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106th Congress                                            Rept. 106-483
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

=======================================================================



 
             DEBT RELIEF FOR POVERTY REDUCTION ACT OF 1999

                                _______
                                

                November 18, 1999.--Ordered to be printed

                                _______
                                

   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 1095]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 1095) to require the United States to 
take action to provide bilateral debt relief, and improve the 
provision of multilateral debt relief, in order to give a fresh 
start to poor countries, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Debt Relief for Poverty Reduction Act 
of 1999''.

SEC. 2. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF AND PROCEDURES FOR NEW 
                    LOANS, CREDITS, AND GUARANTEES.

  (a) Amendment to the Foreign Assistance Act of 1961.--The Foreign 
Assistance Act of 1961 (22 U.S.C. 2151 et seq.) is amended by adding at 
the end the following:

   ``PART VI--CANCELLATION OF DEBT OWED TO THE UNITED STATES BY POOR 
                               COUNTRIES

``SEC. 901. CANCELLATION OF DEBT.

  ``(a) Cancellation of Concessional Debt.--
          ``(1) In general.--Subject to amounts provided in advance in 
        appropriations Acts, the President shall, prior to September 
        30, 2004, cancel all amounts owed to the United States (or any 
        agency of the United States) by countries eligible under 
        section 902 as a result of concessional loans made or credits 
        extended prior to June 20, 1999, under any of the provisions of 
        law described in paragraph (2).
          ``(2) Provisions of law.--The provisions of law described in 
        this paragraph are the following:
                  ``(A) Part I of this Act, including chapter 4 of part 
                II of this Act, or predecessor foreign economic 
                assistance legislation.
                  ``(B) Title I of the Agricultural Trade Development 
                and Assistance Act of 1954 (7 U.S.C. 1701 et seq.).
  ``(b) Cancellation of Nonconcessional Debt.--
          ``(1) In general.--Subject to amounts provided in advance in 
        appropriations Acts, the President shall, prior to September 
        30, 2004, cancel all amounts owed to the United States (or any 
        agency of the United States) by countries eligible under 
        section 902 as a result of nonconcessional loans made, 
        guarantees or insurance issued, or credits extended prior to 
        June 20, 1999, under any of the provisions of law described in 
        paragraph (2).
          ``(2) Provisions of law.--The provisions of law described in 
        this paragraph are the following:
                  ``(A) Sections 221 and 222 of this Act.
                  ``(B) The Arms Export Control Act (22 U.S.C. 2751 et 
                seq.).
  ``(c) Immediate Relief From Debt Service Payments.--A country 
eligible under section 902 for debt cancellation under this section 
shall not be obligated to make debt service payments with respect to 
amounts owed to the United States for which debt cancellation is to be 
provided beginning on the date on which the country is determined to be 
so eligible under section 902 so long as the country remains in 
compliance with the other provisions of this part.

``SEC. 902. ELIGIBLE COUNTRIES.

  ``(a) In General.--Except as provided in subsection (b) and subject 
to the fulfillment of the additional requirement in subsection (c), a 
country that is performing satisfactorily under an economic reform 
program shall be eligible for cancellation of debt under section 901 if 
the country--
          ``(1) as of December 31, 2000, is eligible to borrow from the 
        International Development Association;
          ``(2) as of December 31, 2000, is not eligible to borrow from 
        the International Bank for Reconstruction and Development, or 
        is Nigeria; and
          ``(3)(A) has outstanding public and publicly guaranteed debt, 
        the net present value of which on December 31, 1996, was at 
        least 150 percent of the average annual value of the exports of 
        the country for the period 1994 through 1996; or
          ``(B) has outstanding public and publicly guaranteed debt, 
        the net present value of which, as of the date the President 
        determines that the country is eligible for debt relief under 
        all the criteria set forth in this section, is--
                  ``(i) at least 150 percent of the annual value of the 
                exports of the country, for the most recent year for 
                which such information is available; or
                  ``(ii) at least 250 percent of the annual fiscal 
                revenues of the country, and the country has a minimum 
                ratio of exports to gross domestic product of 30 
                percent and a minimum ratio of fiscal revenues of the 
                country to gross domestic product of 15 percent, for 
                the most recent year for which such information is 
                available.
  ``(b) Exceptions.--A country shall not be eligible for cancellation 
of debt under section 901 if--
          ``(1) the government of the country has an excessive level of 
        military expenditures;
          ``(2) the government of the country has repeatedly provided 
        support for acts of international terrorism, as determined by 
        the Secretary of State under section 6(j)(1) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)) or 
        section 620A(a) of the Foreign Assistance Act of 1961 (22 
        U.S.C. 2371(a));
          ``(3) the government of the country is failing to cooperate 
        on international narcotics control matters;
          ``(4) the government of the country (including its military 
        or other security forces) engages in a consistent pattern of 
        gross violations of internationally recognized human rights;
          ``(5) the government of the country supports or condones the 
        practice of slavery or there is documented evidence of the 
        existence of slavery in the country and the government is not 
        making a concerted effort to eradicate the practice; or
          ``(6) the country is located in Southeast Asia, and the 
        government of the country is failing to fully cooperate with 
        the United States on all issues involving United States 
        prisoners of war/missing in action (POW/MIA), as determined by 
        the Secretary of State.
  ``(c) Additional Requirement.--A country which is otherwise eligible 
to receive cancellation of debt under section 901 may receive such 
cancellation only if--
          ``(1) the government of the country has established, through 
        transparent and participatory processes, including 
        participation of civil society--
                  ``(A) a human development fund (hereinafter referred 
                to as the `Human Development Fund')--
                          ``(i) the resources of which shall be 
                        dedicated to reducing the number of persons 
                        living in poverty, expanding access of the 
                        poorest members of society to basic social 
                        services, including education, health, clean 
                        water and sanitation, and preventing the 
                        degradation of the environment; and
                          ``(ii) into which shall be deposited all 
                        savings generated by debt reduction pursuant to 
                        section 901 and section 2(c) of the Debt Relief 
                        for Poverty Reduction Act of 1999;
                  ``(B) arrangements to ensure that all expenditures 
                from the Human Development Fund during a year will be 
                used to the extent possible to increase annual 
                expenditures for human development by the government 
                above the greater of--
                          ``(i) the total amount of annual expenditures 
                        for human development by the government for the 
                        preceding year; or
                          ``(ii) the average total amount of such 
                        expenditures for the 3 years immediately 
                        preceding the year in which such fund is 
                        established; and
                  ``(C) arrangements for monitoring the operations and 
                financial transactions and accounts of the Human 
                Development Fund by an oversight body which includes 
                representatives of civil society; or
          ``(2) the country has developed and committed to an 
        integrated strategy, of the type described in section 
        1624(a)(1) of the International Financial Institutions Act, for 
        poverty reduction developed in cooperation with the 
        International Bank for Reconstruction and Development and the 
        International Monetary Fund, and in consultation with civil 
        society, which--
                  ``(A) uses economic reform and technical assistance 
                programs developed and jointly administered by the 
                International Bank for Reconstruction and Development 
                and the International Monetary Fund;
                  ``(B) includes monitorable poverty reduction goals 
                (such as increasing literacy, reducing infant and child 
                mortality, lowering the incidence of AIDS, and 
                improving environmental conditions) developed in 
                cooperation with the International Bank for 
                Reconstruction and Development, relevant agencies of 
                the United Nations, civil society groups, and other 
                appropriate organizations;
                  ``(C) takes steps so that the financial benefits from 
                debt relief pursuant to the modified Heavily Indebted 
                Poor Countries (HIPC) Initiative, including savings 
                realized as a result of debt relief pursuant to section 
                901 and section 2(c) of the Debt Relief for Poverty 
                Reduction Act of 1999, are applied to poverty reduction 
                programs dedicated to achieving the goals described in 
                subparagraph (B);
                  ``(D) includes transparent policymaking and budget 
                procedures, good governance, and anti-corruption 
                measures; and
                  ``(E) broadens public participation and popular 
                understanding of the principles and goals of poverty 
                reduction, sustainable development, and good 
                governance.
On request of the country, the Secretary of the Treasury shall provide 
or otherwise arrange for technical assistance to the country regarding 
the establishment and management of the Human Development Fund in 
accordance with paragraph (1) of this subsection. The Secretary of the 
Treasury should also encourage international financial institutions to 
provide funds for the country to hire technical assistanceconsultants 
regarding the establishment and management of the Human Development 
Fund in accordance with paragraph (1) of this subsection.
  ``(d) Definition.--In this section, the term `modified Heavily 
Indebted Poor Countries Initiative' means the multilateral debt 
initiative presented in the Report of G-7 Finance Ministers on the Koln 
Debt Initiative to the Koln Economic Summit, Cologne, Germany, held 
from June 18-20, 1999.

``SEC. 903. PRIORITY.

  ``In carrying out section 901, the President should seek to leverage 
scarce foreign assistance dollars and give priority to those heavily 
indebted poor countries with demonstrated need and the capacity to use 
such relief effectively.

``SEC. 904. SPECIAL PROVISIONS.

  ``(a) Cancellation of Debt Not Considered To Be Assistance.--Except 
as the President may otherwise determine for reasons of national 
security, a cancellation of debt under section 901 shall not be 
considered to be assistance for purposes of any provision of law 
limiting assistance to a country.
  ``(b) Inapplicability of Certain Prohibitions Relating to 
Cancellation of Debt.--The authority to provide for cancellation of 
debt under section 901 may be exercised notwithstanding section 620(r) 
of this Act or any similar provision of law.
  ``(c) Other Debt Cancellation Authorities.--The authority to cancel 
debt under section 901 is in addition to the authority to cancel debt 
under any other provision of law and does not in any way limit or 
otherwise affect such other authority.
  ``(d) Child Labor and Workers Rights.--In exercising the authority 
under section 901, the President shall take into account the country's 
record on international child labor and international workers rights.
  ``(e) Female Genital Mutilation.--In exercising the authority under 
section 901, the President shall take into account the country's record 
with regard to female genital mutilation.

``SEC. 905. ANNUAL REPORTS TO THE CONGRESS.

  ``(a) In General.--Not later than December 31 of each year, the 
President shall prepare and transmit to the appropriate congressional 
committees a report, which shall be made available to the public, 
concerning the cancellation of debt under section 901 and section 2(c) 
of the Debt Relief for Poverty Reduction Act of 1999, determinations 
made under section 904(a), activities undertaken under section 2(d) of 
the Debt Relief for Poverty Reduction Act of 1999, the progress made in 
accomplishing the purposes of such section 2(d), and other debt 
restructuring activities for the prior fiscal year. The report shall 
also include a list of the countries that have received debt 
cancellation under section 901 and a list of the countries that, 
although eligible under section 902(a)(3)(A), have been denied debt 
cancellation under section 902 and the reasons therefor. The report 
shall also include a description of the extent to which countries that 
receive debt cancellation under section 901 or under section 2(c)(1) of 
the Debt Relief for Poverty Reduction Act of 1999 have complied with 
the requirements described in section 902(c) or section 2(c)(4) of such 
Act, respectively.
  ``(b) Definition.--In this section, the term `appropriate 
congressional committees' means--
          ``(1) the Committee on Banking and Financial Services, the 
        Committee on Appropriations, and the Committee on International 
        Relations of the House of Representatives; and
          ``(2) the Committee on Banking, Housing, and Urban Affairs, 
        the Committee on Foreign Relations, and the Committee on 
        Appropriations of the Senate.

``SEC. 906. SENSE OF THE CONGRESS.

  ``It is the sense of the Congress that the amounts that would 
otherwise be provided by the United States for development aid or other 
debt relief should not be reduced on account of any appropriations made 
pursuant to section 907.

``SEC. 907. AUTHORIZATION OF APPROPRIATIONS.

