Federal News Service May 20, 2004 Thursday
May 20, 2004 Thursday
HEADLINE: HEARING OF THE FOREIGN OPERATIONS, EXPORT FINANCING AND RELATED PROGRAMS SUBCOMMITTEE OF THE HOUSE HOUSE APPROPRIATIONS COMMITTEE
SUBJECT: FISCAL YEAR 2005 APPROPRIATIONS FOR TREASURY DEPARTMENT FOREIGN OPERATIONS
CHAIRED BY: REPRESENTATIVE JIM KOLBE (R-AZ)
WITNESS: JOHN TAYLOR, TREASURY UNDERSECRETARY FOR INTERNATIONAL AFFAIRS
LOCATION: 2359 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.
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REP. JESSE JACKSON JR. (D-IL): Thank you, Mr. Chairman.
And welcome, Undersecretary Taylor. Secretary Taylor, I have a couple of questions about debt relief in sub-Saharan Africa. Undersecretary, do you think that the rationale that's being used to eliminate Iraq's debt is sound? And if it is, shouldn't that rationale be applied to the countries of sub-Saharan Africa to maximize the effect of humanitarian and development assistance from the United States?
I know that Secretary Baker-former Secretary Baker has been spending considerable amount of time in Europe and traveling the world trying to have the debt of the people of Iraq lifted from the G- 8 countries and other governments that have obligations in Iraq. I was just wondering if the United States thought that the same rationale used in Iraq is a rationale that could be used in sub- Saharan Africa.
MR. TAYLOR: The rationale that has been the focus of debt relief in all cases is the idea of having debt get to a more sustainable level. And the work that Secretary Baker is involved in now involves some technical calculations. The IMF is participating in these technical calculations to determine what the size of the reduction in the debt would be needed to get Iraq to a situation where its fiscal situation is sustainable.
That kind of rationale is also used for the sub-Saharan African countries. There's measures of what sustainability means. For example, in the Heavily Indebted Poor Country Program, it's the amount of debt relative to exports, or the debt-to-export ratio, and that that number be 150 percent or less. So that's an example of the methodology being comparable.
Of course, the Heavily Indebted Poor Country Program has called for 100 percent debt relief on a bilateral basis. And the United States is offering 100 percent debt relief to all these countries. That's part of our participation in the Heavily Indebted Poor Country Program. So that's as much debt relief as you can give, 100 percent.
So I think your point is a good one. I think it's important to make comparisons like this. I think it does stand up to good comparison.
The Heavily Indebted Poor Country Program is not finished, of course. Not all the contries have gone throgh their completion point, and there's more debt relief that would take place with respect to the international financial institutions, the IMF and the World Bank. But on a bilateral basis, we're doing as much as you can possibly do.
REP. JACKSON: Mr. Secretary, as you know, most of Africa's foreign debt is illegitimate in nature because it was accumulated by unrepresentative regimes during the era of the Cold War patronage, when loans were made to corrupt leaders who used money for their own personal gain. And for example, former Zaire dictator Mobutu Sese Seko received more U.S. aid than the rest of sub-Saharan Africa combined during much of the Cold War, even though it was well known that it was being shifted to his private Swiss bank accounts. The people of the DRC, from my perspective, should not now have to pay back the loans that they never benefited from, when we had foreknowledge of where the loans were going.
And so when I ask this question, I'm wondering what the standard is when we try to make the DRC more sustainable. I know that Iraq takes great precedence because of the hour, but some African countries have also been making millennium challenges and making the case that their debts are overburdensome and they came from undemocratic regimes.
Let me ask you a question. Should a moratorium be declared on debt repayments by African countries until, number one, an inventory of these debts has been compiled, and two, the cost of 100 percent cancellation has been determined; these two studies are obviously providing a foundation for moving towards a just resolution of the continent's debt crisis?
MR. TAYLOR: I would say, Mr. Jackson, that the Heavily Indebted Poor Country Program is the way we should proceed this way.
Those countries were chosen as the ones that had the heavy debts, regardless of how they were accumulated, and the horrible ways you indicated are included. And the program is to reduce their debt to the United States, to cut-to forgive it to zero, 100 percent debt reduction. There's a question of the timing of that. I think that, as your question about the moratorium raises, we're committed to reduce it to zero.
Our budget request has $105 million for debt relief for the DRC. That is not enough to fully cut it to zero, as I think we've tried to make clear. We requested 300 million (dollars) in the past and were not appropriated any of it. So this time we requested 105 (million dollars), and I hope that will be-that amount will be appropriated, and then we'll have to see in the future how we get the rest of it done. But our commitment is to have the DRC debt fully forgiven.
REP. JACKSON: I thank the chairman for the time.
Thank you, Mr. Secretary.