I 

108TH CONGRESS 

2D SESSION H. R. 4560

To provide multilateral and bilateral debt relief for developing countries, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 14, 2004

Mr. HYDE introduced the following bill; which was referred to the Committee 

on Financial Services, and in addition to the Committees on International 

Relations and Agriculture, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To provide multilateral and bilateral debt relief for 

developing 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 ‘‘Foreign Credit Reform Act 

5 of 2004’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Unsustainable debt in the world’s poorest 

9 countries constitutes a serious impediment to the de-
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1 velopment of stable democratic political structures, 

2 broad-based economic growth, poverty eradication, 

3 and food security. 

4 (2) Financing should be appropriate for the 

5 purposes for which it is used and should, to the 

6 maximum extent possible, generate a return suffi7 cient to pay the principal and interest due. As such, 

8 long-term lending for perishable goods, such as food 

9 commodities, may be construed as inappropriate to 

10 the extent that it places a long-term debt burden on 

11 the recipient country without generating sufficient 

12 revenues with which to service the debt. 

13 (3) Since 1955, the United States has extended 

14 more than $27,800,000,000 in loans for food under 

15 title I of the Agricultural Trade Development and 

16 Assistance Act of 1954 (commonly referred to as 

17 ‘‘PL 480’’), $10,632,858,000 of which remained 

18 outstanding at the end of 2002. 

19 (4) As of December 31, 2002, arrears on prin20 cipal and interest payments under title I of PL 480 

21 totaled $1,241,472,000. 

22 (5) Since 1992 the United States provided the 

23 independent states of the former Soviet Union with 

24 $1,601,500,000 in loans for food under title I of PL 

25 480, for which these countries are estimated to have 
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1 paid $112,748,000 in principal and interest in 2003. 

2 Russia alone has received $1,035,000,000 in credits, 

3 paying an estimated $79,695,000 in principal and 

4 interest in 2003. 

5 (6) Rising debt stocks and debt-to-export ratios 

6 may undermine a country’s credit worthiness and 

7 jeopardize its ability to borrow from commercial 

8 lenders. 

9 (7) Debt reduction contributes marginally to a 

10 country’s development prospects if new debt is al11 lowed to create the next generation of heavy indebt12 edness. Therefore, President Bush’s initiative, 

13 adopted by Group of Seven (G–7) leaders at the 

14 June 2002 summit, to increase World Bank grant 

15 assistance to the most heavily indebted poor coun16 tries is a crucial step toward alleviating poverty, 

17 curbing future unsustainable debt, and providing for 

18 urgent human needs in countries in which people live 

19 on less than one dollar a day. Replacing loans with 

20 targeted grants will eliminate the need for govern21 ments to repay long-term investments in people, es22 pecially for education, health, nutrition, water sup23 ply, and sanitation purposes. 

24 (8) The G–7 agreement at the June 2002 sum25 mit to fully fund the remaining costs of the en-
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1 hanced Heavily Indebted Poor Country (HIPC) ini2 tiative is essential to ensuring that eligible debt-dis3 tressed nations receive full benefits under the HIPC 

4 debt relief measure. 

5 (9) The United States has been a leading voice 

6 for more than a decade in international debt reduc7 tion initiatives for poor countries, including a 1991 

8 initiative to cancel $689,000,000 in food loans under 

9 title I of PL 480 owed by 15 sub-Saharan African 

10 countries. 

11 (10) The United States must continue its lead12 ership role to encourage full participation by all 

13 Paris Club creditors in multilateral debt negotia14 tions. 

15 (11) Several poor countries that are not eligible 

16 for enhanced HIPC debt reduction terms face a se17 vere debt overhang that undermines increased re18 source allocation for development and discourages 

19 productive investment. 

20 (12) The World Bank, which has provided over 

21 $1,700,000,000 since 1986 to fight the spread of 

22 HIV/AIDS, should continue to place the highest pri23 ority on programs to combat infectious diseases, in24 cluding HIV/AIDS, malaria, and tuberculosis. 
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1 (13) Debt reduction is an important, but only 

2 partial solution to long-term development. Promoting 

3 an environment that will stimulate internal economic 

4 growth, promote trade and external investment, and 

5 encourage responsible governance are the most im6 portant ingredients for sustainable growth. 