  ``For the cost (as defined in section 502(5) of the Federal Credit 
Reform Act of 1990) of the cancellation of any debt under section 901 
of this Act, there are authorized to be appropriated to the President 
such sums as may be necessary for each of the fiscal years 2000 through 
2004.''.
  (b) Annual Report by the Secretary of the Treasury on Paris Club Debt 
Restructuring Actions and Cancellations.--Not later than January 1, 
2000, and not later than January 1 of each year thereafter, the 
Secretary of the Treasury shall prepare and submit to the Congress a 
report containing the following:
          (1) A description of debt restructuring actions and 
        cancellations undertaken by the United States as a member of 
        the Paris Club of Official Creditors for the prior fiscal year, 
        including--
                  (A)(i) the amount of debt restructured with respect 
                to each such debtor country;
                  (ii) the new maturity or maturities of each such debt 
                restructured;
                  (iii) the new interest rates and other costs of each 
                such debt restructured; and
                  (iv) any other terms and conditions of each such debt 
                restructured; and
                  (B) an assessment of the debt restructuring described 
                in subparagraph (A), including an assessment of the 
                effect of the restructuring on the debt service 
                payments of the debtor country.
          (2) A description, based on the most recently available 
        information, of all outstanding amounts owed to the United 
        States Government by foreign countries as a result of loans 
        made, guarantees or insurance issued, or credits extended under 
        any provision of law, including the amount owed by each country 
        under each provision of law.
  (c) Cancellation of Debt Owed to the Export-Import Bank or the 
Commodity Credit Corporation.--
          (1) In general.--Subject to amounts provided in advance in 
        appropriations Acts, the President shall cancel all amounts 
        owed to--
                  (A) the Export-Import Bank of the United States by 
                each country that the President determines is eligible 
                for debt cancellation under this paragraph, as a result 
                of loans made, or guarantees or insurance issued, prior 
                to June 20, 1999, under the Export Import Bank Act of 
                1945, or
                  (B) the Commodity Credit Corporation by each country 
                that the President determines is eligible for debt 
                cancellation under this paragraph, as a result of loans 
                made, or guarantees issued, prior to June 20, 1999, 
                under section 5(f) of the Commodity Credit Corporation 
                Charter Act (15 U.S.C. 714c(f)), section 201 of the 
                Agricultural Trade Act of 1978 (7 U.S.C. 5621), or 
                section 202 of such Act (7 U.S.C. 5622), or predecessor 
                provisions under the Food for Peace Act of 1966.
        A country eligible under paragraph (2) for debt cancellation 
        under this paragraph shall not be obligated to make debt 
        service payments with respect to amounts owed to the United 
        States for which debt cancellation is to be provided beginning 
        on the date on which the country is determined to be so 
        eligible under paragraph (2) so long as the country remains in 
        compliance with the other provisions of this subsection.
          (2) Eligible countries.--Except as provided in paragraph (3) 
        and subject to the fulfillment of the additional requirement in 
        paragraph (4), a country that is performing satisfactorily 
        under an economic reform program shall be eligible for debt 
        cancellation under paragraph (1) if the country--
                  (A) as of December 31, 2000, is eligible to borrow 
                from the International Development Association;
                  (B) as of December 31, 2000, is not eligible to 
                borrow from the International Bank for Reconstruction 
                and Development, or is Nigeria; and
                  (C)(i) has outstanding public and publicly guaranteed 
                debt, the net present value of which on December 31, 
                1996, was at least 150 percent of the average annual 
                value of the exports of the country for the period 1994 
                through 1996; or
                  (ii) has outstanding public and publicly guaranteed 
                debt, the net present value of which, as of the date 
                the President determines that the country is eligible 
                for debt relief under all the criteria set forth in 
                this paragraph, is--
                          (I) at least 150 percent of the annual value 
                        of the exports of the country for the most 
                        recent year for which such information is 
                        available; or
                          (II) at least 250 percent of the annual 
                        fiscal revenues of the country, and the country 
                        has a minimum ratio of exports to gross 
                        domestic product of 30 percent, and a minimum 
                        ratio of fiscal revenues to gross domestic 
                        product of 15 percent, for the most recent year 
                        for which such information is available.
          (3) Exceptions.--A country shall not be eligible for debt 
        cancellation under paragraph (1) if--
                  (A) the government of the country has an excessive 
                level of military expenditures;
                  (B) the government of the country has repeatedly 
                provided support for acts of international terrorism, 
                as determined by the Secretary of Stateunder section 
6(j)(1) of the Export Administration Act of 1979 (50 U.S.C. App. 
2405(j)(1)) or section 620A(a) of the Foreign Assistance Act of 1961 
(22 U.S.C. 2371(a));
                  (C) the government of the country is failing to 
                cooperate on international narcotics control matters;
                  (D) the government of the country (including its 
                military or other security forces) engages in a 
                consistent pattern of gross violations of 
                internationally recognized human rights;
                  (E) the government of the country supports or 
                condones the practice of slavery or there is documented 
                evidence of the existence of slavery in the country and 
                the government is not making a concerted effort to 
                eradicate the practice; or
                  (F) the country is located in Southeast Asia, and the 
                government of the country is failing to fully cooperate 
                with the United States on all issues involving United 
                States prisoners of war/missing in action (POW/MIA), as 
                determined by the Secretary of State.
          (4) Requirement for an action plan for human development.--A 
        country which is otherwise eligible for debt cancellation under 
        paragraph (1) may receive such cancellation only if--
                  (A) the government of the country has established, 
                through transparent and participatory processes, 
                including participation of civil society--
                          (i) a human development fund (hereinafter 
                        referred to as the ``Human Development 
                        Fund'')--
                                  (I) the resources of which shall be 
                                dedicated to reducing the number of 
                                persons living in poverty, expanding 
                                access of the poorest members of 
                                society to basic social services, 
                                including education, health, clean 
                                water and sanitation, and preventing 
                                the degradation of the environment; and
                                  (II) into which shall be deposited 
                                all savings generated by debt 
                                cancellation received pursuant to 
                                section 901 of the Foreign Assistance 
                                Act of 1961 or this subsection;
                          (ii) arrangements to ensure that all 
                        expenditures from the Human Development Fund 
                        during a year will be used, to the extent 
                        possible, to increase annual expenditures for 
                        human development by the government above the 
                        greater of--
                                  (I) the total amount of annual 
                                expenditures for human development by 
                                the government for the preceding year; 
                                or
                                  (II) the average total amount of such 
                                expenditures for the 3 years 
                                immediately preceding the year in which 
                                such fund is established; and
                          (iii) arrangements for monitoring the 
                        operations and financial transactions and 
                        accounts of the Human Development Fund by an 
                        oversight body which includes representatives 
                        of civil society; or
                  (B) the country has developed and committed to an 
                integrated strategy for poverty reduction developed in 
                cooperation with the International Bank for 
                Reconstruction and Development and the International 
                Monetary Fund, and in consultation with civil society, 
                which--
                          (i) uses economic reform and technical 
                        assistance programs developed and jointly 
                        administered by the International Bank for 
                        Reconstruction and Development and the 
                        International Monetary Fund;
                          (ii) includes monitorable poverty reduction 
                        goals (such as increasing literacy, reducing 
                        infant and child mortality, lowering the 
                        incidence of AIDS, and improving environmental 
                        conditions) developed in cooperation with the 
                        International Bank for Reconstruction and 
                        Development, relevant agencies of the United 
                        Nations, civil society groups, and other 
                        appropriate organizations;
                          (iii) takes steps so that the financial 
                        benefits from debt relief pursuant to the 
                        modified Heavily Indebted Poor Countries (HIPC) 
                        Initiative, including savings realized as a 
                        result of debt cancellation under section 901 
                        of the Foreign Assistance Act of 1961 and this 
                        subsection, are applied to poverty reduction 
                        programs dedicated to achieving the goals 
                        described in clause (ii) of this subparagraph;
                          (iv) includes transparent policymaking and 
                        budget procedures, good governance, and anti-
                        corruption measures; and
                          (v) broadens public participation and popular 
                        understanding of the principles and goals of 
                        poverty reduction, sustainable development, and 
                        good governance.
          (5) Definition of modified heavily indebted poor countries 
        (hipc) initiative.--For purposes of this subsection, the term 
        ``modified Heavily Indebted Poor Countries (HIPC) Initiative'' 
        means the multilateral debt initiative presented in the Report 
        of G-7 Finance Ministers on the Koln Debt Initiative to the 
        Koln Economic Summit, Cologne, 18-20 June, 1999.
          (6) Priority.--In carrying out this subsection, the President 
        should seek to leverage scarce foreign assistance dollars and 
        give priority to those heavily indebted poor countries with 
        demonstrated need and the capacity to use such relief 
        effectively.
          (7) Child labor and workers rights.--In exercising the 
        authority under this subsection, the President shall take into 
        account the country's record on international child labor and 
        international workers rights.
          (8) Female genital mutliation.--In exercising the authority 
        under this subsection, the President shall take into account 
        the country's record with regard to female gential mutilation.
          (9) Other debt reduction authorities.--The authority to 
        cancel debt under this subsection is in addition to the 
        authority to reduce debt under any other provision of law and 
        does not in any way limit or otherwise affect such other 
        authority.
          (10) Authorization of appropriations.--For the cost (as 
        defined in section 502(5) of the Federal Credit Reform Act of 
        1990) of the cancellation of any debt under paragraph (1) of 
        this subsection, there are authorized to be appropriated to the 
        President such sums as may be necessary for each of the fiscal 
        years 2000 through 2004.
  (d) Ensuring Burdensharing by Other Creditor Countries.--In order to 
accelerate bilateral debt relief and promote human and economic 
development and poverty alleviation in countries eligible for debt 
cancellation under section 901 of the Foreign Assistance Act of 1961 
(as added by subsection (a) of this section) or under subsection (c) of 
this section, the Congress urges the President, immediately after the 
date of the enactment of this Act, to establish efforts with countries 
that are members of the Paris Club of Official Creditors, and, if 
necessary, with other creditors, to accomplish the following by 
September 30, 2004:
          (1) The cancellation of all amounts owed to each such member 
        country by countries eligible for debt cancellation as of their 
        respective decision points, and by Nigeria, as a result of 
        concessional loans made or credits extended prior to June 20, 
        1999, by each such country.
          (2) The cancellation of all amounts owed to each such member 
        country by countries eligible for debt cancellation as of their 
        respective decision points, and by Nigeria, as a result of 
        nonconcessional loans made, guarantees or insurance issued, or 
        credits extended prior to June 20, 1999, by each such country.
          (3) The establishment of procedures by the Club to ensure 
        greater transparency in the decision-making process, including 
        publication of information for each restructuring action 
        undertaken by the Club as to the amount of sovereign debt 
        restructured, as to whom amounts are owed and by how much each 
        is owed, disaggregated by each country, as to how much each 
        debtor country owes each international financial institution, 
        as to new maturity or maturities of the restructured debts, as 
        to new interest rate and other costs associated with the 
        restructured debts, and as to any other new terms or 
        conditions. With due specificity, such information shall be 
        contrasted with such amounts, terms, and conditions in effect 
        before the restructuring, and offer an assessment of the 
        effects the restructuring will have on the country's debt 
        servicing.
  (e) Definition of Decision Point.--In subsection (d), the term 
``decision point'' means the point in time at which the Executive 
Boards of the International Bank for Reconstruction and Development and 
the International Monetary Fund review the debt sustainability analysis 
for a country and decide that the country is eligible for debt relief 
under the modified Heavily Indebted Poor Countries Initiative.
  (f) Sense of Congress.--It is the sense of the Congress that any 
assistance proposed to be provided by the United States to a country 
that receives cancellation of debt under this section should be in the 
form of grants only.

SEC. 3. ACTIONS TO IMPROVE THE PROVISION OF MULTILATERAL DEBT RELIEF 
                    AND PROCEDURES FOR NEW LENDING.

  Title XVI of the International Financial Institutions Act (22 U.S.C. 
262p-262p-5) is amended by adding at the end the following:

``SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED POOR COUNTRIES 
                    INITIATIVE; ENSURING EQUITABLE BURDEN SHARING.

