The U.S. House of Representatives today approved H.R. 2634, the Jubilee Act for Responsible Lending and Expanded Debt Cancellation. The bill directs the Administration to begin negotiations for an agreement within the World Bank, International Monetary Fund, and the Paris Club of bilateral creditors to allow up to 24 additional low-income countries qualify for international debt relief. Further, the Jubilee Act will expand existing debt relief programs for the world's poorest countries and ensure that the benefits from debt relief will not be eroded by future abusive lending to these impoverished nations.
"The Jubilee Act will free up resources for poverty reduction in some of the poorest countries in the world. I am proud that my colleagues had the foresight to support debt cancellation to help people in poverty," said Rep. Maxine Waters (D-CA), Chairwoman of the Subcommittee on Housing and Community Opportunity, and author of the legislation. "Debt cancellation allows poor countries to use their own money to address the needs of their people. It is simple, effective, and the right thing to do"
"Our first round of debt relief yielded results far beyond our expectations and has proven to be cost effective," stated Ranking Member Spencer Bachus (R-AL). "Debt relief serves the national security interests of the United States by helping to combat the hopelessness and poverty that allow instability and terrorism to thrive."
"Today we take a step widely hailed by particularly those who are concerned with the alleviation of poverty in other parts of the world. We take a step that does more than any other single step to reach that goal. We have had a problem in the world of economic growth occurring in ways that shut out a great majority of the people in various countries from the benefit. We need a coordinated strategy so that we can have growth but we have growth in an equitable way. Debt relief is an essential part of that overall strategy," said House Financial Services Committee Chairman Barney Frank (D-MA).
The Jubilee Act for Responsible Lending and Expanded Debt Cancellation builds on the successful international debt relief activities that began in 1996 - with 30 poor countries having receiving debt relief in the last 12 years. This bill builds on the immensely successful debt relief efforts that began more than a decade ago to provide debt relief for the world's poorest countries as an essential ingredient in the overall effort to reduce global poverty. These existing debt relief programs thus have freed up resources to reduce poverty in some of the world's poorest countries. These efforts require the country receiving the debt relief to use the savings for poverty reduction efforts. These efforts were first launched in 1996, when the World Bank and IMF launched the first "Highly Indebted Poor Countries Initiative (HIPC)." There have been follow-on efforts since then. Since 1996, more than 30 poor countries have received some form of debt relief, totaling approximately $80 billion.
H.R. 2634 also includes steps for ensuring countries benefiting from debt cancellation don't return to square one. This legislation calls for measures to help ensure that nations that benefit from debt cancellation do not acquire new debt and thus return to square one, including prioritizing grants over lending in future development assistance and adoption of a legal framework to prevent some creditors from profiting from debt relief by providing high-cost loans to countries that are newly debt-free.