I
106TH CONGRESS
1ST SESSION
H. R. 1095
To require the United States to take action to provide bilateral debt relief,
and improve the provision of multilateral debt relief, in order to give
a fresh start to poor countries.
IN THE HOUSE OF REPRESENTATIVES
MARCH 11, 1999
Mr. LEACH (for himself, Mr. LAFALCE, Mr. BACHUS, Ms. WATERS, Mr. BE-
REUTER, Mr. FRANK of Massachusetts, Mr. WOLF, and Mr. HALL of
Ohio) introduced the following bill; which was referred to the Committee
on International Relations, and in addition to the Committee on Banking
and Financial Services, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To require the United States to take action to provide bilat-
eral debt relief, and improve the provision of multilateral
debt relief, in order to give a fresh start to poor coun-
tries.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Debt Relief for Poverty
Reduction Act of 1999’’.
SEC. 2. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF
AND PROCEDURES FOR NEW LOANS, CRED-
ITS, AND GUARANTEES.
(a) CANCELLATION AND REDUCTION OF DEBT AND
PROCEDURES FOR NEW LOANS, CREDITS, AND GUARAN-
TEES.—The Foreign Assistance Act of 1961 (22 U.S.C.
2151 et seq.) is amended by adding at the end the fol-
lowing:
‘‘PART VI—CANCELLATION AND REDUCTION OF
DEBT OWED TO THE UNITED STATES BY
POOR COUNTRIES AND PROCEDURES FOR
NEW LOANS, CREDITS, AND GUARANTEES TO
DEVELOPING COUNTRIES
‘‘SEC. 901. CANCELLATION AND REDUCTION OF DEBT.
‘‘(a) CANCELLATION OF DEBT.—
‘‘(1) IN
GENERAL.—Subject to amounts pro-
vided in advance in an appropriations Act, the Presi-
dent shall, prior to September 30, 2001, cancel all
amounts owed to the United States (or any agency
of the United States) by heavily indebted poor coun-
tries described in section 902 as a result of
concessional loans made or credits extended prior to
January 1, 1996, under any of the provisions of law
described in paragraph (2).
‘‘(2) PROVISIONS OF LAW.—The provisions of
law described in this paragraph are the following:
‘‘(A) Part I of this Act, chapter 4 of part
II of this Act, or predecessor foreign economic
assistance legislation.
‘‘(B) Title I of the Agricultural Trade De-
velopment and Assistance Act of 1954 (7
U.S.C. 1701 et seq.).
‘‘(b) REDUCTION OF DEBT.—
‘‘(1) IN
GENERAL.—Subject to amounts pro-
vided in advance in an appropriations Act, the Presi-
dent shall, prior to September 30, 2001, reduce, by
not less than 90 percent, amounts owed to the
United States (or any agency of the United States)
by each heavily indebted poor country described in
section 902 as a result of nonconcessional loans
made, guarantees issued, or credits extended prior to
January 1, 1996, under any of the provisions of law
described in paragraph (2).
‘‘(2) PROVISIONS OF LAW.—The provisions of
law described in this paragraph are the following:
‘‘(A) Sections 221 and 222 of this Act.
‘‘(B) The Arms Export Control Act (22
U.S.C. 2751 et seq.).
‘‘(C) Section 5(f) of the Commodity Credit
Corporation Charter Act.
‘‘(D)(i) Section 201 of the Agricultural
Trade Act of 1978 (7 U.S.C. 5621).
‘‘(ii) Section 202 of such Act (7 U.S.C.
5622).
‘‘(E) The Export-Import Bank Act of
1945 (12 U.S.C. 635 et seq.).
‘‘SEC. 902. ELIGIBLE COUNTRIES.
‘‘(a) HEAVILY INDEBTED POOR COUNTRIES.—Ex-
cept as provided in subsection (b) and subject to the fulfill-
ment of the additional requirement in subsection (c), a
country shall be considered to be a heavily indebted poor
country and eligible for cancellation or reduction of debt
under section 901 if the country—
‘‘(1) is eligible to borrow from the International
Development Association;
‘‘(2) is not eligible to borrow from the Inter-
national Bank for Reconstruction and Development;
and
‘‘(3) has outstanding public and publicly guar-
anteed debt, the net present value of which on De-
cember 31, 1996, was at least 150 percent of the av-
erage annual value of the exports of the country for
the period 1994 through 1996.