  ``(a) Improvement of the HIPC Initiative.--In order to accelerate 
multilateral debt relief and promote human and economic development and 
poverty alleviation in heavily indebted poor countries the Congress 
urges the President to commence immediately efforts, within the Paris 
Club of Official Creditors, as well as the International Bank for 
Reconstruction and Development (World Bank), the International Monetary 
Fund (IMF), and other appropriate multilateral development institutions 
to accomplish the following modifications in the Heavily Indebted Poor 
Countries (HIPC) Initiative:
          ``(1) Prohibition on structural adjustment programs.--The 
        provision of debt reduction under the modified HIPC Initiative 
        shall not be conditioned on any country adopting or 
        implementing any structural adjustment or stabilization program 
        of the Enhanced Structural Adjustment Facility of the IMF or 
        any other structural adjustment or stabilization program 
        operated solely or jointly by the IMF, or any other program of 
        the IMF.
          ``(2) Promotion of poverty alleviation and environmental 
        protection.--The social and economic reforms on which debt 
        reduction under the modified HIPC Initiative is conditioned 
        shall incorporate effective measures for poverty reduction and 
        environmental protection.
          ``(3) Revision of country eligibility requirement.--A country 
        shall be regarded as having an unsustainable debt burden for 
        purposes of qualifying for debt reduction (or for further debt 
        reduction) under the modified HIPC Initiative if the country is 
        Nigeria or has outstanding public and publicly guaranteed debt, 
        the net present value of which at the decision point, is--
                  ``(A) at least 150 percent of the annual value of the 
                exports of the country for the most recent year for 
                which such information is available; or
                  ``(B) at least 250 percent of the annual fiscal 
                revenues of the country, and the country has a minimum 
                ratio of exports to gross domestic product of 30 
                percent, and a minimum ratio of fiscal revenues to 
                gross domestic product of 15 percent, for the most 
                recent year for which such information is available.
          ``(4) Requirement for an action plan for human development.--
        Debt reduction under the modified HIPC Initiative shall not be 
        provided for the benefit of a country unless the government of 
        the country has established, through transparent and 
        participatory processes, including the participation of civil 
        society--
                  ``(A) a plan of action for human development (in this 
                section referred to as the `Action Plan') which 
                includes policies, programs, and projects designed to 
                reduce the number of persons living in poverty, expand 
                access of the poorest members of society to basic 
                social services, including health, education, clean 
                water, and sanitation, and prevent the degradation of 
                the environment;
                  ``(B) a human development fund (in this section 
                referred to as the `Human Development Fund')--
                          ``(i) the resources of which are dedicated to 
                        achieving the purposes of the Action Plan; and
                          ``(ii) into which are required to be 
                        deposited all savings generated by debt 
                        reduction provided for the benefit of the 
                        country under the modified HIPC Initiative and 
                        under other debt reduction programs;
                  ``(C) arrangements to ensure that all expenditures 
                from the Human Development Fund during a year will be 
                used, to the extent possible, to increase annual 
                expenditures for human development by the government 
                above the greater of--
                          ``(i) the total amount of annual expenditures 
                        for human development by the government for the 
                        preceding year; or
                          ``(ii) the average total amount of such 
                        expenditures for the 3 years immediately 
                        preceding the year in which such fund is 
                        established; and
                  ``(D) arrangements for monitoring the operations, 
                financial transactions, and accounts of the Human 
                Development Fund by an oversight body which includes 
                representatives of civil society, and a majority of the 
                members of which are citizens of the country.
        On request of the country, the World Bank should provide 
        technical assistance to the country regarding the establishment 
        and management of the Human Development Fund in accordance with 
        the preceding sentence.
          ``(5) Requirement of southeast asian countries to cooperate 
        with united states on pow/mia issues.--Debt reduction under the 
        modified HIPC Initiative shall not be provided for the benefit 
        of a country located in Southeast Asia if the government of the 
        country is failing to fully cooperate with the United States on 
        all issues involving United States prisoners of war/missing in 
        action (POW/MIA), as determined by the Secretary of State.
          ``(6) Requirement for a natural resources development plan.--
                  ``(A) In general.--Debt reduction under the modified 
                HIPC Initiative shall not be provided for the benefit 
                of a country unless the government of the country has 
                established through transparent and participatory 
                processes (including the participation of civil 
                society) a plan (in this section referred to as the 
                `Natural Resources Development Plan'), covering at 
                least a 5-year period, for the development of the 
                country's natural resources in a manner that will 
                benefit the population of the country. The plan shall 
                specify at least the following:
                          ``(i) The natural resources that are being 
                        developed or will be developed in the country.
                          ``(ii) The profits and other benefits that 
                        the government estimates will accrue to the 
                        companies involved in the development of such 
                        natural resources.
                          ``(iii) The corporate tax revenues, land use 
                        fees, resource extraction fees, export tariffs, 
                        and other revenues that the government 
                        estimates will be raised as a result of the 
                        development and extraction of such natural 
                        resources.
                          ``(iv) The plans of the government for the 
                        use of the revenues so raised.
                          ``(v) The plans of the government to conserve 
                        such natural resources and protect the 
                        environment of the country.
                          ``(vi) The plans of the government to protect 
                        public health and safety and the rights of 
                        workers.
                          ``(vii) The plans of the government to 
                        provide for the training and education of the 
                        local population and to ensure that the 
                        companies involved in the development of such 
                        natural resources provide members of the local 
                        population opportunities for employment and 
                        advancement.
                          ``(viii) Any other plans of the government to 
                        ensure a fair return to the country and its 
                        people for the development of such natural 
                        resources.
                  ``(B) Transparency.--All contracts between the 
                government (including any enterprise owned or 
                controlled by the government) and a foreign or 
                multinational corporation for the development of 
                natural resources of the country shall be made 
                available to the public.
                  ``(C) Assistance.--The World Bank, the African 
                Development Bank, the IMF, or other appropriate 
                multilateral development institutions shall, under the 
                modified HIPC Initiative, provide assistance to 
                countries in developing their Natural Resources 
                Development Plans and in negotiating or renegotiating 
                equitable contracts with foreign or multinational 
                corporations for the development of natural resources.
          ``(7) Amount of debt reduction.--The amount of debt reduction 
        provided under the modified HIPC Initiative for the benefit of 
        a country with an unsustainable debt burden shall be sufficient 
        to help catalyze sustainable growth and poverty reduction, by 
        reducing--
                  ``(A) the net present value of the outstanding public 
                and publicly guaranteed debt of the country to less 
                than 100 percent of the value of the annual exports of 
                the country; and
                  ``(B) the amount of annual payments due on such 
                public and publicly guaranteed debt to a percentage of 
                government revenues, not greater than 10 percent, that 
                will facilitate higher levels of expenditure in areas 
                that have been identified as key to accelerated poverty 
                reduction as well as ensure that the country is able to 
                meet its current and future external debt-service 
                obligations in full, without recourse to debt relief, 
                rescheduling, or the accumulation of arrears.
          ``(8) Transparency and participation in hipc decision 
        making.--All decisions under the modified HIPC Initiative 
        concerning the amount, terms and conditions, and timing of debt 
        relief for a country, and the processes by which such decisions 
        are made, shall be subject to procedures which--
                  ``(A) are transparent, including publication of the 
                content of the decisions and of all relevant 
                analytical, legal, and policy documents, including Debt 
                Sustainability Analyses, Policy Framework Papers, debt 
                relief agreements, and national development programs 
                and budgets;
                  ``(B) are participatory, including the participation 
                of civil society and organizations with social sector 
                expertise, including United Nations agencies; and
                  ``(C) require that the published content of the 
                decisions and documents described in subparagraph (A) 
                of this paragraph that affect or pertain to debt relief 
                for the country to be provided to the relevant 
                oversight body referred to in paragraph (4), and 
                require that such oversight body be consulted in the 
                making of key decisions regarding such debt relief.
          ``(9) Special provisions.--
                  ``(A) Debt reduction under the modified HIPC 
                Initiative for the benefit of a country that has 
                demonstrated a sustained commitment to poverty 
                alleviation shall be provided in a greater amount or 
                more quickly than would otherwise be the case under 
                that Initiative.
                  ``(B) A country that is emerging from civil conflict 
                or that has recently suffered a major natural disaster 
                should receive special consideration for debt relief 
                under the modified HIPC Initiative, notwithstanding the 
                country's record of performance under the country's 
                program of social and economic reform.
          ``(10) HIPC review.--The Secretary of the Treasury, after 
        consulting with the Committees on Banking and Financial 
        Services and on International Relations of the House of 
        Representatives and the Committees on Foreign Relations and on 
        Banking, Housing, and Urban Affairs of the Senate, shall make 
        every effort (including instructing the United States Executive 
        Directors at the IMF and the World Bank) to ensure that an 
        external assessment of the modified HIPC Initiative, including 
        the reformed ESAF program as it relates to that Initiative, 
        take place by December 31, 2001, incorporating the views of 
        debtor governments and civil society, and that such assessment 
        be made public and include--
                  ``(A) an analysis of the contribution of the modified 
                HIPC Initiative to the poverty reduction and social 
                development goals for the 21st century established by 
                the Development Assistance Committee of the 
                Organization for Economic Cooperation and Development; 
                and
                  ``(B) recommendations to the IMF, World Bank, and the 
                governments of the United States and other creditor 
                countries that may be necessary to strengthen the 
                contribution of the modified HIPC Initiative to the 
                poverty reduction and social goals referred to in 
                subparagraph (A).
          ``(11) Termination of the modified hipc initiative.--The 
        modified HIPC Initiative shall not terminate until all the debt 
        reduction contemplated by this section has been carried out.
  ``(b) Promotion of Equitable Burden Sharing.--In order to promote 
equitable burden-sharing by bilateral, multilateral, and private 
creditors under the modified HIPC Initiative, the Congress urges the 
President to commence immediately efforts to ensure that such creditors 
draw upon their own resources to finance debt reduction under the 
modified HIPC Initiative to the extent possible without diverting funds 
from other high priority poverty alleviation programs.
  ``(c) Contributions to the HIPC Trust Fund.--For payment to the 
Heavily Indebted Poor Countries Trust Fund of the International Bank 
for Reconstruction and Development, but only for purposes of debt 
relief, there are authorized to be appropriated to the President such 
sums as may be necessary for fiscal years 2000 through 2004, except 
that if, with respect to fiscal year 2001, 2002, 2003, or 2004, the 
President has not determined that, during the then preceding fiscal 
year--
          ``(1) satisfactory progress was made in accomplishing the 
        improvements in the HIPC initiative described in subsections 
        (a) and (b); and
          ``(2) the United States' contributions to the reduction of 
        multilateral debt pursuant to the modified HIPC Initiative were 
        matched, by a ratio of at least two to one, by resources 
        provided in the aggregate by all other donors,
then no sums are authorized to be appropriated for such purpose for the 
fiscal year.
  ``(d) Sense of Congress.--It is the sense of Congress that the 
amounts that would otherwise be provided by the United States for 
development aid or other debt relief should not be reduced on account 
of any appropriations pursuant to subsection (c).
  ``(e) Report to the Congress.--Not later than December 31 of each 
year, the President shall submit to the Committees on Banking and 
Financial Services, on Appropriations, and on International Relations 
of the House of Representatives and the Committees on Foreign 
Relations, on Banking, Housing, and Urban Affairs, and on 
Appropriations of the Senate a report, which shall be made available to 
the public, on the activities undertaken under this section, and on the 
progress made in accomplishing the purposes of this section, for the 
prior fiscal year. The report shall include a list of the countries 
that have received debt relief under the original or modified HIPC 
Initiative, a list of the countries whose request for such debt relief 
has been denied and the reasons therefor, and a list of the countries 
whose requests for such debt relief are under consideration. The report 
shall also include a description of the extent to which countries that 
receive debt relief under the modified HIPC Initiative have complied 
with the requirements described in subsection (a)(4).
  ``(f) Definitions.--In this section:
          ``(1) Modified hipc initiative.--The term `modified HIPC 
        Initiative' means the multilateral debt initiative presented in 
        the Report of the G-7 Finance Ministers on the Koln Debt 
        Initiative to the Koln Economic Summit, Cologne, 18-20 June, 
        1999.
          ``(2) Decision point.--The term `decision point' means the 
        point in time at which the Executive Boards of the 
        International Bank for Reconstruction and Development and the 
        International Monetary Fund review the debt sustainability 
        analysis for a country and decide that the country is eligible 
        for debt relief under the modified Heavily Indebted Poor 
        Countries Initiative.

``SEC. 1624. REFORM OF THE ENHANCED STRUCTURAL ADJUSTMENT FACILITY.

