Jubilee Act for Responsible Lending and Expanded Debt Cancellation Act Would Help Reduce Global Poverty
WASHINGTON, DC- U.S. Senator Bob Casey (D-PA) today announced that the Senate Foreign Relations Committee passed bipartisan legislation he introduced to expand on existing debt cancellation programs for the world’s poorest countries. The Jubilee Act for Responsible Lending and Expanded Debt Cancellation Act would expand bilateral and multilateral debt cancellation for an additional 25 nations and ensure that the benefits from debt cancellation will not be eroded.
“In recent years, the world has witnessed a coming together of a diverse coalition of groups on behalf of the cause of forgiving the debts of those nations at the lowest rungs of the world’s economic ladder,” said Senator Casey. “I’m pleased that at a time when nations around the world are suffering and their citizens are dying of hunger, disease and poverty, the Senate Foreign Relations Committee recognizes the importance of helping the world’s poorest countries.”
In 1999 and 2005, the international community came together to organize debt cancellation for Heavily Indebted Poor Countries (HIPC); however, a number of impoverished developing nations were left out of those debt cancellation efforts.
Of the 66 nations that are so impoverished that they are eligible to borrow from the World Bank’s low-income lending arm and have a per capita annual income of below $1,025, only 41 of those nations qualify for the HIPC designation. Accordingly, this legislation instructs the Secretary of Treasury to commence negotiations within the International Monetary Fund and other relevant international institutions to negotiate comprehensive debt cancellation for the remaining 25 poorest nations not already eligible for the debt cancellation approved under previous initiatives. Among these 25 nations are Mongolia and Georgia.
In April, Senator Casey chaired a Foreign Relations Committee hearing on the Jubilee Act where he heard testimony from Assistant Secretary of Treasury Clay Lowery and a distinguished panel of outside experts.
The legislation includes a series of provisions to ensure that debt cancellation would be carried out in a responsible fashion:
Recipient governments must dedicate the proceeds from debt relief towards effective poverty reduction mechanisms, including health care, education and clear water services. In other words, the debt relief cannot go towards benefits for the wealthy elites or unnecessary military expenditures in these nations;
No nations that support international terrorism, engage in weapons of mass destruction proliferation, fail to cooperate on drug interdiction or engage in human rights abuses would be eligible for this debt cancellation;
Measures to help ensure that nations which benefit from debt cancellation do not acquire new debt and thus return to square one, including implementation of effective policy reforms, prioritizing grants over lending in future development assistance, adoption of a legal framework to prevent some creditors from profiting from debt relief by servicing new loans and a crackdown on so-called vulture funds that seek to purchase existing debt at market prices and then redeem it for full value;
Maximum transparency in debt cancellation and follow-on use of debt proceeds by recipient governments.
In marking up the Jubilee Act legislation, the Committee made a number of changes to the bill, which include:
Insertion of a Sense of Congress clause on the need to fully fund arrears on previous U.S. debt relief commitments, to ensure that while the United States is considering taking on new debt relief obligations, we should recognize the imperative of living up to past promises;
Revised language to discourage so-called “vulture fund” activity to meet concerns expressed by the Treasury Department;
Insertion of additional criteria that eligible countries demonstrate democratic governance and transparency to qualify for debt relief;
Insertion of a reporting requirement from the Treasury Department on the design of a potential facility to provide short-term financing to respond to temporary economic shocks;
The Jubilee Act for Responsible Lending and Expanded Debt Cancellation Act of 2007 is supported by the 80 religious denominations and faith communities, human rights, environmental, labor and community groups organizations which make up the Jubilee USA Network.
This bill is also cosponsored by 26 Senators:
Joseph R. Biden, Jr (D-DE)
Barbara Boxer (D-CA)
Sherrod Brown (D-OH)
Hillary Rodham Clinton (D-NY)
Norm Coleman (R-MN)
Susan M. Collins (R-ME)
Christopher J. Dodd (D-CT)
Richard Durbin (D-IL)
Russell Feingold (D-WI)
Chuck Hagel (R-NE)
Johnny Isakson (R-GA)
John F. Kerry (D-MA)
Amy Klobuchar (D-MN)
Patrick J. Leahy (D-VT)
Joseph I. Lieberman (ID-CT)
Richard G. Lugar (R-IN)
Claire McCaskill (D-MO)
Robert Menendez (D-NJ)
Barbara A. Mikulski (D-MD)
Bill Nelson (D-FL)
Barack Obama (D-IL)
Charles E. Schumer (D-NY)
Gordon H. Smith (R-OR)
Olympia J. Snowe (R-ME)
John E. Sununu (R-NH)
Ron Wyden (D-OR)
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“In recent years, the world has witnessed a coming together of a diverse coalition of groups on behalf of the cause of forgiving the debts of those nations at the lowest rungs of the world’s economic ladder,” said Senator Casey. “I’m pleased that at a time when nations around the world are suffering and their citizens are dying of hunger, disease and poverty, the Senate Foreign Relations Committee recognizes the importance of helping the world’s poorest countries.”