‘‘(b) EXCEPTIONS.—A country shall not be eligible
for cancellation or reduction of debt under section 901 if
the government of the country—
‘‘(1) has an excessive level of military expendi-
tures;
‘‘(2) has repeatedly provided support for acts of
international terrorism, as determined by the Sec-
retary 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 As-
sistance Act of 1961 (22 U.S.C. 2371(a));
‘‘(3) is failing to cooperate on international nar-
cotics control matters; or
‘‘(4) (including its military or other security
forces) engages in a consistent pattern of gross vio-
lations of internationally recognized human rights.
‘‘(c) ADDITIONAL REQUIREMENT.—A country which
is otherwise eligible to receive cancellation or reduction of
debt under section 901 may receive such cancellation or
reduction, as the case may be, only if the government of
the country has established, through transparent and
participatory processes, including participation of civil
society—
‘‘(1) a human development fund (hereinafter re-
ferred to as the ‘Human Development Fund’)—
‘‘(A) the resources of which shall be dedi-
cated to reducing the number of persons living
in poverty, expanding access of the poorest
members of society to basic social services, in-
cluding education, health, clean water and sani-
tation, and preventing the degradation of the
environment; and
‘‘(B) into which shall be deposited all sav-
ings generated by debt reduction received under
the Heavily Indebted Poor Countries (HIPC)
Initiative of the International Bank for Recon-
struction and Development and the Inter-
national Monetary Fund and other debt reduc-
tion programs;
‘‘(2) arrangements to ensure that all expendi-
tures from the Human Development Fund during a
year will be used to increase annual expenditures for
human development by the government above the
greater of—
‘‘(A) the total amount of annual expendi-
tures for human development by the govern-
ment for the preceding year; or
‘‘(B) the average total amount of such ex-
penditures for the 3 years immediately pre-
ceding the year in which such fund is estab-
lished; and
‘‘(3) arrangements for monitoring the oper-
ations and financial transactions and accounts of the
Human Development Fund by an oversight body
which includes representatives of civil society.
‘‘SEC. 903. PRIORITY.
‘‘In canceling or reducing debt under section 901, the
President shall give priority to heavily indebted poor coun-
tries that have demonstrated a sustained commitment to
poverty alleviation or have recently suffered a major nat-
ural disaster.
‘‘SEC. 904. SPECIAL PROVISIONS.
‘‘(a) CANCELLATION OR REDUCTION OF DEBT NOT
CONSIDERED TO BE ASSISTANCE.—Except as the Presi-
dent may otherwise determine for reasons of national se-
curity, a cancellation or reduction of debt under section
901 shall not be considered to be assistance for purposes
of any provision of law limiting assistance to a country.
‘‘(b) INAPPLICABILITY OF CERTAIN PROHIBITIONS
RELATING
TO
CANCELLATION
OR
REDUCTION
OF
DEBT.—The authority to provide for cancellation or re-
duction of debt under section 901 may be exercised not-
withstanding section 620(r) of this Act.
‘‘SEC. 905. ANNUAL REPORTS TO THE CONGRESS.
‘‘(a) IN GENERAL.—Not later than December 31 of
each year, the President shall prepare and transmit to the
appropriate congressional committees a report, which shall
be made available to the public, concerning the cancella-
tion and reduction of debt under section 901, determina-
tions made under section 904(a), activities undertaken
under section 2(b) of the Debt Relief for Poverty Reduc-
tion Act of 1999, and the progress made in accomplishing
the purposes of such section 2(b), for the prior fiscal year.
‘‘(b) DEFINITION.—In this section, the term ‘appro-
priate congressional committees’ means—
‘‘(1) the committee on Banking and Financial
Services and the Committee on International Rela-
tions of the House of Representatives; and
‘‘(2) the committee on Foreign Relations of the
Senate.
‘‘SEC. 906. SENSE OF THE CONGRESS.
‘‘It is the sense of the Congress that the amounts
that would otherwise be provided by the United States for
development aid or other debt relief should not be reduced
on account of any appropriations made pursuant to sec-
tion 907.
‘‘SEC. 907. AUTHORIZATION OF APPROPRIATIONS.
‘‘For the cost (as defined in section 502(5) of the
Federal Credit Reform Act of 1990) of the cancellation
or reduction of any debt under section 901 of this Act,
there are authorized to be appropriated to the President
such sums as may be necessary for each of the fiscal years
2000 and 2001.
‘‘SEC. 908. PROCEDURES FOR NEW LOANS, CREDITS, AND
GUARANTEES.