  ``The Secretary of the Treasury shall instruct the United States 
Executive Directors at the International Bank for Reconstruction and 
Development and the International Monetary Fund to use the voice and 
vote of the United States to promote the establishment of poverty 
reduction strategy policies and procedures at the International Bank 
for Reconstruction and Development and the International Monetary Fund 
which support countries' efforts to honor the commitments as set forth 
in lending operations under programs developed and jointly administered 
by the International Bank for Reconstruction and Development and the 
International Monetary Fund that have the following components:
          ``(1) The development of country-specific poverty reduction 
        strategies (Poverty Reduction Strategies) under the leadership 
        of such countries, that--
                  ``(A) will be set out in poverty reduction strategy 
                papers (PRSPs) to provide the basis for the lending 
                operations of the International Development Association 
                (IDA) and the Enhanced Structural Adjustment Facility 
                and its successors (ESAF);
                  ``(B) will reflect the role of the International Bank 
                for Reconstruction and Development in social sector 
                development, structural policies, and poverty 
                reduction, and the role of the International Monetary 
                Fund in macroeconomic issues; and
                  ``(C) will make the advice and operations of the 
                International Monetary Fund and the International Bank 
                for Reconstruction and Development fully consistent 
                with the objectives of poverty reduction and broad-
                based growth; and
                  ``(D) should include--
                          ``(i) a participatory poverty assessment, 
                        undertaken as a systematic part of the design 
                        of the Poverty Reduction Strategy, involving 
                        collaboration between the government, civil 
                        society, the International Bank for 
                        Reconstruction and Development, organizations 
                        with expertise in the social sector, including 
                        United Nations agencies, and donors, which 
                        analyzes, among other things, the economic and 
                        social needs of the poor and the policy reforms 
                        and public investments that will best address 
                        these needs;
                          ``(ii) social impact assessments, undertaken 
                        as a systematic part of the design of the 
                        Poverty Reduction Strategy, involving 
                        collaboration between the government, civil 
                        society, the International Bank for 
                        Reconstruction and Development, and 
                        organizations with expertise in the social 
                        sector, including United Nations agencies, and 
                        donors, which analyze the impact of policies 
                        implemented under the Poverty Reduction 
                        Strategy and related lending operations and 
                        which are completed before International Bank 
                        for Reconstruction and Development and 
                        International Monetary Fund Executive Board 
                        consideration of such operations;
                          ``(iii) explicit consideration of the short- 
                        and long-term tradeoffs between alternative 
                        policy decisions, such as the distributional, 
                        equity, and poverty reduction implications of 
                        monetary and fiscal policies or the pace and 
                        sequencing of structural reforms;
                          ``(iv) implementation of transparent budget 
                        procedures and mechanisms to help ensure that 
                        the financial benefits of debt relief under the 
                        modified HIPC Initiative result in increased 
                        national expenditures on poverty reduction 
                        programs; and
                          ``(v) monitorable indicators of progress in 
                        poverty reduction;
          ``(2) the adoption of procedures for periodic comprehensive 
        reviews of ESAF and IDA programs to help ensure progress toward 
        poverty goals outlined in the Poverty Reduction Strategies and 
        to allow adjustments in such programs;
          ``(3) the publication of the PRSPs (including social impact 
        assessments) prior to Executive Board review of related 
        programs under IDA and the ESAF;
          ``(4) the establishment of a standing evaluation unit at the 
        International Monetary Fund, similar to the Operations 
        Evaluation Department of the International Bank for 
        Reconstruction and Development, that would report directly to 
        the Executive Board of the International Monetary Fund and that 
        would undertake periodic reviews of International Monetary Fund 
        operations, including the operations of the ESAF, including--
                  ``(A) assessments of experience under the ESAF 
                programs in the areas of poverty reduction, rapid 
                growth, and access to basic social services;
                  ``(B) assessments of the extent and quality of 
                participation in program design by civil society; and
                  ``(C) verifications that ESAF programs are designed 
                in a manner consistent with the Poverty Reduction 
                Strategies; and
                  ``(D) prompt release to the public of all reviews by 
                the standing evaluation unit;
          ``(5) the promotion of simpler and clearer conditionality in 
        IDA and ESAF programs that focuses on reforms most likely to 
        support poverty reduction and broad-based growth;
          ``(6) the adoption by the International Monetary Fund of 
        policies aimed at reforming the Enhanced Structural Adjustment 
        Facility so that ESAF programs are consistent with the Poverty 
        Reduction Strategies;
          ``(7) the adoption by the International Bank for 
        Reconstruction and Development of policies to ensure that 
        International Bank for Reconstruction and Development lending 
        operations in HIPC countries are consistent with the Poverty 
        Reduction Strategies;
          ``(8) strengthening the linkage between borrower country 
        performance and lending operations by IDA and the ESAF on the 
        basis of clear and monitorable indicators;
          ``(9) full public disclosure of the proposed objectives, 
        financial organization and operations of the successor to the 
        Enhanced Structural Adjustment Facility of the International 
        Monetary Fund at least 90 days before any decision by the 
        Executive Board of the International Monetary Fund to consider 
        its adoption; and
          ``(10) the abolishment of ESAF, and its replacement with a 
        Poverty Reduction and Growth Facility (PRGF), which will be a 
        subordinate part of a new approach to defining the economic 
        framework for low-income countries, in that the new approach 
        will give to the government of a borrowing country the ability 
        to construct its own comprehensive development strategy, and 
        will allow the borrowing country government, at its sole 
        discretion, to request technical assistance, in creating the 
        comprehensive development strategy, from international 
        institutions, such as the World Health Organization, the Food 
        and Agricultural Organization, the International Bank for 
        Reconstruction and Development, and the International Monetary 
        Fund, and from private organizations, businesses, or civil 
        society organizations.

``SEC. 1625. TRANSPARENCY AND PARTICIPATION OF CIVIL SOCIETY IN NEW 
                    INTERNATIONAL FINANCIAL INSTITUTION LENDING.

  ``The Secretary of the Treasury shall instruct the United States 
Executive Directors at the international financial institutions (as 
defined in section 1701(c)(2)) to use the voice and votes of the 
Executive Directors to encourage vigorously that their respective 
institutions adopt transparency and other measures that will facilitate 
participation of civil society in developing countries in the design of 
poverty reduction strategies and in decisions to borrow from such 
institutions in support of such strategies, including--
          ``(1) disclosure of Policy Framework Papers, Public 
        Expenditure Reviews, Country Assistance Strategies, 
        International Monetary Fund Letters of Intent, appraisal 
        documents, and other reports relevant to proposed lending 
        operations; and
          ``(2) provision of detailed information to the Board of 
        Directors of such an institution and to the public, prior to 
        the approval of a lending operation for a developing country, 
        as to the nature and extent of civil society participation in 
        the design of, and approval process for, such operation.''.

SEC. 4. ENHANCED STRUCTURAL ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR 
                    COUNTRIES TRUST FUND.

  The Bretton Woods Agreements Act (22 U.S.C. 286-286mm) is amended by 
adding at the end the following:

``SEC. 62. APPROVAL OF CONTRIBUTIONS TO THE ENHANCED STRUCTURAL 
                    ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR COUNTRIES 
                    TRUST FUND.

  ``(a) In General.--For the purpose of mobilizing the resources of the 
Fund in order to help reduce poverty and improve the lives of residents 
of poor countries and, in particular, to allow those poor countries 
with unsustainable debt burdens to receive deeper, broader, and faster 
debt relief, without allowing gold to reach the open market or 
otherwise adversely affecting the market price of gold, the Secretary 
of the Treasury may instruct the United States Executive Director of 
the Fund to vote--
          ``(1) to approve an arrangement whereby the Fund--
                  ``(A) sells not more than a total of 14,000,000 
                ounces of its gold at prevailing market prices to a 
                member or members in non-public transactions;
                  ``(B) immediately after, and in conjunction with, 
                each such sale, accepts payment by such member or 
                members of such gold to satisfy existing repurchase 
                obligations of such member or members so that the Fund 
                retains ownership of the gold at the conclusion of such 
                payment; and
                  ``(C) transfers the earnings on the investment of the 
                profits of such sales to the Trust for Special ESAF 
                Operations for the Heavily Indebted Poor Countries and 
                Interim ESAF Subsidy Operations (ESAF/HIPC Trust Fund), 
                provided that such earnings shall be used, through a 
                separate subaccount, only for the purpose of providing 
                debt relief from the Fund under the modified HIPC 
                Initiative; and
          ``(2) to support a decision that would make available to the 
        ESAF/HIPC Trust Fund resources in Special Contingency Account 2 
        (SCA-2) of the Fund derived from the extended burdensharing 
        arrangements adopted pursuant to IMF Decision No. 9471 (90/98), 
        as amended, including any funds attributable to the United 
        States participation in such arrangements, which funds shall be 
        used only for debt relief under the original or modified HIPC 
        Initiative (within the meaning of section 1623 of the 
        International Financial Institutions Act).
  ``(b) Certification.--Within 15 days after the United States 
Executive Director casts the votes necessary to carry out with the 
instruction provided pursuant to subsection (a), the Secretary of the 
Treasury shall certify to the Committee on Banking and Financial 
Services of the House of Representatives and the Committee on Foreign 
Relations of the Senate that the Fund has stated that--
          ``(1) when gold is sold pursuant to the authorization 
        provided under subsection (a), the estimated net present value 
        (as determined by the Fund) of the earnings on the investment 
        of profits from the total amount of gold that has been sold 
        shall not be greater than the estimated net present value (as 
        determined by the Fund) of the cost of the modified HIPC 
        Initiative (within the meaning of section 1623 of the 
        International Financial Institutions Act);
          ``(2) the earnings on the invested profits of such gold sales 
        shall be deposited in a separate sub-account and used only for 
        the purpose of providing debt relief from the Fund under the 
        original or modified HIPC Initiative; and
          ``(3) any funds attributable to United States participation 
        in the arrangements referred to in subsection (a)(2) shall be 
        used only for debt relief from the Fund under the original or 
        modified HIPC Initiative.''.

SEC. 5. UNITED STATES INTERNATIONAL FINANCIAL AGREEMENTS; TRANSMISSION 
                    TO CONGRESS.

  Section 112b of title 1, United States Code, is amended by adding at 
the end the following:
  ``(f) The Secretary of the Treasury shall transmit to the Committee 
on Banking and Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of the Senate a 
copy of any international financial agreement to which this section 
applies. Any such agreement the immediate public disclosure of which 
would, in the opinion of the President, be prejudicial to the national 
security of the United States, shall be so transmitted under an 
injunction of secrecy to be removed only upon due notice by the 
President.''.

SEC. 6. CORRUPTION IN FOREIGN GOVERNMENTS.

  (a) In General.--It is the sense of the Congress that, in 
deliberations between the United States Government and any other 
country on money laundering and corruption issues, the United States 
Government should--
          (1) emphasize an approach that addresses not only the 
        laundering of the proceeds of traditional criminal activity but 
        also the increasingly endemic problem of governmental 
        corruption and the corruption of ruling elites; and
          (2) encourage the enactment and enforcement of laws in such 
        country to prevent money laundering and systemic corruption.
  (b) United States Votes in International Financial Institutions.--
Title XV of the of the International Financial Institutions Act (22 
U.S.C. 262o-262o-2) is amended by adding at the end the following:

``SEC. 1504. UNITED STATES VOTES IN INTERNATIONAL FINANCIAL 
                    INSTITUTIONS.

  ``The Secretary of the Treasury shall instruct the United States 
Executive Director at each multilateral development bank (as defined in 
section 1701(c)(4)) to use aggressively the voice and vote of the 
United States to promote vigorously policies that would make the 
institution more effective mechanisms, in concert with appropriate 
international authorities and other international financial 
institutions (as defined in section 1701(c)(2)), for promoting good 
governance principles within recipient countries by fostering 
structural reforms, including procurement reform, that reduce 
opportunities for corruption and bribery, and drug-related money 
laundering. In addition, the Secretary of the Treasury shall instruct 
the United States Executive Director at each multilateral development 
bank (as defined in section 1701(c)(4)) to use aggressively the voice 
and vote of the United States to oppose loans or other assistance by 
such bank to a country located in Southeast Asia if the government of 
such country is failing to fully cooperate with the United States on 
all issues involving United States prisoners of war/missing in action 
(POW/MIA), as determined by the Secretary of State.''.
  (c) Annual Reports Required.--Not later than December 31 of each 
year, the Secretary of the Treasury, in consultation with the Secretary 
of State and the Attorney General, shall submit an annual report to the 
Congress on efforts bilaterally and within the international financial 
institutions (as defined in section 1701(c)(2) of the International 
Financial Institutions Act) consistent with the objectives in sections 
1503(a)(6) and 1504 of such Act.

SEC. 7. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.

  The Bretton Woods Agreements Act (22 U.S.C. 286-286mm) is further 
amended by adding at the end the following:

``SEC. 63. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.

  ``The Secretary of the Treasury shall instruct the United States 
Executive Director at the Fund to use the voice and vote of the 
Executive Director to vigorously encourage the Fund to--
          ``(1) require independent audits of central bank and other 
        relevant entities on a more systematic basis by developing 
        objective criteria to assist in determining when audits are 
        warranted;
          ``(2) ensure that such audits occur before Fund financing is 
        disbursed;
          ``(3) develop a systematic approach to reducing inappropriate 
        uses of foreign exchange reserves through laws, regulations, 
        and procedures, by means including the requirement of arms 
        length transactions and the prohibition of preferential access 
        to foreign exchange on a nontransparent basis; and
          ``(4) strongly encourage all countries receiving exceptional 
        levels of financial support to adopt and comply with Fund 
        standards applicable to management of foreign exchange 
        reserves, particularly with respect to the nature and location 
        of the institutions where such reserves are placed.''.

