to determine which countries should receive their future IDA financing either wholly or partially in the form of grants. 

When the exercise was conducted in 2005, it showed that 42 

countries were at sufficiently high risk of debt distress to be eligible for grant financing, instead of the usual loans. The list included 

29 HIPC countries plus 18 other countries. This meant that there 

were 18 non-HIPC countries rated as having a risk of debt distress 

equal to or greater than the HIPC countries. Like the HIPC countries, now they were going to get some grants going forward. But 


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unlike the HIPCs, they would get no debt relief. One recent study 

showed that when using a debt-poverty ratio, there are 30 countries that are both poorer and more indebted than the least poor 

and least indebted eligible HIPCs. 

H.R. 2634 addresses this concern by bringing deep debt relief 

within the reach of virtually all of the world’s poorest countries. 

Some will note that the IDA-only criterion for eligibility under the 

bill will capture some countries with relatively low levels of external debt. But all of these countries are ones with very high levels 

of poverty, and thus they need to maximize the amount of resources that they can marshal to promote human development and 

move toward the millennium development goals for reducing poverty. 

CONDITIONS AND REQUIREMENTS

Over the last five years there has been a growing international 

consensus that economic conditionality often does more harm than 

good. The 2005 Commission for Africa report stated that the ‘‘use 

of policy conditionality associated with external assistance should 

be strongly reduced.’’ The United Kingdom also recently withheld 

a portion of its IDA contribution in protest against some of the conditions imposed by the World Bank on poor countries. 

Still, aid to developing countries nearly always comes with conditions attached, which countries seeking debt forgiveness are under 

particular pressure to adopt. Even if some reforms are necessary 

to ensure that money will not be misappropriated, many conditions 

impose specific, often harmful economic policies on developing 

countries. 

Twelve years after the inception of HIPC in 1996, many advocates point to evidence that shows that a number of conditions and 

macroeconomic reform requirements that attach to both debt relief 

and lending from the IMF and World Bank sometimes undermine 

and even negate the benefits of debt cancellation. In particular, 

policies that force countries applying for debt relief to adhere to 

strict IMF fiscal and monetary targets, privatize key industries, liberalize their markets, and remove subsidies for sensitive commodities like gasoline and cooking oil have been shown to hurt the 

poorest and most vulnerable people in these countries. 

The requirement that the countries seeking debt relief stay on 

track with a Poverty Reduction and Growth Facility (PRGF) loan 

from the IMF is of particular concern. PRGF loans include macroeconomic policy conditions such as maximum inflation targets and 

public spending limits, specific levels of currency reserves that 

must be attained, and caps on public wages. These conditions give 

the IMF the power to dictate spending levels in a number of sensitive sectors, which in some cases can undermine democratic processes within a country. 

H.R. 2634 mandates that debt cancellation be provided to eligible 

low-income countries without any conditions except those that are 

explicitly outlined in the bill. These conditions include a requirement that governments of each country ensures that the financial 

benefits of debt relief are applied to programs to combat poverty; 

adopts an integrated development strategy to support poverty reduction through economic growth, that includes monitorable poverty reduction goals; makes policy decisions through transparent 


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12 

and participatory processes; adopts sound budget procedures, good 

governance and effective anticorruption measures; and produces 

and disclose to the public an annual report disclosing how the savings from debt cancellation were used. 

The Committee notes that while it supports the adoption by 

countries of an integrated development strategy to support poverty 

reduction, it also believes countries should have the necessary flexibility to independently change its strategy in light of changing economic circumstances, or in response to adjustments made to national development plans by democratically elected parliaments. 

