I 

111TH CONGRESS 

1ST SESSION H. R. 4405 

To provide for greater responsibility in lending and expanded cancellation 

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

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 16, 2009 

Ms. WATERS (for herself, Mr. FRANK of Massachusetts, Mr. BACHUS, Mrs. 

MALONEY, Mrs. BIGGERT, Mr. GUTIERREZ, Mr. PAYNE, Ms. LEE of California, Mr. CLEAVER, and Mr. WALDEN) introduced the following bill; 

which was referred to the Committee on Financial Services 

A BILL 

To provide for greater responsibility in lending and expanded 

cancellation of debts owed to the United States and 

the international financial institutions by low-income 

countries, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

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

6 2009’’. 


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1 SEC. 2. FINDINGS. 

2 The Congress finds the following: 

3 (1) Many low-income countries have been strug4 gling under the burden of international debts for 

5 many years. 

6 (2) Since 1996, when the Heavily Indebted 

7 Poor Countries Initiative (HIPC) was created, more 

8 than 30 nations have seen some form of debt relief 

9 totaling more than $100,000,000,000. 

10 (3) Congress has demonstrated its support for 

11 bilateral and multilateral debt relief through the en12 actment of comprehensive debt relief initiatives for 

13 heavily indebted low-income countries in— 

14 (A) title V of H.R. 3425 of the 106th Con15 gress, as enacted into law by section 1000(a)(5) 

16 of the Act entitled ‘‘An Act making consoli17 dated appropriations for the fiscal year ending 

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

19 approved November 29, 1999 (Public Law 106– 

20 113; 113 Stat. 1501–311) and the amendments 

21 made by such title; 

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

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

24 of the Act entitled ‘‘An Act making appropria25 tions for foreign operations, export financing, 

26 and related programs for the fiscal year ending 


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

2 approved November 6, 2000 (Public Law 106– 

3 429; 114 Stat. 1900A–5); and 

4 (C) title V of the United States Leadership 

5 Against HIV/AIDS, Tuberculosis, and Malaria 

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

7 747) and the amendment made by such title. 

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

9 nations reached an agreement to provide cancellation 

10 of 100 percent of the debts owed by eligible poor na11 tions to Paris Club members, the IMF, the World 

12 Bank, and the African Development Bank. The 

13 Inter-American Development Bank reached an 

14 agreement in early 2007 to provide similar treat15 ment. 

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

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

18 August 2009, 26 nations have seen the majority of 

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

20 Development Bank cancelled under the terms of the 

21 MDRI. In March 2007, the Inter-American Develop22 ment Bank announced it would provide full debt 

23 cancellation to 5 Latin American countries on MDRI 

24 terms. 


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1 (6) Resources released by debt relief efforts to 

2 date are reaching the poor. Cameroon used the 

3 $29,800,000 of savings it gained from the MDRI in 

4 2006 for national poverty reduction priorities, in5 cluding infrastructure, social sector and governance 

6 reforms. Uganda used its $57,900,000 savings in 

7 2006 on improving energy infrastructure to try to 

8 ease acute electricity shortages, as well as primary 

9 education, malaria control, healthcare and water in10 frastructure (specifically targeting the poor and 

11 under-served villages). Zambia used its savings of 

12 $23,800,000 under the MDRI in 2006 to increase 

13 spending on agricultural projects, such as 

14 smallholder irrigation and livestock disease control, 

15 as well as to eliminate fees for healthcare in rural 

16 areas. 

17 (7) While debt cancellation has a record of suc18 cess, there remains an unfinished agenda on inter19 national debt. There are a number of challenges to 

20 both the effective reduction of poverty and inequality 

21 and the achievement of broader debt cancellation. 

22 (8) A critical issue which needs to be addressed 

23 on debt is the way that non-concessional lenders 

24 stand to gain financially from lending to poor coun25 tries that have benefited from debt relief without 


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1 having paid for past debt relief or facing the pros2 pect of paying for the future relief of unsustainable 

3 and irresponsible new lending. In these cases, the 

4 gains of debt relief for poor debtor countries are at 

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

6 lending to countries that have received debt cancella7 tion from countries including China. 

8 (9) It is also essential that all lenders and bor9 rowers accept co-responsibility and learn from past 

10 mistakes—as evidenced by the debt crisis itself—by 

11 making more productive investment choices and en12 gaging in more responsible lending and borrowing in 

13 the future. In October 2006, Norway became the 

14 first creditor to accept co-responsibility for past 

15 lending mistakes and cancelled the debt of 5 nations 

16 on the grounds that the loans reflected poor develop17 ment policy. 