SEC. 8. UNITED STATES LENDING POLICIES TOWARD COUNTRIES RECEIVING DEBT 
                    RELIEF.

  (a) Study.--The Comptroller General of the United States shall study 
and prepare a report on efforts to ensure that the lending policies of 
the United States and the international financial institutions (as 
defined in section 1701(c)(2) of the International Financial 
Institutions Act) toward countries eligible for debt relief under part 
VI of the Foreign Assistance Act of 1961 or this Act, or under the 
modified HIPC Initiative (as defined in section 1623(f)(1) of the 
International Financial Institutions Act) avoid moral hazard and 
promote economic growth and poverty reduction, without recourse to 
future debt relief, rescheduling, or the accumulation of arrears.
  (b) Report.--Not later than September 30, 2000, the Comptroller 
General of the United States shall submit to the Committees on Banking 
and Financial Services and on International Relations of the House of 
Representatives and the Committees on Banking, Housing, and Urban 
Affairs and on Foreign Relations of the Senate the report required by 
subsection (a).

                     Explanation of the Legislation

    H.R. 1095 as amended provides for the following: (1) a 
requirement that the President cancel all concessional and non-
concessional debts owed to the United States by eligible poor 
countries under applicable provisions of the Foreign Assistance 
Act of 1961, the Export-Import Bank Act of 1945, and the 
Commodity Credit Corporation Charter Act; (2) an authorization 
of such sums as necessary for the cost of canceling debts owed 
to the U.S. by eligible poor countries; (3) definitions of 
country eligibility for receiving U.S. debt relief together 
with a list of exceptions, (4) a requirement that resources 
freed through debt relief are used for poverty reduction 
through a Human Development Fund or Poverty Reduction Strategy; 
(5) a statement that in providing bilateral debt relief, the 
President should seek to leverage scarce foreign assistance 
dollars and give priority to those heavily indebted poor 
countries with demonstrated need and the capacity to use such 
relief effectively; (6) a requirement of annual reports on U.S. 
debt relief for eligible poor countries and on U.S. 
participation in Paris Club debt restructuring actions and 
cancellations; (7) policy language urging the President to 
ensure burdensharing by other creditor countries; (8) policy 
language urging the President to seek improvements in the 
Heavily Indebted Poor Countries Initiative (HIPC); (9) an 
authorization of such sums as necessary for U.S. contributions 
to the World Bank's HIPC Trust Fund, but only for the purposes 
of debt relief, and provided that certain conditions are met; 
(10) a requirement of an annual report on multilateral debt 
relief under the modified HIPC Initiative; (11) a requirement 
that the Secretary of the Treasury instruct the U.S. Executive 
Directors of the World Bank and International Monetary Fund 
(IMF) to use their voice and vote to reform the Enhanced 
Structural Adjustment Facility (ESAF) and soon replace it with 
a new Poverty Reduction and Growth Facility; (12) a requirement 
that the Secretary of the Treasury instruct the U.S. Executive 
Directors to the international financial institutions to use 
their voice and vote to facilitate transparency and 
participation of civil society in new international financial 
institution lending; (13) an authorization for the Secretary of 
the Treasury to instruct the U.S. Executive Director of the IMF 
to approve the sale of up to 14 million ounces of the IMF's 
gold in non-public transactions with a member or members of the 
Fund, provided that the invested profits of the sales may only 
be used for debt relief and deposited in a sub-account separate 
from the Enhanced Structural Adjustment Facility; (14) an 
authorization for the Secretary of the Treasury to instruct the 
U.S. Executive Director of the IMF to transfer any funds 
attributable to U.S. participation in Special Contingency 
Account 2 (SCA-2) to the Fund's ESAF/HIPC Trust, which funds 
shall be used only for debt relief; (15) a certification by the 
Secretary of the Treasury that the amount of gold sold by the 
IMF is not greater than the estimated net present value of the 
cost of the Fund's participation in the modified HIPC 
Initiative, that the earnings on the invested profits shall be 
deposited in a separate sub-account and used only for the 
purpose of providing debt relief from the Fund, and that any 
U.S. funds transferred from the SCA-2 to the ESAF/HIPC Trust 
shall be used only for IMF debt relief; (16) a requirement for 
the Department of the Treasury to transmit international 
financial agreements to the House and Senate Banking 
Committees; (17) a requirement that the Secretary of the 
Treasury instruct the U.S. Executive Directors of the 
multilateral development banks to use their voice and vote to 
promote good governance and anti-corruption principles in 
recipient countries, as well as to oppose loans to Southeast 
Asian countries failing to fully cooperate with the U.S. on 
issues involving POW/MIAs; (18) a requirement that the 
Secretary of the Treasury instruct the U.S. Executive Director 
at the IMF to use his or her voice and vote to establish 
additional safeguards on the use of IMF resources; and (19) a 
requirement that by September 30, 2000, the General Accounting 
Office (GAO) prepare and submit a report on efforts to ensure 
that the lending policies of the U.S. and the international 
financial institutions toward countries eligible for debt 
relief avoid moral hazard and promote economic growth and 
poverty reduction, without recourse to future debt relief, 
rescheduling, or the accumulation of arrears.