ESTABLISHING A FRAMEWORK FOR TRANSPARENT, RESPONSIBLE

LENDING

One of the greatest challenges facing nations that have received 

debt cancellation under existing initiatives is the range of new 

lenders which threaten to send nations back into unsustainable 

debt. To ensure that countries that benefit from debt relief do not 

fall back into unsustainable debt, the Jubilee Act calls on the Secretary of the Treasury to: provide that the external financing needs 

of low-income countries are primarily met through grants rather 

than new lending; develop and promote policies to ensure that all 

creditors work together to preserve the gains of debt relief; promote 

the adoption of a legal framework, binding on all creditors, and 

overseen by an independent body with significant input from affected communities to guarantee that no future creditor can take 

advantage of debt relief through the terms of their new lending 

(known as free-riding) and to ensure that free-riders would pay 

their share of future debt relief made necessary in part by their irresponsible lending. 

The Jubilee Act also calls for greater transparency in lending. 

The legislation calls on the Department of Treasury to commence 

immediate efforts to encourage Paris Club creditors, the International Monetary Fund and the World Bank to promote greater 

transparency regarding their activities and follow a policy of maximum disclosure and support continued efforts to allow greater participation and input by affected communities and institutions in affected areas. 

FINANCING OF DEBT CANCELLATION AND COST TO THE UNITED STATES

This legislation only provides authorization for the Secretary of 

the Treasury to commence immediate efforts to negotiate a multilateral agreement on debt cancellation, but it does not authorize 

the implementation of any agreement. Since the Committee explicitly withholds authorization for any future agreement that might 

be reached, there should be no budgetary impact associated with 

this Act. The following section provides estimates on what future 

costs might be, contingent on the timing and scope and nature of 

any future agreement. 

Bilateral Debt: The budgetary cost to forgive the U.S. bilateral 

debts of the 24 countries that could potentially qualify for debt cancellation under the Jubilee Act is estimated at approximately $700 

million to $1 billion, spread over 9 years (2009–2017), or an average annual appropriation of $106 million. 

International Monetary Fund Debt: The 24 countries potentially 

covered under the Act owe a total of roughly $2 billion to the IMF. 


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There is growing support for selling a portion of the IMF’s gold 

holding to pay for some IMF debt forgiveness, as well as to bolster 

the World Bank’s soft-loan arm. This approach provides purely additional funds and does not require any additional contributions. 

The IMF’s gold reserves are the third largest in the world after 

the United States and Germany. The IMF currently holds 103.4 

million ounces of gold that are valued on its balance sheet at about 

$9 billion. At the current market prices of about $913/ounce, the 

IMF’s gold holdings amount to roughly $94 billion. In 1999, it revalued 12.9 million ounces of the gold in off-market transactions as 

a way to fund the HIPC debt cancellation. 

An internal IMF staff report presented to the board in 2005 

shows that selling a small portion of the fund’s gold to pay for debt 

relief need not cause disruption to the market if the sale is well 

managed. By adhering to the terms of the 1999 Central Bank Gold 

Agreement, which governs future sales of gold by central banks, 

the IMF could raise the required resources without causing market 

volatility or hurting gold-producing countries. The report also 

stresses the need to make clear that a sale would not be the first 

stage in an ongoing disposal of the IMF’s gold—and that it would 

retain large holdings for prudential reasons. 

The World Gold Council, a body representing gold-mining companies, also voiced conditional support for the sale of some IMF gold 

to help pay for the Fund’s share of debt relief, saying it would prefer any sales to be conducted under the auspices of the Central 

Bank Gold Agreement to avoid disruption to the market. 

The Administration has indicated support for a proposal to sell 

a small portion of the IMF’s gold holdings in order to help fund 

IMF operations. The Committee believes some additional gold sales 

would be appropriate to help finance debt relief for additional poor 

countries that are not already eligible for the debt cancellation approved under the current initiatives. 

The Fund needs near universal support (an 85 percent majority 

of voting power) from the IMF Executive Board to engage in the 

sale or use of its gold reserves. The IMF is required under U.S. law 

to gain support from the U.S. Congress before selling any IMF 

gold. 