7 TITLE I—MULTILATERAL DEBT 

8 RELIEF 

9 SEC. 101. SUPPORT FOR THE HIPC TRUST FUND. 

10 Section 801(b)(1) of H.R. 5526 of the 106th Con11 gress, as introduced on October 24, 2000, and enacted 

12 into law by section 101(a) of Public Law 106–429 (and 

13 contained in the appendix thereto) is amended by striking 

14 ‘‘2003, $435,000,000’’ and inserting ‘‘2006, such sums as 

15 may be necessary’’. 

16 SEC. 102. DEBT SERVICE REINVESTED INTO THE GLOBAL 

17 FUND. 

18 The Bretton Woods Agreements Act (22 U.S.C. 286–

19 286oo) is further amended by adding at the end the fol20 lowing: 

21 ‘‘SEC. 64. DEBT SERVICE REINVESTED INTO THE GLOBAL 

22 FUND. 

23 ‘‘(a) NEGOTIATION OF AGREEMENT.—The Secretary 

24 of the Treasury shall seek to negotiate an agreement 

25 among the member countries of the Bank and the Fund, 
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1 under which, on approval by the Global Fund of a grant 

2 proposal originating from an eligible country, the Bank 

3 and the Fund shall make a contribution to the Global 

4 Fund in an amount equal to the amount of the grant 

5 award for the year, except that the total amount of the 

6 contributions so made with respect to the country during 

7 a year shall not exceed the total amount of debt service 

8 payments made by the country to the Bank and the Fund 

9 during the year. 

10 ‘‘(b) DEFINITIONS.—In this section: 

11 ‘‘(1) GLOBAL FUND.—The term ‘Global Fund’ 

12 means the public-private partnership known as the 

13 Global Fund to Fight AIDS, Tuberculosis and Ma14 laria that was established upon the call of the 

15 United Nations Secretary General in April 2001. 

16 ‘‘(2) ELIGIBLE COUNTRY.—The term ‘eligible 

17 country’ means a country—

18 ‘‘(A) which has received debt relief under 

19 the Enhanced HIPC Initiative; and 

20 ‘‘(B) in which the prevalence of HIV/AIDS 

21 among individuals who have attained 15 years 

22 of age but have not attained 49 years of age is 

23 not less than 5 percent. 

24 ‘‘(3) ENHANCED HIPC INITIATIVE.—The term 

25 ‘Enhanced HIPC Initiative’ means the multilateral 
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1 debt initiative for heavily indebted poor countries 

2 presented in the Report of G–7 Finance Ministers 

3 on the Cologne Debt Initiative to the Cologne Eco4 nomic Summit, Cologne, June 18–20, 1999. 

5 ‘‘(4) HIV/AIDS.—The term ‘HIV/AIDS’ 

6 means, with respect to an individual, an individual 

7 who is infected with HIV or living with AIDS. 

8 ‘‘(5) HIV.—The term ‘HIV’ means the human 

9 immunodeficiency virus, the pathogen that causes 

10 AIDS. 

11 ‘‘(6) AIDS.—The term ‘AIDS’ means the ac12 quired immune deficiency syndrome.’’. 

13 TITLE II—BILATERAL DEBT 

14 RELIEF 

15 SEC. 201. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF. 

16 Section 501(i) of H.R. 3425 of the 106th Congress, 

17 as introduced on November 17, 1999, and enacted into 

18 law by section 1000(a)(5) of Public Law 106–113 (and 

19 contained in Appendix E thereto), is amended by striking 

20 ‘‘2004’’ and inserting ‘‘2005’’. 

21 SEC. 202. DEBT FORGIVENESS UNDER TITLE I OF PUBLIC 

22 LAW 480. 

23 (a) DEBT FORGIVENESS.—For each of the fiscal 

24 years 2005 and 2006, the President is authorized and en25 couraged to use the authority of section 411 of the Agri-
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1 cultural Trade Development and Assistance Act of 1954 

2 (7 U.S.C. 1736e) to waive payments of principal and in3 terest that a country described in subsection (b) would 

4 otherwise be required to make to the Commodity Credit 

5 Corporation under dollar sales agreements under title I 

6 of such Act (7 U.S.C. 1701 et seq.). 