                Background and Need for the Legislation

    The bill as reported fully authorizes U.S. participation in 
the modified Heavily Indebted Poor Countries Initiative. it 
authorizes the Executive Branch to cancel 100% of the debt owed 
to the U.S. by up to 45 eligible heavily indebted poor 
countries. It urges the President to seek several reforms in 
the modified HIPC Initiative. It also provides authorization 
for U.S. contributions to the World Bank's HIPC Trust, as well 
as U.S. agreement to mobilizing IMF gold reserves and the 
transfer of resources from an IMF reserve account to finance 
the Fund's participation in the modified HIPC Initiative. It 
requires the advocacy of certain policies by the U.S. in the 
international financial institutions, particularly regarding 
reform of ESAF, and requires the production of several reports 
by the Secretary of the Treasury.
    Relieving the debt burdens of the world's poorest countries 
is one of foremost economic, humanitarian, and moral challenges 
of the late 20th century. Seldom has three been such a 
compelling conjunction between abstract economics, ethics, and 
public policy. In addition, because the Heavily Indebted Poor 
Countries (HIPC) Initiative represents a uniquely comprehensive 
approach to debt reduction, multilateral and bilateral issues 
are interwoven in ways that challenge traditional approaches to 
foreign policy of all creditor countries. In this context, the 
HIPC Initiative raises authorization and policy issues that 
overlap the jurisdictions of this Committee and the Committee 
on International Relations. The Banking Committee is extremely 
grateful to the International Relations Committee for its 
gracious cooperation and understanding on this most complex and 
important subject.
    The goal of the H.R. 1095 is simple: to provide faster and 
deeper debt relief to more countries provided they are 
committed to reform as well as translating savings from debt 
relief into poverty reduction and sustainable development.
    The Committee on Banking and Financial Services strongly 
supports international efforts to relieve the debt burdens of 
the world's poorest countries. As the president of the World 
Bank recently observed, more than one billion people around the 
world still live in extreme poverty. Nearly 1.4 billion people 
lack access to clean water. Approximately three billion live 
without basic sanitation. In 1999, 11 million children under 
the age of five will die of preventable diseases. For those 
children who live past five, more than 250 million of them will 
work instead of going to school. Yet several hundred million of 
the world's poor live in countries where crushing foreign debt 
obligations, almost exclusively to official bilateral and 
multilateral creditors, stand in the way of economic growth and 
poverty reduction.
    At the request of the G-7 industrial nations for a 
comprehensive framework to relieve the debt burdens of heavily 
indebted poor countries, the World Bank and the International 
Monetary Fund (IMF) proposed the HIPC Debt Initiative in 1996. 
The HIPC Initiative is the first coordinated effort to include 
all creditors, particularly the international financial 
institutions, in addressing the debt problems of poor 
developing countries. The goal of the original HIPC Initiative 
was solely to bring countries' debts to ``sustainable'' levels, 
meaning that in the future they would be able to make debt 
payments on time and without rescheduling. As a condition of 
receiving the exceptional levels of debt relief provided under 
the initiative, countries were required to successfully 
complete as much as six years of economic reform under ESAF.
    The World Bank and the IMF originally classified a group of 
41 developing countries as heavily indebted poor countries. The 
41 countries are the following: Angola, Benin, Burkina Faso, 
Burundi, Cameroon, Central African Republic, Chad, Congo, Cote 
d'Ivoire, Democratic Republic of the Congo, Equatorial Guinea, 
Ethiopia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, 
Kenya, Lao PDR, Liberia, Madagascar, Mali, Mauritania, 
Mozambique, Myanmar, Nicaragua, Niger, Nigeria, Rwanda, Sao 
Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, 
Tanzania, Togo, Uganda, Vietnam, Yemen, and Zambia. Nigeria was 
subsequently dropped off the original list. As introduced, H.R. 
1095 would extend eligibility to 4 additional countries: 
Bangladesh, Cambodia, Comoros, and Haiti. During Committee 
markup Nigeria was subsequently added as an additional eligible 
country.
    The original HIPC Initiative, however, failed to fulfill 
its early promise. The common refrain was that debt relief was 
``too little'' and ``too late.'' As of September 14, 1999, 
eligibility has been reviewed for 14 countries. Relief has been 
agreed to for 7 countries: Bolivia, Burkina Faso, Cote 
d'Ivoire, Guyana, Mali, Mozambique, and Uganda, yielding debt 
relief of $3.4 billion in net present value (NPV) terms. Four 
countries (Bolivia, Uganda, Guyana and Mozambique) have already 
received debt relief amounting to an NPV of $2.8 billion. 
Preliminary review has been completed for five more countries, 
Ethiopia, Guinea-Bissau, Nicaragua, Mauritania, and Tanzania.
    In response to widespread criticism of the original 
program, in June 1999 at the G-7 summit in Cologne, Germany, 
the World Bank and IMF endorsed proposals to modify the HIPC 
Initiative. The goal of the so-called ``modified'' HIPC 
Initiative is to provide faster, broader, and deeper debt 
relief, while strengthening the links between debt relief and 
poverty reduction. In contrast to the original framework, the 
newly modified HIPC Initiative is designed to increase the 
safety cushion against unanticipated economic shocks and to 
increase the probability of a permanent exit from unsustainable 
debt relief. Deeper debt relief will be provided through a 
lowering of the NPV debt-to-export target from 200-250% to 
150%; a lowering of the NPV debt-to-fiscal revenue target for 
countries with very open economies from 280 to 250% and a 
lowering of the qualifying thresholds from 40 to 30% (export-
to-GDP ratio) and from 20 to 15% (revenue-to-GDP ratio).
    Similarly, in response to concerns that the original 
Initiative was insufficiently linked to poverty reduction, the 
modified HIPC attempts to free up resources for high levels of 
social spending aimed at poverty reduction through: more 
generous ``interim'' relief between the decision and completion 
points; and the introduction of ``floating completion points'' 
which would shift the focus of assessment more towards 
achievements and outcomes rather than the length of the track 
record of reform. Strong performers could reach the completion 
point earlier by accelerating key reforms while maintaining 
macroeconomics stability. It also envisions ``front-loading'' 
the delivery of debt relief by the international financial 
institutions (IFIs) on a ``case-by-case'' basis.
    On September 29, 1999, President Clinton announced that the 
U.S. would increase the amount of bilateral debt relief 
available to eligible countries to 100% of all market-based 
loans ``when needed to help them finance basic human needs'' 
and when the money will be used to do so. This follows 
agreement at the G-7 summit in Cologne to reduce non-concession 
debt owed to governments by HIPCs by up to 90% and concessional 
debt by 100%. The authorization provided by this legislation is 
necessary to enable the U.S. to fulfill this commitment.
    Creditors may provide relief through several means, such as 
rescheduling debt payments through lower interest rates, buying 
back the debt, making debt service payments as they come due, 
and/or lending new funds on concessional terms to make debt 
service payments. Multilateral creditors have said they will 
not forgive debt outright; instead, they intend to provide debt 
relief in ways that preserve their preferred creditor status.
    The World Bank's participation in the HIPC Initiative is to 
be funded solely from the Bank's own resources. Debt relief 
provided by the Bank takes place primarily through 
contributions to its HIPC Trust Fund from transfers of net 
income. The World Bank's HIPC Trust Fund also receives 
contributions from the U.S. and other participating creditors 
that are to be used primarily to help other multilateral 
development banks, such as the African Development Bank, to 
finance their share of HIPC debt relief. Because providing the 
necessary financing is crucial to turning the promise of the 
modified HIPC Initiative into reality, the committee included 
an authorization of such sums as may be necessary for the U.S. 
contribution to the HIPC Trust Fund.
    The IMF is participating in the Initiative through the 
ESAF/HIPC Trust, which is to finance both debt relief and the 
subsidy cost of ESAF loans from 2000 to approximately 2005 (the 
``interim'' ESAF). At the completion point, ESAF grants are 
deposited into escrow accounts to meet the debt service 
payments owed to the IMF under a predetermined schedule.
    The enhancements to the Initiative agreed to in Cologne 
will more than double the estimated costs from $12.5 billion to 
about $27 billion in NPV terms, divided roughly between 
bilateral and multilateral creditors. Of this, the costs to the 
Bank would amount to about $5 billion, to the Fund about $2.3 
billion, and to other multilateral institutions just under $6 
billion. If Liberia, Somalia, and Sudan are added to the 33 
countries thought likely to qualify for HIPC relief, the 
estimated NPV cost to all creditors would rise to $36 billion. 
To fund U.S. participation, the Administration requested $120 
million for debt relief programs in FY 2000 (only $70 million 
of which was HIPC-related). The amended budget request for FY 
2000-2004 asked for an additional $850 million. Of the total 
$970 million requested for debt relief, $270 is for bilateral 
relief; $650 is for the World Bank's HIPC Trust; and $50 
million is for a debt-for-tropical rainforest initiative.
    The Committee applauds U.S.-led efforts to strengthen the 
linkage between debt relief and poverty reduction. The new 
framework agreed to during the World Bank--IMF annual meetings 
in September 1999 would foster a much closer collaboration 
between the IMF, the World Bank, recipient governments, and 
civil society. The IMF's concessional lending facility and the 
vehicle for its participation in the Initiative--ESAF--will be 
required to take into account more fully the potential impact 
of macroeconomic reforms on programs aimed at poverty reduction 
and renamed the Poverty Reduction and Growth Facility (PRGF).
    Many questions have been raised about the IMF's involvement 
in concessional lending. The first IMF facility to make 
concessional loans to low-income countries was the Trust Fund 
established in 1976, financed primarily by profits on the sale 
of 25 million ounces of gold by the IMF. The Trust Fund was 
terminated in 1981. Repayments of loans made by the Trust Fund 
went to the Special Disbursement Account (SDA) and were used to 
finance the establishment of the Structural Adjustment Facility 
(SAF) in 1986. ESAF was established in 1987 and subsequently 
expanded in 1993. In 1996, it was decided that the ESAF would 
be a permanent, rather than a temporary, facility, as the 
centerpiece of the IMF's strategy to help low-income countries.
    ESAF arrangements are made available to eligible low income 
countries, those with a per capita GDP of $925 or less and 
eligible for borrowing under the International Development 
Association (IDA), that agree to three-year macroeconomic 
structural and reform plans. According to the IMF, key to the 
arrangements are Policy Framework Papers (PFPs), which are 
drafted by the debtor governments in collaboration with the 
staffs of the IMF and world Bank. Loans under the ESAF carry an 
annual interest rate of 0.5%, with repayments made 
semiannually, beginning in 5\1/2\ years and ending 10 years 
after disbursement.
    Resources to finance lending in support of ESAF 
arrangements--which consist of loans and subsidy 
contributions--are administered by the IMF through the ESAF 
Trust. The trust conducts its operations through three 
accounts: the Loan Account, to administer the funds needed for 
trust loans; the Subsidy Account, to subsidize the rate of 
interest paid by borrowers on loans from the trust; and the 
Reserve Account, to secure lenders' claims on the trust. The 
Loan Account has received its resources from loans made to the 
IMF by 12 countries at market rates. The subsidy Account has 
received grants from 33 countries (including a U.S. 
contribution in FY 1995 of $75 million), plus some funds from 
the SDA. Reflows (repaid loans) from SDA-financed SAF and ESAF 
loans go to the Reserve Account, which will become available 
for future concessional operations when balances exceed the 
amount owed to the creditors (about $4.3 billion by early 
2007), or as agreed by the creditors.
    The ESAF and other so-called ``Administered Accounts'' are 
legally and financially separate from all other accounts of the 
IMF. They represent resources held by the Fund for purposes, 
such as financial and technical assistance, that are consistent 
with the Fund's Articles.
    The Committee is cognizant of the controversy surrounding 
the IMF's involvement in the HIPC initiative. The IMF has been 
at the center of international debt workouts since the early 
1980's. Its relationship to debtor and creditor countries, as 
well as other international financial institutions managing 
sovereign debt workouts, is analogous to a ``hub and spoke.'' 
During the Latin American debt crisis, the IMF played a key 
role negotiating economic reform programs with debtor countries 
and in coordinating the contributions of other creditors 
groups. In order to ensure that the debtor is undertaking 
economic reforms, bilateral creditors insist that the country 
negotiate an adjustment program with the IMF before it comes to 
the Paris Club. If the debtor is a poor developing country, the 
IMF adjustment program will take the form of ESAF loan. In the 
same vein, the original HIPC Initiative required that eligible 
countries successfully complete two successive ESAF programs in 
order to receive full debt relief.
    The IMF projects that by the end of this year the ESAF 
Trust will reach its cumulative lending target of SDR 10.1 
billion, precluding new lending. The ``Interim'' ESAF would 
continue IMF concessional lending until the ``self-financed'' 
ESAF or its successor facility begins operations sometime 
between year 2005 and 2007. The Interim ESAF faces a funding 
shortfall for loan principal of between SDR 5-7 billion. The 
IMF has not yet identified a source for the principal of ESAF 
loans. It could seek new loans from bilateral creditors or 
subsidize the interest rate on three year loans (``extended 
arrangements'') made from the IMF's ordinary resources (the 
General Resources Account).
    The ESAF-HIPC Trust, which is separate from the ``interim'' 
ESAF, was established in February 1997, to finance both ESAF 
grants (for debt service payments) under the HIPC Initiative 
and interim ESAF subsidy operations. Disbursements to fund the 
IMF contribution to the HIPC Initiative have already begun, 
pre-financed by transfers from the Reserve Account (with the 
permission of creditors). The ESAF-HIPC Trust currently faces a 
funding shortfall of $3.5 billion (in present value terms). 
About $2.3 billion is needed for HIPC operations, and about 
$1.2 billion for Interim ESAF subsidies. The resources of the 
ESAF-HIPC Trust (apart from the principal amount of Interim 
ESAF loans) are to be derived primarily from a combination of 
bilateral contributions (including foregone SCA-2 refunds) and 
the income on profits from the proposed sales of gold.
    Two main criticisms have been leveled against ESAF. First 
is the charge that it has applied inappropriate and 
counterproductive ``austerity'' policies in developing 
countries. In this regard, the 1980's and the early 1990's were 
a difficult period for low-income developing countries, 
particularly those in Africa. Per capita incomes stagnated or 
declined. This led many observers to question the effectiveness 
of the remedies embodied in IMF-supported adjustment programs--
especially those backed by ESAF. Criticisms of ESAF have 
continued in the context of the HIPC debt initiative, which 
conditions debt relief on adherence to ESAF-supported programs. 
Second, some critics suggest that ESAF represents IMF 
represents IMF ``mission creep'' into areas of development 
assistance that are properly the domain of the World Bank and 
other multilateral development banks. On the other hand, ESAF 
supporters point out that the world's poorest countries cannot 
afford IMF balance of payments support at market rates of 
interest, and that any fund lending operations to such members 
countries should properly be concessional.
    Proposals for a ``reformed ESAF'' and a new ``poverty 
reduction and growth strategy'' were unveiled at the IMF--World 
Bank annual meetings in September 1999. Under the new strategy, 
the design of IMF-supported macroeconomic policies would take 
more fully into account their potential impact on social and 
sectoral programs aimed at poverty reduction while 
ensuringmacroeconomic stability. The new approach envisions much closer 
interaction with the World Bank in order to make the linkage to poverty 
reduction an operational reality. Similar to previous Bank-Fund efforts 
to produce a ``policy framework paper,'' EASF lending operations would 
be guided by a comprehensive Poverty Reduction Strategy Paper (PRSP) 
prepared by the national authorities with assistance from the World 
Bank, the IMF and others. The PRSP would have to be endorsed by the 
Executive Boards of both the World Bank and the IMF. ESAF performance 
measures would explicitly incorporate a set of key poverty reduction 
targets set out in the PRSP. According to Treasury Secretary Summers, 
adoption of these reforms ``marks a profound change which will put 
poverty reduction at the center of IMF and World Bank supported 
programs in HIPC and other low income countries.''
    During the World Bank--IMF annual meetings this September, 
agreement was reached on the main elements of a financing 
package that would allow the IMF to mobilize a portion of its 
gold reserves to contribute to the HIPC Initiative and to 
continue ESAF operations through at least 2005. The total to be 
financed is $3.5 billion in 1998 present value terms, and is 
largely composed of bilateral contributions made by member 
countries as well as the use of the investment income on the 
sale of a portion of up to 14 million ounces of the IMF's gold 
reserves. Bilateral pledges are $1.4 billion in present value 
terms while contributions from the IMF total $2.1 billion. 
Because legal title to the gold resides with the Fund, IMF gold 
sales do not have any budgetary implications for the U.S. and 
no appropriations is required. Under the Bretton Woods 
Agreement Act, however, authorization is required for any gold 
sale that is to be used for the benefit of a single member or a 
particular segment of the IMF's membership.
    Because member countries have not pledged enough to fully 
fund both debt relief and ESAF, use of IMF resources has become 
an integral part of the overall financing package. In this 
regard, the Treasury Department has requested congressional 
authorization for: (1) approval of off-market sales of up to 14 
million ounces of IMF gold, with the transfer of the earnings 
on the invested profit from the sale to the ESAF; and (2) 
making available to the ESAF-HIPC Trust Fund about $300 million 
attributable to U.S. participation in a now unneeded IMF 
reserve account called the Special Contingency Account Number 2 
(SCA-2). These authorizations were included in H.R. 1095, as 
amended.
    The IMF originally proposed to sell at public auction 
between 5-10% of its gold holdings to finance debt relief and 
ESAF. The IMF would retain the book value of the gold. The net 
proceeds of sale would be transferred to the Special 
Disbursement Account (SDA) and be invested in low-risk 
securities. The interest earnings would be used to finance IMF 
participation in the HIPC Initiative. The grants for HIPC and 
interest rate subsidies for the ``Interim'' ESAF would be 
provided through the ESAF-HIPC Trust Fund. But with the price 
of gold hovering around historic lows of $250 an ounce 
throughout much of 1999, vehement opposition by the gold 
industry and key Members of Congress eventually forced Treasury 
and the IMF to consider alternative ways of mobilizing IMF gold 
reserves.
    The new plan is for the IMF to sell up to 14 million ounces 
of gold without having an impact on the gold market. In 
essence, it is a complicated way to revalue the IMF's gold. 
There are two parts to the transaction. The first part is that 
the IMF would sell gold at the market price to one or more 
member countries that have obligations due to the Fund. The 
Fund would then receive the full proceeds of the gold sales in 
foreign currency. It would keep the book value, which is SDR 35 
per ounce, on the balance sheet of its main capital account 
(the General Resources Account or GRA) and transfers the 
profits--the difference between the book value and the realized 
price--to an account called the Special Disbursement Account 
(SDA). The profits would then be invested and earn interest 
over approximately the next 18 years. The interest earnings 
would be transferred to the ESAF-HIPC Trust and used for 
financing HIPC as well as interest rate subsidies for loans 
made by the Interim ESAF. In the second part, the Fund would 
simultaneously agree to accept the same amount of gold, valued 
at the same price, in repayment for obligation coming due. 
There would be no sale in the market; the gold would be 
available to the member only to settle its obligations and thus 
would effectively remain in the IMF. It is expected that the 
profits would eventually be returned to the GRA.
    The IMF holds 103.4 million fine ounces of gold. It values 
its gold at SDR 35 per ounce (about $48 per ounce). Under its 
amended charter, there are significant legal limitations on IMF 
transactions in gold. The Fund can only sell gold on the basis 
of market prices. It may accept gold to discharge a member's 
obligations to the IMF. But it cannot engage in gold leasing or 
gold lending, enter into gold swaps, utilize gold options or 
other transactions (including a pure revaluation) that do not 
involve the transfer of ownership of the gold. Any IMF 
transactions in gold require an 85% majority of the total 
voting power of the Fund. Because the United States has a 17.5% 
share of the IMF's voting power, it could unilaterally block a 
gold sale.
    The IMF's gold is held in the GRA. The book value of any 
sales must remain in the GRA (thus increasing the capacity of 
the IMF to generate income through loans). The profits must be 
placed in the SDA. Use of SDA assets for concessional 
assistance to developing members is permitted, in contrast to 
the general prohibition of such targeted use of GRA resources, 
if approved by an 85% majority. The Fund currently invests the 
assets held in so-called ``administered accounts,'' such as the 
ESAF-HIPC Trust and the SDA (which holds the profits of the 
gold sales), in SDR-denominated deposits at the Bank for 
International Settlements.
    In 1995, the IMF's Executive Board adopted a policy on 
gold. The policy contains the following principles: (1) any 
mobilization of IMF gold should avoid weakening its overall 
financial position; (2) the IMF should continue to hold a 
relatively large amount of gold among its assets; (3) the IMF 
has a responsibility avoid causing disruptions to the 
functioning of the gold market; and (4) the profits from any 
gold sales should be retained, and only the invested income 
used for IMF operations.
    The IMF has established Special Contingency Accounts (SCAs) 
in the GRA to serve as precautionary balances on certain IMF 
lending. Resources for these SCAs are obtained by increasing 
the rate of charge to borrowing countries and decreasing the 
rate of remuneration to lending countries. The SCA-2 has 
accumulated the SDR 1 billion (about $1.4 billion) that it was 
designed to achieve, and no further funding is required. 
Contributions to the SCA-2 are to be returned to Members when 
no longer required for their original purpose. The U.S. share 
is SDR 220 million or about $300 million.
    In order to ensure that none of the earnings on the 
invested profits of IM gold sales will be used to finance ESAF, 
the Committee conditioned the authorization for the U.S. to 
consent to the arrangement on the creation of a separate sub-
account for the interest earnings and that the earnings may 
only be used to finance the IMF's contribution to debt relief 
under the modified HIPC Initiative. A similar requirement was 
established of the transfer of funds from the SCA-2 to the 
ESAF/HIPC Trust. Under the Bretton Woods Agreements Act, as 
amended (Sec. 22 U.S.C. 26(c)), congressional authorization is 
required for the U.S. to approve the proposed IMF gold sales.