World Bank Debt: The 24 countries potentially covered under the 

Act owe a total of roughly $24 billion to the World Bank. While the 

cost to cancel the multilateral debts that eligible countries owe to 

the World Bank by eligible countries is much greater, the cost to 

the United States would be less because the World Bank has the 

financial capacity to responsibly mobilize a share of its large reserves and/or transfer funds from the annual net income of the 

IBRD or IFC to cover the costs of cancellation without any impact 

on the World Bank’s ability to lend or its credit rating. In fact, the 

World Bank Board of Directors recently considered a Capital Adequacy Report which recognized that the Bank’s current equity to 

loans ratio is significantly higher than what is necessary to cover 

risk and generate sufficient income. The report also identifies a $10 

billion ‘‘capital buffer’’ that could be mobilized to fund debt cancellation. 

African Development Bank and Asian Development Bank Debt: 

The 24 countries potentially covered under the Act owe a total of 

roughly $11.1 billion to the African Development Bank and Asian 


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14 

Development Bank. While some costs could be borne by the institutions themselves, the remaining burden would be shared among 

other donor governments. 

DEBT AUDITS

The Jubilee Act also addresses the problem of odious and unjust 

debts (debts accrued by undemocratic regimes or that did not benefit the population) by requiring the Comptroller General of the 

U.S. to undertake audits of debt portfolios of previous regimes in 

countries where there is accepted evidence of odious, onerous or illegal loans, such as the Democratic Republic of Congo and South 

Africa. Such audits should consider debts owed to the World Bank, 

IMF, and other multilaterals, as well as export credit debts owed 

to governments, and commercial creditors, and assess whether or 

not past investments produced the intended results. Furthermore, 

such audits would investigate the process by which the loans were 

contracted, how the funds were utilized and their product, and determine whether U.S. and/or international laws were violated in 

the contraction of these loans. This is imperative in order to learn 

from past errors and ensure more responsible and productive lending and borrowing moving forward. The audits should be planned 

and executed in a transparent and consultative manner, engaging 

Congressional bodies and civil society groups in the countries in 

question. 

HEARINGS

The Committee on Financial Services held a legislative hearing 

entitled ‘‘H.R. 2634, the Jubilee Act for Responsible Lending and 

Expanded Debt Cancellation Act of 2008’’ on November 8, 2007. 

The following witnesses testified: 

• Mr. Neil Watkins, National Coordinator, Jubilee USA Network 

• Ms. Emira Woods, Co-Director, Foreign Policy in Focus, Institute for Policy Studies 

• Mr. Gerald F. Flood, Counselor, Office of International 

Justice and Peace, U.S. Conference of Catholic Bishops 

• Mr. Aldo Caliari, Director, Rethinking Bretton Woods 

Project, Center of Concern 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

April 3, 2008, and ordered H.R. 2634, the ‘‘Jubilee Act for Responsible Lending and Expanded Debt Cancellation Act of 2008,’’ as 

amended, favorably reported by a voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken in conjunction with the consideration of this legislation. A 

motion by Mr. Frank (MA) to report the bill, as amended, to the 

House with a favorable recommendation was agreed to by a voice 

vote. 


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During the consideration of the bill, the following amendment 

was considered: 

An amendment by Mr. Frank (MA), No. 1, a manager’s amendment making various technical and substantive changes, was 

agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 2634 authorizes the Secretary of the Treasury to commence 

immediate efforts to negotiate with the Paris Club and the international financial institutions to establish an agreement that provides full cancellation of the debts of eligible low-income countries, 

including those owed to the United States. The Secretary shall 

work to require the government of each eligible low-income country 

to allocate the savings from debt cancellation towards poverty-reducing expenditures, and engage a broad cross-section of civil society groups in determining how the funds should be allocated. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 


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U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, April 9, 2008. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2634, 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 Michelle S. Patterson. 

Sincerely, 

ROBERT A. SUNSHINE

(For Peter R. Orszag). 

Enclosure. 

H.R. 2634—Jubilee Act for Responsible Lending and Expanded 

Debt Cancellation of 2008 

H.R. 2634 would require the Secretary of the Treasury to begin 

negotiations to cancel debt owed by eligible low-income countries to 

the United States and to certain global organizations, such as the 

International Monetary Fund and the World Bank. Agreements to 

cancel debt could not be finalized without authorization from the 

Congress. The bill also would require the Secretary to promote 

within the international community transparent lending processes 

and responsible financing policies for the benefit of debtor nations. 

