Providing for Consideration of H.R. 2634, Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008

PROVIDING FOR CONSIDERATION OF H.R. 2634, JUBILEE ACT FOR RESPONSIBLE LENDING AND EXPANDED DEBT CANCELLATION OF 2008 -- (House of Representatives - April 16, 2008)

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Mr. WELCH of Vermont. Madam Speaker, House Resolution 1103 provides for consideration of H.R. 2634, the Jubilee Act for Responsible Lending and Expanded Debt Cancellation, under a structured rule. The rule provides 1 hour of general debate controlled by the Committee on Financial Services. The rule also makes in order four amendments printed in the Rules Committee report, each of which is debatable for 10 minutes. The rule provides for one motion to recommit, with or without instructions.

Madam Speaker, structured, responsible debt relief has been proven to be one of the most effective methods of fighting global poverty. In 1996 the World Bank and the IMF, the International Monetary Fund, developed the Heavily Indebted Poor Countries, or HIPC, Initiative to provide debt relief to the world's most impoverished nations. The 28 countries that participated in this program have been spending the debt relief on good things in their country for the very poor people, on education and health. In the first 10 years of the program, the IMF and the World Bank provided $62 billion of debt relief, cutting the countries' debt by an average of two-thirds.

The results speak for themselves. The participating countries now spend four times as much on health, education, and social services as they do on paying back debt. Tanzania, for instance, has used its money from debt cancellation to eliminate school fees for elementary school education. Think about it. The poorest countries, their kids were having to pay fees to go to elementary school, something that's not even required here, while Zambia eliminated fees for health care in rural areas. Multilateral efforts in Niger reduced debt from 76 percent of their

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gross domestic product, and think about that, 76 percent of the gross domestic product was used in debt relief, in 2002 to 14 percent in 2006. With that savings Niger has been able to make investments in health and education. They've reduced the infant mortality rate, cut it in half. Primary school completion has increased from 16 to 28 percent, and access to drinkable water increased from 40 percent for the people in Niger to 69 percent.

The bill that this rule will bring to the floor today will build on this record of quantifiable success to expand efforts to reduce the debts owed by impoverished nations. This legislation makes debt forgiveness immediately possible for nine countries that meet the standards of the Jubilee Act. This is not a giveaway program.

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These nations are among the poorest in the world with per capita incomes of less than $3 a day, $1,065 a year. Countries initially eligible under this legislation for debt relief would include Cape Verde, Georgia, Kenya, Mongolia and Vietnam.

But as I mentioned, the Jubilee Act does not give countries that borrowed money a free ride with debt forgiveness. It includes strict parameters to ensure that the participating countries: one, have transparent and effective budget processes; two, do not support terrorism; three, cooperate in international counternarcotic efforts; and, four, uphold human rights standards.

In addition, funds made available as a result of loan forgiveness must be directed toward antipoverty programs, and countries must publish an annual report to be accountable on how those funds were spent.

These criteria ensure the loan forgiveness funds are used wisely and well. They provide an incentive for noneligible countries to reduce corruption and improve human rights practices so they may, one day, become eligible for debt forgiveness.

Fifteen additional countries, including Bangladesh, Nigeria and Zimbabwe would be eligible for debt cancellation upon making required reforms.

This is the brand of leadership that America needs more of where we are doing our share, but we are working with our allies and where we are using the incentive of debt forgiveness. Many of these debts, incidentally, were taken by kleptocrats who formerly ruled in these countries, and now these countries are trying to free themselves of the yoke of this terrible leadership. This debt forgiveness program allows us, working with our allies, the IMF and the World Bank, to give them a boost.

Finally, Madam Speaker, it must be noted that because the international financial institutions like the World Bank and the IMF are expected to pay the bulk of the debt relief, the tremendous improvements that can be achieved under this bill come at a very reasonable cost to the U.S. taxpayer.

The cost of America canceling bilateral debt for the countries initially eligible is estimated to be $197 million. That is less than what we spend for 14 hours in Iraq, just to put it in perspective. However, this bill does not actually authorize any debt cancellation. It authorizes the Secretary of the Treasury to enter into negotiations to cancel debt. Any debt cancellation agreement reached by the Secretary returns to Congress for our approval. In fact, the Congressional Budget Office has scored this legislation at no cost to the taxpayers.

Debt reduction has been proven to be one of the most effective, both cost effective and socially effective, ways to achieve significant reductions in global poverty.

I urge my colleagues to support this rule and the underlying bill.

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