                                Hearings

    On June 15, 1999 the House Banking Committee held a hearing 
on debt relief. Present were Tim Geithner, Treasury Under 
Secretary for International Affairs; Reverend J. Bryan Hehir, 
The Center for International Affairs, Harvard University; Salih 
Booker, Senior Fellow & Director of Africa Studies, Council on 
Foreign Relations; Lydia Williams, Advocacy Coordinator, Oxfam 
America; and Jeffrey Sachs, Director, Harvard Institute for 
International Development, Harvard University; with the 
testimony of The Most Reverend Frank T. Griswold, Presiding 
Bishop and Primate, the Episcopal Church, submitted for the 
record.
    On March 21, 1999, the Subcommittee on Domestic and 
International Monetary Policy, Committee on Banking and 
Financial Services, held a hearing on the Administration's FY 
2000 authorization requests for the international financial 
institutions and related programs. Present were Lawrence 
Summers, Deputy Secretary of the Treasury; Nancy Birdsall, 
Senior Associate, Carnegie Endowment for International Peace; 
Njoki Njehu, Coordinator, Fifty Years is Enough Network; Lydia 
Williams, Advocacy Coordinator, Oxfam America; George Milling-
Stanley, Manager, Gold Market Analysis, World Gold Council; Jo 
Marie Griesgraber, Director, Rethinking Bretton Woods, Center 
of Concern.

                   Committee Consideration and Votes

    On November 3, 1999, the Committee met in open session to 
mark up legislation authorizing debt relief for heavily 
indebted poor countries. The Committee considered as original 
text for purposes of amendment a substitute amendment striking 
all after the enacting clause. The Committee considered a 
number of amendments to the substitute, accepting many of them 
by voice vote. The following amendments passed by voice vote: 
(1) an amendment offered by Rep. Frank providing that once a 
country becomes eligible for bilateral debt relief that country 
will not have to make debt service payments on any debt owed to 
the U.S. so long as it remains in compliance with the Act; (2) 
an amendment offered by Rep. Frank eliminating reference to the 
``modified HIPC Initiative'' in Presidential determinations of 
country eligibility for bilateral debt relief; (3) an amendment 
offered by Rep. Vento inserting child labor and workers rights 
as a consideration in granting bilateral debt relief; (4) an 
amendment offered by Rep. Waters ensuring that countries that 
support or condone the practice of slavery will not be eligible 
to receive bilateral debt relief; (5) an amendment offered by 
Rep. Waters (as modified by Rep. Watt) requiring the Secretary 
of the Treasury to provide or arrange for technical assistance 
to countries regarding the establishment and management of 
Human Development Funds; (6) an amendment offered by Rep. Frank 
(as modified by Rep. Watt) providing that in carrying out 
bilateral debt relief under the Act, the President should seek 
to leverage scarce foreign assistance dollars and give priority 
to those heavily indebted poor countries with demonstrated need 
and the capacity to use such relief effectively; (7) an 
amendment offered by Rep. Campbell stating the sense of the 
Congress providing that future bilateral assistance to poor 
countries receiving debt relief should be in the form of grants 
only; (8) an amendment offered by Rep. Bentsen to include in an 
annual reporting requirement an additional requirement that 
Congress be advised on country compliance and accomplishment in 
achieving poverty reduction reform goals under the Act; (9) a 
technical amendment offered by Rep. LaFalce to the 
certification language on IMF gold sales; (10) and amendment 
offered by Rep. Sherman inserting a requirement that Southeast 
Asian countries receiving debt relief cooperate in POW/MIA 
recovery efforts; (11) an amendment offered by Rep. Maloney 
inserting the country's record on female genital mutilation as 
a consideration in granting bilateral debt relief; (12) an 
amendment offered by Rep. Waters stating that the amount of 
debt relief provided to a country under the modified HIPC 
Initiative should be sufficient to ensure that the size of the 
country's outstanding debt does not exceed the value of its 
annual exports; (13) an amendment offered by Rep. Waters 
stating that the amount of debt relief provided to a country 
under the modified HIPC Initiative be sufficient to reduce the 
country's annual debt service payment to no greater than ten 
percent of the country's annual revenues; (14) an amendment 
offered by Rep. Bachus requiring the U.S. Executive Directors 
at the IMF and World Bank to abolish ESAF and replace it with a 
Poverty Reduction and Growth Facility; and (15) an amendment 
offered by Rep. Kelly, providing for a General Accounting 
Office study of U.S. and IFI lending policies to HIPC countries 
to evaluate if those policies avoid moral hazard and promote 
economic growth and poverty reduction.
    Rollcall votes were taken on the following amendments:
    The Committee rejected by recorded vote an amendment 
offered by Rep. Campbell and Rep. Sanders to forgive all U.S. 
bilateral assistance to Heavily Indebted Poor Countries with no 
conditionality. The amendment was defeated 2-21.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Mr. Sanders                         Mrs. Roukema
                                    Mr. Lazio
                                    Mr. Bachus
                                    Mr. Castle
                                    Mr. Royce
                                    Mr. Lucas
                                    Mrs. Kelly
                                    Mr. Riley
                                    Mr. Sweeney
                                    Mrs. Biggert
                                    Mr. Terry
                                    Mr. Toomey
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mrs. Maloney
                                    Mr. Bentsen
                                    Mr. Inslee
                                    Mr. Moore
                                    Mr. Capuano

    The Committee adopted by recorded vote an amendment offered 
by Mr. Campbell expressing the Sense of Congress that future 
U.S. assistance to heavily indebted poor countries, under 
section 2 of the bill, be in the form of grants only. The 
amendment passes 22 to 11.
        YEAS                          NAYS
Mr. Leach                           Mrs. Roukema
Mr. Baker                           Mr. Royce
Mr. Lazio                           Mr. Ryun of Kansas
Mr. Bachus                          Mr. Ose
Mr. Castle                          Mrs. Biggert
Mr. Campbell                        Mr. Green
Mrs. Kelly                          Mr. Toomey
Dr. Paul                            Mr. Maloney
Mr. Manzullo                        Mr. Sherman
Mr. Ryan of Wisconsin               Mr. Goode
Mr. LaFalce                         Ms. Schakowsky
Mr. Vento
Mr. Frank
Ms. Waters
Mr. Sanders
Mr. Watt
Mr. Bentsen
Ms. Hooley
Mr. Weygand
Mr. Meeks
Mr. Moore
Mr. Capuano

    The Committee also adopted by recorded vote an amendment 
offered by Rep. Waters to make Nigeria eligible for bilateral 
debt relief as well as urging that Nigeria become eligible for 
such relief under the modified HIPC Initiative. The amendment 
passed 26 to 13.
        YEAS                          NAYS
Mr. Leach                           Mrs. Roulema
Mr. Bachus                          Mr. Lucas
Mr. Campbell                        Mrs. Kelly
Mr. Royce                           Dr. Paul
Mr. Sweeney                         Mr. Ryun of Kansas
Mr. LaFalce                         Mr. Riley
Mr. Vento                           Mr. Manzullo
Mr. Frank                           Mr. Jones
Ms. Waters                          Mr. Ose
Mr. Sanders                         Mrs. Biggert
Mr. Gutierrez                       Mr. Terry
Mr. Watt                            Mr. Green
Mr. Bentsen                         Mr. Toomey
Mr. Maloney
Ms. Hooley
Ms. Carson
Mr. Weygand
Mr. Sherman
Mr. Sandlin
Mr. Meeks
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mr. Gonzalez
Mrs. Jones
Mr. Capuano

    The Committee defeated by record vote an amendment offered 
by Rep. Bentsen to require any country obtaining debt relief 
under this bill to agree to a 3-year moratorium on borrowing or 
assuming long-term non-concessional debt. The amendment was 
defeated 21 to 11.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Mr. Royce                           Mrs. Roukema
Dr. Paul                            Mr. Lazio
Mr. Cook                            Mr. Bachus
Mr. Manzullo                        Mrs. Kelly
Mr. Ryan of Wisconsin               Mr. Ryun of Kansas
Mr. Sweeney                         Mr. Riley
Mr. Terry                           Mrs. Biggert
Mr. Toomey                          Mr. Green
Mr. Bentsen                         Mr. LaFalce
Mr. Maloney                         Mr. Vento
                                    Mr. Frank
                                    Mrs. Waters
                                    Mr. Sanders
                                    Mr. Watt
                                    Mr. Sherman
                                    Mr. Inslee
                                    Ms. Schakowsky
                                    Mr. Moore
                                    Mrs. Jones
                                    Mr. Capuano

    The Committee adopted by recorded vote an amendment offered 
by Reps. Sanders, Campbell, Carson, Jones of Ohio, Meeks of New 
York, Paul and Gutierrez, modified to include language offered 
by Rep. Waters, that urges the President to immediately 
commence efforts to achieve the modification of Heavily 
Indebted Poor Countries Initiative so that debt reduction for 
Heavily Indebted Poor Countries shall not be conditioned on any 
country adopting or implementing any structural adjustment 
program of the IMF. The amendment also strikes the waiting 
period for debt reduction and the requirement that countries 
seeking debt reduction enter into a program for poverty 
reduction with the IMF and the IBRD. The additional language 
offered by Rep. Waters urges that reform of the HIPC Initiative 
include a requirement that countries adopt a Natural Resources 
Development Plan as a condition of receiving full debt relief. 
The amendment passed 21 to 14.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Dr. Paul                            Mrs. Roukema
Mr. Manzullo                        Mr. Bachus
Mr. Ryan of Wisconsin               Mr. Castle
Mr. Terry                           Mr. Royce
Mr. Toomey                          Mr. Barr
Mr. LaFalce                         Mrs. Kelly
Mr. Vento                           Mr. Riley
Mr. Frank                           Mr. Ose
Ms. Waters                          Mrs. Biggert
Mr. Sanders                         Mr. Green
Mr. Gutierrez                       Mr. Ackerman
Mr. Watt                            Mr. Maloney
Ms. Hooley                          Mr. Sherman
Ms. Carson
Mr. Meeks
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano

    An amendment offered by Reps. Paul, Campbell, McCollum and 
Jones of North Carolina to sunset the Bretton Woods Act after 
three years with a report from Treasury on alternatives after 
two years was defeated by a recorded vote of 22 to 12.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Mr. Barr                            Mrs. Roukema
Dr. Paul                            Mr. Lazio
Mr. Ryun of Kansas                  Mr. Bachus
Mr. Riley                           Mrs. Kelly
Mr. Manzullo                        Mr. Ose
Mr. Ryan of Wisconsin               Mr. Terry
Mr. Sweeney                         Mr. LaFalce
Mrs. Biggert                        Mr. Vento
Mr. Green                           Mr. Frank
Mr. Toomey                          Ms. Waters
Mr. Goode                           Mr. Sanders
                                    Mr. Watt
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson
                                    Mr. Sherman
                                    Mr. Meeks
                                    Ms. Schakowsky
                                    Mr. Moore
                                    Mrs. Jones
                                    Mr. Capuano

    The Committee adopted the substitute amendment as amended 
and then brought up H.R. 1095, struck everything after the 
enacting clause, and inserted in lieu thereof the substitute 
amendment, as amended. The motion passed by voice vote.
    The Committee favorably reported H.R. 1095 as amended to 
the full House by a vote of 23 to 16.
        YEAS                          NAYS
Mr. Leach                           Mrs. Roukema
Mr. Lazio                           Mr. Royce
Mr. Bachus                          Mr. Ney
Mr. Campbell                        Mr. Barr
Mrs. Kelly                          Dr. Paul
Mr. LaFalce                         Mr. Ryun of Kansas
Mr. Vento                           Mr. Riley
Mr. Frank                           Mr. Manzullo
Ms. Waters                          Mr. Ryan of Wisconsin
Mr. Sanders                         Mr. Ose
Mr. Gutierrez                       Mr. Sweeney
Mr. Watt                            Mrs. Biggert
Mr. Ackerman                        Mr. Terry
Mr. Bentsen                         Mr. Green
Mr. Maloney                         Mr. Toomey
Ms. Hooley                          Mr. Goode
Ms. Carson
Mr. Sherman
Mr. Meeks
Ms. Schakowsky
Mr. Moore
Mrs. Jones
Mr. Capuano

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                     Committee on Government Reform

    In compliance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, no oversight findings have 
been submitted to the Committee by the Committee on Government 
Reform.