18 (10) A growing number of governments and 

19 intergovernmental bodies, including the United 

20 Kingdom, the European Commission, and Norway, 

21 are raising concerns about the harmful impacts of 

22 certain economic policy conditionalities. Many impov23 erished countries that have received debt cancella24 tion under the HIPC and MDRI initiatives have 

25 done so at a high social cost, because they have had 


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1 to implement certain economic policy conditions, in2 cluding the privatization of essential basic services 

3 such as water, and comply with other harmful re4 quirements. Some of these policies have had the ef5 fect of limiting fiscal space for productive investment 

6 and threatening growth and human development. 

7 Several countries currently eligible for debt cancella8 tion under the HIPC or MDRI programs are facing 

9 extended delays in receiving cancellation because 

10 they are struggling to comply with such require11 ments from the IMF and World Bank. 

12 (11) There is also an urgent need to look be13 yond the constraints of current debt relief initiatives 

14 to address the need for expanded debt cancellation. 

15 The current initiatives allow countries to qualify for 

16 relief based on economic criteria rather than human 

17 needs. A January 2007 report by the United Na18 tions Human Rights Council found that eligibility 

19 for debt cancellation should be expanded to cover all 

20 low-income countries. 

21 (12) The Government of the United Kingdom 

22 has proposed that qualification for the MDRI be ex23 tended to the 67 nations which qualify for assistance 

24 exclusively from the International Development As25 sociation. To be eligible for cancellation, countries 


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1 must meet economic criteria pertaining to public fi2 nancial management, anti-corruption measures, and 

3 budget transparency. 

4 (13) Since debt cancellation is an essential com5 ponent of the United States development assistance 

6 strategy and the United States has been able to lead 

7 the debt cancellation efforts of the international 

8 community by example, the United States should 

9 continue to work to improve and expand initiatives 

10 in this area. 

11 (14) The United States has been a leader in 

12 supporting debt relief efforts to date and should con13 tinue to work to improve and expand initiatives in 

14 this area. 

15 SEC. 3. CANCELLATION OF DEBT OWED BY ELIGIBLE LOW16 INCOME COUNTRIES. 

17 Title XVI of the International Financial Institutions 

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

19 the end the following: 

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

21 LOW-INCOME COUNTRIES. 

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

23 shall commence immediate efforts, within the Paris Club 

24 of Official Creditors, the International Monetary Fund 

25 (IMF), the International Bank for Reconstruction and DeVerDate Nov 24 2008 03:41 Dec 23, 2009 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4405.IH H4405

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1 velopment (World Bank), and the other international fi2 nancial institutions (as defined in section 1701(c)(2)), to 

3 negotiate an agreement to accomplish the following: 

4 ‘‘(1) Cancellation by each international finan5 cial institution of all debts owed to the institution by 

6 eligible low-income countries, and, to the extent pos7 sible, financing the debt cancellation from the ongo8 ing operations, procedures, and accounts of the insti9 tution, without undermining the financial integrity 

10 of the institution. 

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

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

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

14 enhanced debt cancellation is not excessive. 

15 ‘‘(4) Ensuring that the provision of debt can16 cellation to eligible low-income countries is not fol17 lowed by a reduction in the provision of any other 

18 development assistance to the countries by inter19 national financial institutions and bilateral creditors, 

20 or to other countries eligible for assistance from the 

21 International Development Association. 

22 ‘‘(5) Encouraging the government of each eligi23 ble low-income country to allocate at least 20 per24 cent of its national budget towards poverty-allevi25 ation programs such as the provision of basic health 


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1 care services, education services, and clean water 

2 services to all individuals in the country. 

3 This subsection shall not be interpreted to authorize the 

4 Secretary of the Treasury to enter into an agreement to 

5 accomplish any of the foregoing without express congres6 sional authorization to do so. 

7 ‘‘(b) ESTABLISHMENT OF FRAMEWORK FOR CRED8 ITOR TRANSPARENCY.—The Secretary of the Treasury 

9 shall commence immediate efforts, within the Paris Club 

10 of Official Creditors, the International Monetary Fund, 

11 the World Bank, and the other international financial in12 stitutions (as so defined), to ensure that each of the insti13 tutions— 

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

15 greater transparency regarding the activities of the 

16 institution, including credit, grant, guarantee, and 

17 technical assistance operations, following a policy of 

18 maximum disclosure; and 

19 ‘‘(2) supports continued efforts to allow in20 formed participation and input by affected commu21 nities, including translation of information on pro22 posed projects, provision of information (including 

23 draft documents) through information technology 

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1 logue with community organizations and institutions 

2 in affected areas. 