‘‘The President shall, to the extent appropriate, en-
sure that all decisions by the Government of the United
States (or any agency of the United States) to make new
loans, extend new credits or issue new guarantees to the
governments (or any agency of the governments) of, or
private parties in, any developing country shall be subject
to transparent and participatory processes, including giv-
ing due notice to the public in advance of such decisions
of the proposed purposes, terms, and conditions of such
loans, credits, and guarantees.’’.
(b) ENSURING BURDENSHARING BY OTHER CRED-
ITOR COUNTRIES.—In order to accelerate bilateral debt
relief and promote economic and human development and
poverty alleviation in heavily indebted poor countries, the
Congress urges the President, immediately after the date
of the enactment of this Act, to establish diplomatic ef-
forts with countries that are members of the Paris Club
of Official Creditors, and, if necessary, with other credi-
tors, to accomplish the following by September 30, 2001:
(1) The cancellation of all amounts owed to
each such country by heavily indebted poor countries
described in section 902 of the Foreign Assistance
Act of 1961 (as added by subsection (a)) as a result
of concessional loans made or credits extended prior
to January 1, 1996, by each such country.
(2) The reduction, by not less than 90 percent,
of amounts owed to each such country by heavily in-
debted poor countries described in section 902 of the
Foreign Assistance Act of 1961 (as added by sub-
section (a)) as a result of nonconcessional loans
made, guarantees issued, or credits extended prior to
January 1, 1996, by each such country.
(3) The establishment of procedures by the
Club to ensure greater transparency in the decision-
making process, including publication of each deci-
sion and its rationale, on all applications to the Club
for debt reduction by heavily indebted poor countries
described in section 902 of the Foreign Assistance
Act of 1961 (as added by subsection (a)).
SEC. 3. ACTIONS TO IMPROVE THE PROVISION OF MULTI-
LATERAL DEBT RELIEF AND PROCEDURES
FOR NEW LENDING.
Title XVI of the International Financial Institutions
Act (22 U.S.C. 262p–262p–5) is amended by adding at
the end the following:
‘‘SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED
POOR COUNTRIES INITIATIVE; ENSURING EQ-
UITABLE BURDEN SHARING.
‘‘(a) IMPROVEMENT OF THE HIPC INITIATIVE.—In
order to accelerate multilateral debt relief and promote
economic and human development and poverty alleviation
in heavily indebted poor countries the Congress urges the
President to commence immediately diplomatic efforts,
within the Paris Club of Official Creditors, as well as the
International Bank for Reconstruction and Development
(World Bank), the International Monetary Fund (IMF),
and other appropriate multilateral development institu-
tions to accomplish the following modifications in the
Heavily Indebted Poor Countries Initiative:
‘‘(1) LIMIT ON MAXIMUM WAITING PERIOD BE-
FORE RECEIVING DEBT RELIEF.—The period of sat-
isfactory implementation of economic and social re-
forms which a country may need to establish in
order to receive bilateral and multilateral debt re-
duction under the HIPC Initiative shall not exceed
3 years.
‘‘(2) PROMOTION
OF
POVERTY
ALLEVIATION
AND ENVIRONMENTAL PROTECTION.—The economic
and social reforms on which HIPC debt relief is con-
ditioned shall incorporate effective measures for pov-
erty reduction and environmental protection.
‘‘(3) REVISION OF COUNTRY ELIGIBILITY RE-
QUIREMENT.—A country shall be regarded as having
an unsustainable debt burden for purposes of quali-
fying for debt reduction (or for further debt reduc-
tion) under the HIPC Initiative if the net present
value of the outstanding public and publicly guaran-
teed debt of the country at the end of 1996 was at
least 150 percent of the average annual value of the
exports of the country for the period 1994 through
1996.
‘‘(4) ADDITIONAL REQUIREMENT.—Debt reduc-
tion under the HIPC Initiative shall not be provided
for the benefit of a country unless the government
of the country has established, through transparent
and participatory processes, including the participa-
tion of civil society—
‘‘(A) a plan of action for human develop-
ment (in this section referred to as the ‘Action
‘‘(i) the total amount of annual ex-
penditures for human development by the
government for the preceding year; or
‘‘(ii) the average total amount of such
expenditures for the 3 years immediately
preceding the year in which such fund is
established; and
‘‘(D) arrangements for monitoring the op-
erations, financial transactions, and accounts of
the Human Development Fund by an oversight
body which includes representatives of civil soci-
ety.