In 1999 and 2005, the international community came together to organize debt cancellation for Heavily Indebted Poor Countries (HIPC); however, a number of impoverished developing nations were left out of those debt cancellation efforts.
Of the 66 nations that are so impoverished that they are eligible to borrow from the World Bank’s low-income lending arm and have a per capita annual income of below $1,025, only 41 of those nations qualify for the HIPC designation. Accordingly, this legislation instructs the Secretary of Treasury to commence negotiations within the International Monetary Fund and other relevant international institutions to negotiate comprehensive debt cancellation for the remaining 25 poorest nations not already eligible for the debt cancellation approved under previous initiatives. Among these 25 nations are Mongolia and Georgia.
In April, Senator Casey chaired a Foreign Relations Committee hearing on the Jubilee Act where he heard testimony from Assistant Secretary of Treasury Clay Lowery and a distinguished panel of outside experts.
The legislation includes a series of provisions to ensure that debt cancellation would be carried out in a responsible fashion:
Recipient governments must dedicate the proceeds from debt relief towards effective poverty reduction mechanisms, including health care, education and clear water services. In other words, the debt relief cannot go towards benefits for the wealthy elites or unnecessary military expenditures in these nations;
No nations that support international terrorism, engage in weapons of mass destruction proliferation, fail to cooperate on drug interdiction or engage in human rights abuses would be eligible for this debt cancellation;
Measures to help ensure that nations which benefit from debt cancellation do not acquire new debt and thus return to square one, including implementation of effective policy reforms, prioritizing grants over lending in future development assistance, adoption of a legal framework to prevent some creditors from profiting from debt relief by servicing new loans and a crackdown on so-called vulture funds that seek to purchase existing debt at market prices and then redeem it for full value;
Maximum transparency in debt cancellation and follow-on use of debt proceeds by recipient governments.
In marking up the Jubilee Act legislation, the Committee made a number of changes to the bill, which include:
Insertion of a Sense of Congress clause on the need to fully fund arrears on previous U.S. debt relief commitments, to ensure that while the United States is considering taking on new debt relief obligations, we should recognize the imperative of living up to past promises;
Revised language to discourage so-called “vulture fund” activity to meet concerns expressed by the Treasury Department;
Insertion of additional criteria that eligible countries demonstrate democratic governance and transparency to qualify for debt relief;
Insertion of a reporting requirement from the Treasury Department on the design of a potential facility to provide short-term financing to respond to temporary economic shocks;
The Jubilee Act for Responsible Lending and Expanded Debt Cancellation Act of 2007 is supported by the 80 religious denominations and faith communities, human rights, environmental, labor and community groups organizations which make up the Jubilee USA Network.
This bill is also cosponsored by 26 Senators:
Joseph R. Biden, Jr (D-DE)
Barbara Boxer (D-CA)
Sherrod Brown (D-OH)
Hillary Rodham Clinton (D-NY)
Norm Coleman (R-MN)
Susan M. Collins (R-ME)
Christopher J. Dodd (D-CT)
Richard Durbin (D-IL)
Russell Feingold (D-WI)
Chuck Hagel (R-NE)
Johnny Isakson (R-GA)
John F. Kerry (D-MA)
Amy Klobuchar (D-MN)
Patrick J. Leahy (D-VT)
Joseph I. Lieberman (ID-CT)
Richard G. Lugar (R-IN)
Claire McCaskill (D-MO)
Robert Menendez (D-NJ)
Barbara A. Mikulski (D-MD)
Bill Nelson (D-FL)
Barack Obama (D-IL)
Charles E. Schumer (D-NY)
Gordon H. Smith (R-OR)
Olympia J. Snowe (R-ME)
John E. Sununu (R-NH)
Ron Wyden (D-OR)
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