3 ‘‘(c) ESTABLISHMENT OF A FRAMEWORK FOR RE4 SPONSIBLE LENDING.—The Secretary of the Treasury 

5 shall commence immediate efforts to— 

6 ‘‘(1) Support international efforts to address 

7 the continued challenges associated with lending and 

8 borrowing, and work to ensure debt sustainability in 

9 the future, including constructively engaging in on10 going initiatives such as efforts by the United Na11 tions Conference on Trade and Development 

12 (UNCTAD) to develop a code of conduct for respon13 sible lending and borrowing. 

14 ‘‘(2) Work to ensure that the external financing 

15 needs of low-income countries are met primarily 

16 through grant financing rather than new lending. 

17 ‘‘(3) Work within the IMF and World Bank to 

18 reform the Low Income Country Debt Sustainability 

19 Framework, including the establishment of inde20 pendent entities, which should be comprised of rep21 resentatives from individual countries, creditors, aca22 demic experts, civil society, and other experts, to 

23 provide oversight and input into country debt sus24 tainability assessments. 


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1 ‘‘(d) GAO AUDIT OF DEBT PORTFOLIOS OF COUN2 TRIES WITH QUESTIONABLE LOANS.— 

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

4 the United States shall undertake an audit of the 

5 debt portfolios of previous governments in countries 

6 such as the Democratic Republic of Congo and 

7 South Africa, where there is significant evidence 

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

9 the government. Each such audit shall— 

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

11 Bank, the IMF, and the other international fi12 nancial institutions (as so defined), export cred13 it debts owed to governments, and debts owed 

14 to commercial creditors, and assess whether or 

15 not past investments produced the intended re16 sults; 

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

18 loans were contracted, how the funds were used, 

19 and determine whether United States or inter20 national laws were violated in the contraction of 

21 these loans, and whether any of the loans were 

22 odious or onerous; and 

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1 gressional bodies and civil society groups in the 

2 countries. 

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

4 the enactment of this section, the Comptroller Gen5 eral of the United States shall prepare and submit 

6 to the Committee on Financial Services of the House 

7 of Representatives and the Committee on Foreign 

8 Relations of the Senate a report that contains the 

9 results of the audits undertaken under paragraph 

10 (1). 

11 ‘‘(e) REPORT FROM THE COMPTROLLER GEN12 ERAL.—Within 1 year after the date of the enactment of 

13 this section, the Comptroller General of the United States 

14 shall prepare and submit to the Committee on Financial 

15 Services of the House of Representatives and the Com16 mittee on Foreign Relations of the Senate a report on the 

17 availability of the ongoing operations, procedures, and ac18 counts of the IMF, the World Bank, and the other inter19 national financial institutions (as so defined) for canceling 

20 the debt of eligible low-income countries. 

21 ‘‘(f) ANNUAL REPORTS FROM THE PRESIDENT.— 

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

23 shall submit to the Committee on Financial Services of 

24 the House of Representatives and the Committee on For25 eign Relations of the Senate a report, which shall be made 


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1 available to the public, on the activities undertaken under 

2 this section, and other progress made in accomplishing the 

3 purposes of this section, for the prior fiscal year. The re4 port shall include a list of the countries that have received 

5 debt cancellation, a list of the countries whose request for 

6 debt cancellation has been denied and the reasons there7 for, and a list of the countries whose requests for debt 

8 cancellation are under consideration. 

9 ‘‘(g) ELIGIBLE LOW-INCOME COUNTRY DEFINED.— 

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

11 means a country— 

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

13 International Development Association but not from 

14 the World Bank, and does not qualify for debt relief 

15 under the Enhanced HIPC Initiative (as defined in 

16 section 1625(e)(3)) and under the Multilateral Debt 

17 Relief Initiative; 

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

19 execution and public financial management systems 

20 which ensure that the savings from debt relief are 

21 spent on reducing poverty; 

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

23 excessive level of military expenditures; 

24 ‘‘(4) the government of which has not provided 

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1 mined by the Secretary of State under section 

2 6(j)(1) of the Export Administration Act of 1979 

3 (50 U.S.C. App. 2405(j)(1)), or section 620A(a) of 

4 the Foreign Assistance Act of 1961 (22 U.S.C. 

5 2371(a)); 

6 ‘‘(5) the government of which is cooperating 

7 with the United States on international narcotics 

8 control matters; 

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

10 military or other security forces) does not engage in 

11 a pattern of gross violations of internationally recog12 nized human rights (as defined in section 116 of the 

13 Foreign Assistance Act of 1961 (Public Law 87– 

14 195)); 

15 ‘‘(7) the government of which has not been 

16 identified in the most recent Trafficking in Persons 

17 Report issued by the Department of State as not 

18 fully complying with minimum standards for elimi19 nating human trafficking and not making significant 

20 efforts to do so; 

21 ‘‘(8) the government of which has been deter22 mined by the President to be cooperating with 

23 United States efforts to stop illegal immigration to 

24 the United States; 


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1 ‘‘(9) the government of which has been deter2 mined by the President to be committed to free and 

3 fair elections; and 

4 ‘‘(10) the government of which was chosen by 

5 and permits free and fair elections.’’. 