Because the Congress must approve any agreements to cancel bilateral or multilateral debts, CBO estimates that enacting H.R. 

2634, by itself, would have no budgetary impact. 

H.R. 2634 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

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

The CBO staff contact for this estimate is Michelle S. Patterson. 

This estimate was approved by Peter H. Fontaine, Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 


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17 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 2634 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec 1. Short title 

Title of the bill: the ‘‘Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008’’

Sec. 2. Findings 

The Findings of the bill: (1) outline the record of success under 

the Heavily Indebted Poor Countries Initiative and the Multilateral 

Debt Relief Initiative, as well as the unfinished agenda on international debt, including effective implementation of existing commitments and the need for a broader debt cancellation program; (2) 

review the strong Congressional leadership in supporting previous 

bilateral and multilateral debt relief efforts; (3) express concern 

about the harmful impacts of some of the economic policies imposed 

on poor countries as a condition for receiving debt relief; (4) discuss 

appropriate conditionality; and (5) raise the critical issue of new 

non-concessional loans to countries that have benefited from debt 

relief. 

Sec. 3. Cancellation of debt owed by eligible low-income countries 

This section requires the Secretary of the Treasury to commence 

immediate efforts, within the Paris Club and international financial institutions, to negotiate an agreement to provide full cancellation of the debts of eligible low-income countries, including those 

owed to the United States. 

The Act requires the Secretary of the Treasury to ensure, to the 

extent possible, that the international financial institutions finance 

debt cancellation from the ongoing operations, procedures, and accounts of each institution, and ensure that any waiting period for 

the enhanced debt cancellation is not excessive. 

The Secretary of the Treasury shall work to ensure that the provision of debt cancellation to eligible low-income countries is not 

followed by a reduction of any other development assistance to the 

countries by international financial institutions and bilateral creditors. 

The Secretary shall also work to require the government of each 

eligible low-income country to allocate the savings from debt cancellation towards poverty-reducing expenditures, and engage a 

broad cross-section of civil society groups in the allocation determination process. 

The Act requires an annual public report disclosing how the savings from debt cancellation were used. 


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The Act authorizes the Secretary of the Treasury to commence 

immediate efforts to negotiate an agreement, but it does not explicitly authorize the implementation of any agreement. Once a multilateral agreement is reached, Congress will have to authorize it. 

Establishment of framework for creditor transparency 

The Secretary of the Treasury shall commence immediate efforts 

to continue to promote greater transparency regarding the activities of the international financial institutions, including credit, 

grant, guarantee, and technical assistance operations, following a 

policy of maximum disclosure; and support continued efforts to 

allow informed participation and input by affected communities, including translation of information on proposed projects, provision of 

information (including draft documents) through outreach and dialogue with community organizations and institutions in affected 

areas. 

Establishment of framework for responsible lending 

The Secretary of the Treasury shall commence immediate efforts 

to seek the international adoption of a binding legal framework on 

new lending that (A) guarantees that no creditor can take or expect 

to take financial advantage of acquired or newly awarded 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 irresponsibly provided; (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. 

The Secretary of the Treasury shall support the development of 

responsible financing standards where creditors and aid/loan recipients alike adhere to standards to assure transparency and accountability to citizens, human rights, and the avoidance of new odious 

debt, while encouraging the development of renewable energy and 

helping countries to transition away from dependence on oil. 

The Secretary of the Treasury shall also commence immediate efforts to provide that the external financing needs of low-income 

countries are met primarily through grant financing rather than 

new lending. 

GAO audit of debt portfolios of countries with questionable 

loans 

The Comptroller General of the United States shall undertake an 

audit of the debt portfolios of previous governments in countries 

such as the Democratic Republic of Congo and South Africa, where 

there is significant evidence that odious, onerous, or illegal loans 

were made to the government. The Comptroller General of the 

United States shall prepare and submit to the relevant congressional committees a report that contains the results of these audits 

within 2 years after the date of the enactment of this section. 


