(1) Many low-income countries have been struggling under the burden of international debts for many years.
(2) Since 1996, when the Heavily Indebted Poor Countries Initiative (HIPC) was created more than 30 nations have seen some form of debt relief totaling approximately $80,000,000,000.
(3) Congress has demonstrated its support for bilateral and multilateral debt relief through the enactment of comprehensive debt relief initiatives for heavily indebted low-income countries in--
(A) title V of H.R. 3425 of the 106th Congress, as enacted into law by section 1000(a)(5) of the Act entitled `An Act making consolidated appropriations for the fiscal year ending September 30, 2000, and for other purposes', approved November 29, 1999 (Public Law 106-113; 113 Stat. 1501-311) and the amendments made by such title;
(B) title II of H.R. 5526 of the 106th Congress, as enacted into law by section 101(a) of the Act entitled `An Act making appropriations for foreign operations, export financing, and related programs for the fiscal year ending September 30, 2001, and for other purposes', approved November 6, 2000 (Public Law 106-429; 114 Stat. 1900A-5); and
(C) title V of the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (Public Law 108-25; 117 Stat. 747) and the amendment made by such title.
(4) In 2005, the United States and other G-8 nations reached an agreement to provide cancellation of 100 percent of the debts owed by eligible poor nations to Paris Club members, the IMF, the World Bank, and the African Development Bank. The Inter-American Development Bank reached an agreement in early 2007 to provide similar treatment.
(5) The 2005 agreement led to the creation of the Multilateral Debt Relief Initiative (MDRI). As of April 2007, 22 nations have seen the majority of their debts to the IMF, World Bank, and African Development Bank cancelled under the terms of the MDRI. In March 2007, the Inter-American Development Bank announced it would provide full debt cancellation to 5 Latin American countries on MDRI terms.
(6) Resources released by debt relief efforts to date are reaching the poor. Cameroon is using the $29,800,000 of savings it will gain from the MDRI in 2006 for national poverty reduction priorities, including infrastructure, social sector and governance reforms. Uganda is using its $57,900,000 savings in 2006 on improving energy infrastructure to try to ease acute electricity shortages, as well as primary education, malaria control, healthcare and water infrastructure (specifically targeting the poor and under-served villages). Zambia is using its savings of $23,800,000 under the MDRI in 2006 to increase spending on agricultural projects, such as smallholder irrigation and livestock disease control, as well as to eliminate fees for healthcare in rural areas.
(7) While debt cancellation has a record of success, there remains an unfinished agenda on international debt. There are a number of challenges to both the effective reduction of poverty and inequality and the achievement of broader debt cancellation.
(8) 2007 is an important year to address the unfinished agenda on international debt as the global Jubilee debt campaign has declared 2007 a `Sabbath year', 7 years after the historic Jubilee 2000 campaign.
(9) A critical issue which needs to be addressed on debt is the way that non-concessional lenders stand to gain financially from lending to poor countries that have benefited from debt relief without having paid for past debt relief or facing the prospect of paying for the future relief of unsustainable and irresponsible new lending. In these cases, the gains of debt relief for poor debtor countries are at risk of being eroded. This takes the form of new lending to countries that have received debt cancellation from countries including China.
(10) It is also essential that all lenders and borrowers accept co-responsibility and learn from past mistakes--as evidenced by the debt crisis itself--by making more productive investment choices and engaging in more responsible lending and borrowing in the future. In October 2006, Norway became the first creditor to accept co-responsibility for past lending mistakes and cancelled the debt of 5 nations on the grounds that the loans reflected poor development policy.
(11) A growing number of governments and intergovernmental bodies, including the United Kingdom, the European Commission, and Norway, are raising concerns about the harmful impacts of certain economic policy conditionalities. Many impoverished countries that have received debt cancellation under the HIPC and MDRI initiatives have done so at a high social cost, because they have had to implement certain economic policy conditions, including the privatization of essential basic services such as water, and comply with other harmful requirements. Some of these policies have had the effect of limiting fiscal space for productive investment and threatening growth and human development. Several countries currently eligible for debt cancellation under the HIPC or MDRI programs are facing extended delays in receiving cancellation because they are struggling to comply with such requirements from the IMF and World Bank.
(12) There is also an urgent need to look beyond the constraints of current debt relief initiatives to address the need for expanded debt cancellation. The current initiatives allow countries to qualify for relief based on economic criteria rather than human needs. A January 2007 report by the United Nations Human Rights Council found that eligibility for debt cancellation should be expanded to cover all low-income countries.
(13) The Government of the United Kingdom has proposed that qualification for the MDRI be extended to the 67 nations which qualify for assistance exclusively from the International Development Association. To be eligible for cancellation, countries must meet economic criteria pertaining to public financial management, anti-corruption measures, and budget transparency.
(14) Since debt cancellation is an essential component of the United States development assistance strategy and the United States has been able to lead the debt cancellation efforts of the international community by example, the United States should continue to work to improve and expand initiatives in this area.
(15) The United States has been a leader in supporting debt relief efforts to date and should continue to work to improve and expand initiatives in this area.