7 (b) COUNTRY DESCRIBED.—A country referred to in 

8 subsection (a) is a country—

9 (1) which has outstanding public and publicly 

10 guaranteed debt, the net present value of which on 

11 December 31, 2003, was at least 150 percent of the 

12 value of exports of the country in 2003; or 

13 (2) whose debt service payments on public and 

14 publicly guaranteed debt exceeded 8 percent of the 

15 value of its exports in 2003. 

16 (c) APPLICABLE PROVISIONS.—Except to the extent 

17 inconsistent with the provisions of this section, section 411 

18 of the Agricultural Trade Development and Assistance Act 

19 of 1954 (7 U.S.C. 1736e) (except subsection (e) of such 

20 section) shall apply with respect to the authority to waive 

21 payments of principal and interest under this section to 

22 the same extent and in the same manner as such section 

23 applies to the authority to waive payments of principal and 

24 interest under section 411 of such Act. 
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1 (d) AUTHORIZATION OF APPROPRIATIONS.—For the 

2 cost (as defined in section 502 of the Federal Credit Re3 form Act of 1990) for the reduction or cancellation of any 

4 debt pursuant to this section, there are authorized to be 

5 appropriated to the President for each of the fiscal years 

6 2005 and 2006 such sums as may be necessary. 

7 SEC. 203. MISCELLANEOUS AMENDMENTS. 

8 (a) FINANCING ASSISTANCE UNDER TITLE I OF

9 PUBLIC LAW 480.—Section 101(b) of the Agricultural 

10 Trade Development and Assistance Act of 1954 (7 U.S.C. 

11 1701(b)) is amended—

12 (1) by striking ‘‘To carry out the policies’’ and 

13 inserting the following: 

14 ‘‘(1) IN GENERAL.—To carry out the policies’’; 

15 (2) by striking ‘‘developing countries’’ and in16 serting ‘‘developing countries described in paragraph 

17 (2)’’; and 

18 (3) by adding at the end the following: 

19 ‘‘(2) DEVELOPING COUNTRY DESCRIBED.—A 

20 developing country referred to in paragraph (1) is a 

21 developing country that meets the following require22 ments: 

23 ‘‘(A) The country is not prohibited from 

24 receiving assistance under the Foreign Assist25 ance Act of 1961 by reason of the application 
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1 of section 620(q) of such Act and irrespective 

2 of whether or not the President has determined 

3 that assistance to the country is in the national 

4 interest of the United States. 

5 ‘‘(B) The country is not in default, during 

6 a period in excess of six calendar months, in 

7 payment to the United States of principal or in8 terest on any loan made to such country under 

9 this title or under any other provision of law. 

10 ‘‘(C) The country is not a low-income 

11 country or lower-middle income country, as de12 fined by the International Bank for Reconstruc13 tion and Development in its World Development 

14 Indicators Report (issued in April 2004 and up15 dated annually). 

16 ‘‘(D) The country is not a severely-in17 debted country or moderately-indebted country 

18 as defined by the International Bank for Recon19 struction and Development in its World Devel20 opment Indicators Report (issued in April 2004 

21 and updated annually).’’. 

22 (b) ECONOMIC ASSISTANCE UNDER THE FOREIGN

23 ASSISTANCE ACT OF 1961.—Section 620(q) of the For24 eign Assistance Act of 1961 (22 U.S.C. 2370(q)) is 

25 amended—
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1 (1) by inserting after ‘‘under this Act’’ the sec2 ond place it appears the following: ‘‘or under title I 

3 of the Agricultural Trade Development and Assist4 ance Act of 1954 (7 U.S.C. 1701 et seq.)’’; and 

5 (2) by adding at the end the following: ‘‘A de6 termination by the President under the preceding 

7 sentence that assistance to a country is in the na8 tional interest of the United States shall be effective 

9 for a period not to exceed one calendar year.’’.

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