‘‘(5) AMOUNT
OF
DEBT
REDUCTION.—The
amount of the debt reduction provided under the
HIPC Initiative for the benefit of a country with an
unsustainable debt burden shall be sufficient to
reduce—
‘‘(A) the net present value of the out-
standing public and publicly guaranteed debt of
the country to less than 150 percent of the
value of the annual exports of the country; and
‘‘(B) the amount of annual payments due
on such public and publicly guaranteed debt to
not more than 10 percent of the amount of an-
nual current revenue received by the govern-
ment of the country from internal sources.
‘‘(6) TRANSPARENCY
AND
PARTICIPATION
IN
HIPC
DECISION
MAKING.—All decisions under the
HIPC Initiative concerning the amount, terms and
conditions, and timing of debt relief for a country,
and the processes by which such decisions are made,
shall be subject to procedures which are—
‘‘(A) transparent, including publication of
the content of the decisions and of all relevant
analytical, legal, and policy documents, includ-
ing Debt Sustainability Analyses, Policy Frame-
work Papers, debt relief agreements, and na-
tional development programs and budgets; and
‘‘(B) participatory, including the participa-
tion of civil society.
‘‘(7) SPECIAL PROVISIONS.—
‘‘(A) Debt reduction under the HIPC Ini-
tiative for the benefit of a country that has
demonstrated a sustained commitment to pov-
erty alleviation or has recently suffered a major
natural disaster shall be provided in a greater
amount or more quickly than would otherwise
be the case under the HIPC Initiative.
‘‘(B) Notwithstanding any longer period of
satisfactory performance required pursuant to
paragraph (1), in the case of a country emerg-
ing from civil conflict which has an economic
performance agreement with the IMF and is
otherwise entitled to begin receiving enhanced
bilateral and multilateral debt reduction under
the HIPC Initiative, the lack of a 3-year period
of satisfactory performance under such IMF
agreement shall not cause a delay in the provi-
sion of debt reduction for the benefit of the
country under the HIPC Initiative.
‘‘(8) HIPC REVIEW.—The Secretary of the
Treasury shall make every effort (including instruct-
ing the United States Executive Directors at the
IMF and the World Bank) to ensure that a com-
prehensive external assessment of the HIPC Initia-
tive shall take place by December 31, 2001, shall in-
corporate the views of debtor governments and civil
society, shall be made public, and shall include—
‘‘(A) an analysis of the contribution of the
HIPC Initiative to the poverty reduction and
social development goals for the 21st century
established by the Development Assistance
Committee of the Organization for Economic
Cooperation and Development; and
‘‘(B) recommendations to the IMF, World
Bank, and the governments of the United
States and other creditor countries that may be
necessary to strengthen the contribution of the
HIPC Initiative to the poverty reduction and
social goals referred to in subparagraph (A).
‘‘(9) TERMINATION OF THE HIPC INITIATIVE.—
The HIPC Initiative shall not terminate until all the
debt reduction contemplated by this section has been
carried out.
‘‘(b) PROMOTION
OF EQUITABLE BURDEN SHAR-
ING.—In order to promote equitable burden-sharing by bi-
lateral, multilateral, and private creditors under the HIPC
initiative, the Congress urges the President to commence
immediately diplomatic efforts to ensure that such credi-
tors draw upon their own resources to finance debt reduc-
tion under the HIPC Initiative to the extent possible with-
out diverting funds from other high priority poverty allevi-
ation programs.
‘‘(c) CONTRIBUTIONS TO THE HIPC TRUST FUND.—
For payment to the Heavily Indebted Poor Countries
Trust Fund of the International Bank for Reconstruction
and Development, there are authorized to be appropriated
to the President such sums as may be necessary for fiscal
years 2000, 2001, and 2002, except that if, with respect
to fiscal year 2001 or 2002, the President has not deter-
mined that, during the then preceding fiscal year, satisfac-
tory progress was made in accomplishing the improve-
ments in the HIPC initiative described in subsections (a)
and (b), then no sums are authorized to be appropriated
for such purpose for the fiscal year.
‘‘(d) SENSE OF CONGRESS.—It is the sense of Con-
gress that the amounts that would otherwise be provided
by the United States for development aid or other debt
relief should not be reduced on account of any appropria-
tions pursuant to subsection (c).
‘‘(e) REPORT TO THE CONGRESS.—Not later than
December 31 of each year, the President shall submit to
the Committees on Banking and Financial Services and
on International Relations of the House of Representa-
tives and the Committee on Foreign Relations of the Sen-
ate a report, which shall be made available to the public,
on the activities undertaken under this section, and on the
progress made in accomplishing the purposes of this sec-
tion, for the prior fiscal year.