6 SEC. 4. LIMITATION ON CONDITIONALITY OF DEBT RELIEF 

7 FOR ELIGIBLE LOW-INCOME COUNTRIES. 

8 Title XVI of the International Financial Institutions 

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

10 adding at the end the following: 

11 ‘‘SEC. 1627. LIMITATION ON CONDITIONALITY OF DEBT RE12 LIEF FOR ELIGIBLE LOW-INCOME COUN13 TRIES. 

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

15 shall commence immediate efforts within the Paris Club 

16 of Official Creditors, the International Monetary Fund 

17 (IMF), the International Bank for Reconstruction and De18 velopment (World Bank), and the other international fi19 nancial institutions (as defined in section 1701(c)(2)), to 

20 ensure that debt cancellation is provided to eligible low21 income countries (as defined in section 1626(g)) subject 

22 to all and only the following conditions: That the govern23 ment of such a country— 

24 ‘‘(1) take steps so that the financial benefits of 

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1 erty (in particular through concrete measures to im2 prove economic infrastructure, basic services in edu3 cation, nutrition, and health, particularly treatment 

4 and prevention of the leading causes of mortality) 

5 and to redress environmental degradation; 

6 ‘‘(2) make policy decisions through transparent 

7 and participatory processes; 

8 ‘‘(3) adopt an integrated development strategy 

9 to support poverty reduction through economic 

10 growth, that includes monitorable poverty reduction 

11 goals; 

12 ‘‘(4) implement transparent policy making and 

13 budget procedures, good governance, and effective 

14 anticorruption measures; 

15 ‘‘(5) broaden public participation and popular 

16 understanding of the principles and goals of poverty 

17 reduction, particularly through economic growth, 

18 and good governance; 

19 ‘‘(6) promote the participation of citizens and 

20 nongovernmental organizations in the economic pol21 icy choices of the government; and 

22 ‘‘(7) produce an annual report disclosing how 

23 the savings from debt cancellation were used, and 

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1 sible to all interested parties, including civil society 

2 groups and the media. 

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

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

5 submit to the Committee on Financial Services of the 

6 House of Representatives and the Committee on Foreign 

7 Relations of the Senate a report, which shall be made 

8 available to the public, on the activities undertaken under 

9 this section, and other progress made in accomplishing the 

10 purposes of this section, for the prior fiscal year.’’. 

11 SEC. 5. SENSE OF THE CONGRESS. 

12 It is the sense of the Congress that to further the 

13 goals of debt reduction for low-income countries, in addi14 tion to the efforts described in this Act, the United States 

15 should pay off outstanding arrearages to the International 

16 Development Association and regional development banks, 

17 and become current on all debt reduction efforts, including 

18 those carried out by the International Development Asso19 ciation and under the Enhanced Heavily Indebted Poor 

20 Countries Initiative and the Multilateral Debt Relief Ini21 tiative. 

22 SEC. 6. SENSE OF THE CONGRESS. 

23 (a) FINDINGS.—A March 2009 IMF report on the 

24 impact of the global financial crisis found that the crisis 

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1 tries, especially in sub-Saharan Africa. The report noted 

2 that over the past decade, debt relief initiatives have sig3 nificantly reduced the large external debts with which low 

4 income countries have often struggled, and that a lower 

5 debt servicing burden has also freed greater resources for 

6 development spending. The report also found that the 

7 global financial crisis has led to lower levels of remit8 tances, lower aid inflows and reduced revenues from for9 eign direct investment, which has put pressure on low in10 come countries to undertake new borrowing. According to 

11 the report, 31 low income countries are projected to be 

12 at high risk of debt distress in 2009. Countries at risk 

13 of debt distress face an increased risk of defaulting on 

14 their foreign debts, posing high risks for consumers and 

15 bondholders in the United States and elsewhere. 

16 (b) SENSE OF THE CONGRESS.—It is the sense of 

17 the Congress that— 

18 (1) in order to help avoid a chaotic series of de19 faults, both creditors and debtors should have the 

20 opportunity to turn to an international mechanism 

21 to seek orderly debt work-outs; and 

22 (2) the Secretary of the Treasury should sup23 port the establishment of such a mechanism for or24 derly, quick, predictable, and equitable resolutions of 

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1 bitration panels, a standing insolvency court under 

2 the administration of a specialized United Nations 

3 body such as the Permanent Court on Arbitration, 

4 or similar alternatives. 

Æ 


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