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Availability on Treasury Department Website of remarks of 

U.S. 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 each international financial institution 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. 

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 Congress a report on the availability of the ongoing operations, 

procedures, and accounts of the IMF, the World Bank, and the 

other international financial institutions for canceling the debt of 

eligible low-income countries. 

Annual reports from the President 

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

submit to the relevant congressional committees a public report on 

the progress made in accomplishing the purposes of this section, including a list of the countries that have received debt cancellation, 

a list of the countries whose request for debt cancellation has been 

denied and why, and a list of the countries whose requests for debt 

cancellation are under consideration. 

Eligible low-income country defined 

The term ‘‘eligible low-income country’’ is defined as a country 

that (1) is eligible for financing only from the International Development Association and has not already qualified for debt relief 

under HIPC and MDRI; (2) 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) 

does not have an excessive level of military expenditures; (4) has 

not repeatedly provided support for acts of international terrorism, 

as determined by the Secretary of State and defined under U.S. 

law; (5) is cooperating on international narcotics control matters; 

and (6) is not engaging in a consistent pattern of gross violations 

of internationally recognized human rights, including through its 

military or other security forces. 

Sec. 4. Limitation on conditionality of debt relief for eligible low-income countries 

The Secretary of the Treasury shall commence immediate efforts 

within the Paris Club of bilateral creditors and within the international financial institutions to ensure that the provision of debt 

cancellation to eligible low-income governments is not conditioned 

on any agreement by such a government to implement policies except those explicitly outlined in the bill, such as those that foster 

transparent and participatory policies to achieve poverty reduction 

through economic growth; ensure sound budget procedures, good 

governance and effective anticorruption measures; and produce and 


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20 

disclose to the public an annual report disclosing how the savings 

from debt cancellation were used. 

Annual reports to the Congress 

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

submit to the relevant congressional committees a public report on 

the progress made in accomplishing the purposes of this section. 

Sec. 5. Sense of the Congress 

This section expresses the sense of the Congress that to further 

the goals of debt reduction for low-income countries, in addition to 

the efforts described in this Act, the United States should pay off 

outstanding arrearages of $595.8 million to the multilateral development banks and debt reduction efforts. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

INTERNATIONAL FINANCIAL INSTITUTIONS ACT 

* * * * * * * 

TITLE XVI—HUMAN WELFARE 

* * * * * * * 

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 

negotiate an agreement to accomplish the following: 

(1) Cancellation by each international financial institution of 

all 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. 

(2) Cancellation by the United States of all debts owed to it 

by eligible low-income countries. 

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

cancellation is not excessive. 

(4) 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. 

(5) 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 


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basic health care services, education services, and clean water 

services to all individuals in the country. 

This subsection shall not be interpreted to authorize the Secretary 

of the Treasury to enter into an agreement to accomplish any of the 

foregoing without express congressional authorization to do so. 

(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, 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) provide that the external financing needs of low-income 

countries are met primarily through grant financing rather 

than new lending; 

(3) seek the international adoption of a binding legal framework on new lending that—

(A) guarantees that no creditor can take or expect to take 

financial advantage of acquired or newly awarded debt relief through the terms and rates of such 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 irresponsibly provided; 

(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; and 

(4) support the development of responsible financing standards where creditors and aid/loan recipients alike adhere to 

standards to assure transparency and accountability to citizens, 

human rights, and the avoidance of new odious debt, while encouraging the development of renewable energy and helping 

countries to transition away from dependence on oil. 

(d) GAO AUDIT OF DEBT PORTFOLIOS OF COUNTRIES WITH QUESTIONABLE LOANS.—


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(1) IN GENERAL.—The Comptroller General of the United 

States shall undertake an audit of the debt portfolios of previous governments in countries such as the Democratic Republic 

of Congo and South Africa, where there is significant evidence 

that odious, onerous, or illegal loans were made to the government. Each such audit shall— (A) consider debt owed to the World Bank, the IMF, and 

the other international financial institutions (as so defined), export credit debts owed to governments, and debts 

owed to commercial creditors, and assess whether or not 

past investments produced the intended results; 

(B) 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). 

(e) AVAILABILITY ON TREASURY DEPARTMENT WEBSITE OF RE- MARKS 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 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 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 of each year, the President 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 


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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, and does not qualify for debt relief under the Enhanced HIPC Initiative (as defined in section 1625(e)(3)) and under the Multilateral Debt Relief Initiative; 

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

of military expenditures; 

(4) 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)), or section 

620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 

2371(a)); 

(5) the government of which is cooperating on international 

narcotics control matters; and 

(6) 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. 

SEC. 1627. LIMITATION ON CONDITIONALITY OF DEBT RELIEF FOR 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 

ensure that debt cancellation is provided to eligible low-income 

countries (as defined in section 1626(h)) without any conditions except requiring the government of such a country to—

(1) take steps so that the financial benefits of debt relief are 

applied to programs to combat poverty (in particular through 

concrete measures to improve economic infrastructure, basic 

services in education, nutrition, and health, particularly treatment and prevention of the leading causes of mortality) and to 

redress environmental degradation; 

(2) make policy decisions through transparent and 

participatory processes; 

(3) adopt an integrated development strategy to support poverty reduction through economic growth, that includes 

monitorable poverty reduction goals; 

(4) implement transparent policy making and budget procedures, good governance, and effective anticorruption measures; 

(5) broaden public participation and popular understanding 

of the principles and goals of poverty reduction, particularly 

through economic growth, and good governance; 


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24 

(6) promote the participation of citizens and nongovernmental 

organizations in the economic policy choices of the government; 

and 

(7) produce an annual report disclosing how the savings from 

debt cancellation were used, and make the report publicly available and easily accessible to all interested parties, including 

civil society groups and the media. 

(b) ANNUAL REPORTS TO THE CONGRESS.—Not later than December 31 of each year, the President shall submit to the Committees 

on Financial Services and on International Relations of the House 

of Representatives and the Committees on Foreign Relations and on 

Banking, Housing, and Urban Affairs of the Senate 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. 

* * * * * * * 


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ADDITIONAL VIEWS 

H.R. 2634, the ‘‘Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008,’’ authorizes the Secretary of the 

Treasury to negotiate with the Paris Club and international financial institutions a debt relief agreement for certain low-income 

countries that have not received debt relief under previous programs. Such an agreement is expected to include bilateral and multilateral debt cancellation for low-income countries that are eligible 

for International Development Association assistance. Once negotiated, implementation would require Congressional approval. 

The Jubilee Act will build on the immensely successful debt relief 

efforts begun more than a decade ago under the Heavily Indebted 

Poor Countries (HIPC) initiative and continued in the ‘‘Enhanced 

HIPC’’ and the Multilateral Debt Relief Initiative (MDRI). In countries where debt relief has been completed, national debt has been 

reduced by two-thirds and spending on reducing hunger and improving health, education, and social services now is four times 

greater than the amount of previous debt payments. The Jubilee 

Act would build on these successes. By doing so, it would serve 

United States national interests by helping to combat the poverty 

that breeds unrest and instability and creates the conditions that 

allow dictators and terrorists to thrive. Paying for the U.S. share 

of the expected first round of debt relief under the Jubilee Act 

would cost no more than 50 cents apiece for every man, woman, 

and child in this country. 

The bill reported by the Committee on Financial Services makes 

a number of important improvements to the introduced version: establishing conditions for receipt of the debt reduction, breaking 

debt relief into a two-step process—negotiation, followed by implementation—and deleting language that would be either controversial or duplicative of other legislation. It also contains a ‘‘Sense of 

Congress’’ section expressing the view that while pressing forward 

on new debt-relief programs, the U.S. should become current in its 

existing debt relief obligations, which are currently $600 million in 

arrears. 

SPENCER BACHUS. 

JUDY BIGGERT. 

Æ 


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