                        Constitutional Authority

    In compliance with clause 3(d)(1) of rule XIII of the Rules 
of the House of Representatives, the Constitutional Authority 
for Congress to enact this legislation is derived from Article 
I, section 8, clause 1 (relating to the general welfare of the 
Untied States): Article I, section 8, clause 3 (relating to 
Congressional power to regulate commerce); Article 1, section 
8, clause 5 (relating to the power ``to coin money'' and 
``regulate the value thereof''); Article I, section 8, clause 
18 (relating to making all laws necessary and proper for 
carrying into execution powers vested by the Constitution in 
the government of the United States).

               New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, please see the attached 
Congressional Budget Office cost estimate.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (P.L. 104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

    Congressional Budget Office Cost Estimate and Unfunded Mandates 
                                Analysis

    The cost estimate in compliance with clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and Section 
402 of the Congressional Budget Act of 1974 has been requested 
but is not yet available.

 Section-by-Section Analysis of the Debt Relief for Poverty Reduction 
                              Act of 1999


Sec. 1. Short title this section designates the bill as the ``Debt 
        Relief for Poverty Reduction Act of 1999''.

Sec. 2. Actions to provide bilateral debt relief and procedures for new 
        loans, credits, and guarantees

    Subsection (a) amends the Foreign Assistance Act of 1961 
(``the Act'') by adding new sections 901-907.
    Sec. 901--Cancellation of Debt. Section 901(a) amends the 
Act to require the President to cancel, prior to September 30, 
2004, all amounts owed to the U.S. or any agency thereof by 
eligible countries described in section 902 as a result of 
concessional loans made or credits extended prior to June 20,1 
999. This section includes bilateral economic assistance, 
including loans made under Title I of the PL 480 Food for Peace 
program. Section 901(b) amends the Act to require the President 
to cancel, prior to September 30, 2004, all amounts owed to the 
U.S. or any agency thereof by eligible countries under section 
902 as a result of nonconcessional loans, guarantees or 
insurance, or credits provided prior to June 20, 1999. This 
section includes housing guarantees and loans made to finance 
defense sales under the Arms Export Control Act. Sections 
901(a) and 901(b) are subject to amounts provided in advance in 
appropriations acts. Section 901(c) amends the Act by requiring 
the U.S. to provide immediate relief form debt service payments 
with respect to amounts owed to the U.S. for which debt 
cancellation is to be provided beginning on the date on which 
the country is determined to be so eligible under sec. 902 so 
long as the country remains in compliance with the eligibility 
criteria and maintains the link to poverty reduction described 
below. None of the provisions of sec. 901 are intended to apply 
to the U.S. Overseas Private Investment Corporation.
    Sec. 902--Eligible Countries. Section 902(a) amends the Act 
by establishing eligibility criteria for cancellation of debts 
owed to the Untied States, First, the President must be 
satisfied that thecountry is performing satisfactorily under an 
economic program. Second, as of December 31, 2000, the country must be 
eligible to borrow from the International Development Association (the 
concessional lending facility of the World Bank Group) and must be 
ineligible to borrow from the International Bank for Reconstruction and 
Development (the market rate lending facility of the World Bank Group) 
or is Nigeria. If the country meets the general eligibility criteria 
established above, it must also meet one of two indebtedness tests. 
Section 902(a)(3)(A) defines an indebtedness test that would make the 
original 41 HIPC countries including Bangladesh, Cambodia, Comoros, and 
Haiti eligible for U.S. debt cancellation. Section 902(a)(3)(B) states 
the revised debt sustainability targets agreed to by the G-7 at Cologne 
in June 1999. However, the determination of country eligibility under 
Section 902(a)(3)(B) is to be made by the President and is not linked 
to the modified HIPC Initiative. Current estimates are that between 33-
37 countries will ultimately qualify for enhanced relief under the 
Cologne criteria.
    Section 902(b) establishes six exceptions to country 
eligibility: (1) excessive military spending; (2) support for 
acts of international terrorism; (3) failure to cooperate on 
international narcotics control matters; (4) gross violations 
of internationally recognized human rights; (5) support for the 
practice of slavery or failing to make a concerted effort to 
eradicate the practice; or (6) if the country is located in 
Southeast Asia and is failing to fully cooperate with the U.S. 
on POW/MIA issues.
    Section 902(c) establishes an additional requirement to 
strengthen the linkage between debt relief and poverty 
reduction. Eligible countries have the choice of either 
establishing this linkage, through transparent and 
participatory processes, through one of two mechanisms: a Human 
Development Fund or Integrated Poverty Reduction Strategy. 
Section 902(c)(1) elaborates the requirements for Human 
Development Fund (HDF), the resources of which shall be 
dedicated reducing poverty and expanding access to the poorest 
members of society to basic social services, including 
education, health, clean water, and sanitation. There is no 
requirement that the country be performing satisfactorily under 
IMF or World Bank economic and social reform programs. Section 
902(c)(2) elaborates the requirements of an integrated strategy 
for poverty reduction, developed in cooperation with the World 
Bank and IMF. On the request of the country, the Secretary of 
the Treasury is required to provide or otherwise arrange for 
technical assistance to the country to help establish and 
manage a HDF. Similarly, the Secretary is urged to encourage 
the international financial institutions to provide funds for 
the country to hire technical assistance in the establishment 
and management of the HDF. Section 902(d) defines the modified 
HIPC Initiative.
    Sec. 903--Priority. This section provides that in carrying 
out debt relief under the Act, the President should seek to 
leverage scarce foreign assistance dollars and give priority to 
those heavily indebted poor countries with demonstrated need 
and the capacity to use such relief effectively.
    Sec. 904--Special Provisions. Section 904(a) provides that 
a cancellation of debt under section 901 shall not be 
considered to be assistance for any provision of law that 
limits assistance to a country, except as the President may 
determine for reasons of national security. Section 904(b) 
states that the authority to provide for debt cancellation may 
be exercised notwithstanding sec. 620(r) of the Act, which 
provides that no recipient of a loan made under the Act shall 
be relieved of liability for the repayment of any part of the 
principal of or interest on such loan. Section 904(c) states 
that cancellation of debt under section 901 is an additional 
authority and does not limit the authority to cancel debt under 
any other provision of law. Section 904(d) states that in 
exercising the authority under sec. 901, the President shall 
take into account the country's record on child labor and 
workers rights. Section 904(e) further states that in 
exercising his authority under section 901, the President shall 
take into account the country's record with regard to female 
genital mutilation.
    Sec. 905--Annual Reports to Congress. This provision 
requires the President to issue a comprehensive public report 
to the appropriate congressional committees regarding U.S. 
bilateral debt relief for eligible heavily indebted poor 
countries. The report shall be completed by not later than 
December 31 of each year. Appropriate committees are the 
Banking, Appropriations, and International Relations Committees 
of the House, and the Banking, Foreign Relations, and 
Appropriations Committees of the Senate.
    Sec. 906--Sense of the Congress. This section states that 
it is the sense of the Congress that the amounts that would 
otherwise be provided by the U.S. for development aid or other 
debt relief should not be reduced on account of any 
appropriations made pursuant to section 907.
    Sec. 907--Authorization of Appropriations. For the cost (as 
defined in section 502(5) of the Federal Credit Reform Act of 
1990) of the cancellation or reduction of any debt under 
section 901 of this Act, the section authorizes to be 
appropriated to the President such sums as may be necessary for 
each of the fiscal years 2000 and 2001.
    (b) Annual Report on Paris Club Debt Rescheduling Actions 
and Cancellations. This provision requires an annual report by 
the Secretary of the Treasury on Paris Club debt restructuring 
actions and cancellations shall be prepared no later than Jan. 
1, 2000. The report submitted to Congress shall contain (1) a 
description of debt restructuring actions and cancellations 
undertaken the U.S. in the Paris Club for the prior fiscal year 
and (A)(i) describe the amount of debt restructured with 
respect to each member country; (ii) the new maturity of each 
such debt restructured; (iii) the new interest rates and other 
costs of such restructured; (iv) any other terms and conditions 
of each such debt restructured; and (B) an assessment of the 
debt restructuring, including an assessment of the effect of 
the restructuring on the debt service payments of the debtor 
country; and (2) a description of all amounts owed to the U.S. 
Government by foreign countries as a result of loans, 
guarantees or insurance, or credits extended.
    (c) Cancellation of Debt Owed to the Export-Import Bank or 
the Commodity Credit Corporation.--Subsection (c)(1)(A) states 
that subject to amounts provided in advance in appropriations 
Acts, the President shall cancel all amounts owed to the Ex-Im 
Bank of the U.S. by each country eligible for debt reduction as 
a result of loans, guarantees, or insurance, provided prior to 
June 20, 1999. This provision covers the Export-Import Bank and 
the Commodity Credit Corporation. Subsections (c)(2)-(c)(4) 
repeat provisions on country eligibility, exceptions, and in 
the Foreign Assistance Act. Section (c)(5) defines the 
``modified HIPCInitiative.'' Subsections (c)(6)--(c)(8) restate 
the funding priority, requirement on child labor and workers rights, 
and female genital mutilation as in sections 903 and 904 amending the 
Foreign Assistance Act. Subsection (c)(9) states that the authority to 
reduce debt is an additional authority. Subsection (c)(10) states that 
for the cost of the reduction of debt, there are authorized to be 
appropriated to the President such sums as may be necessary for each of 
the fiscal years 2000 through 2004.
    (d) Ensuring Burdensharing by Other Creditor Countries.--
This section urges the President to establish efforts, 
immediately after enactment of this Act, with other countries 
that are members of the Paris Club and other creditors to 
accomplish by September 30, 2004 the following: (1) 
cancellation of all concessional debts owed by eligible 
countries as of their respective decision points; (2) 
cancellation of nonconcessional loans, guarantees or insurance 
owed by eligible countries eligible as of their respective 
decision points; and (3) the establishment of procedures by the 
Club to ensure greater transparency in the decisionmaking 
process, including publication of information for each 
restructuring action undertaken by the Club as to the amount of 
sovereign debt restructured, as to whom amounts are owed and by 
how much each is owed, disaggregated by each country, as to how 
much each debtor country owes each international financial 
institution (IFI), as to new maturity or maturities of the 
restructured debts, as to new interest rate and other costs 
associated with the restructured debts, and as to any other new 
terms. Such information shall be contrasted with such amounts 
and terms in effect before the restructuring and offer an 
assessment of the effects the restructuring will have on the 
country's debt servicing.
    (e) Definition of Decision Point.--This provision defines 
the term ``decision point'' as it is used in the modified HIPC 
Initiative.
    (f) Sense of Congress.--This provision states the Sense of 
the Congress that U.S. bilateral assistance to a country that 
receives cancellation of debt should be in the form of grants 
only.

Sec. 3. Actions to improve the provision of multilateral debt relief 
        and procedures for new lending

    Section 3 adds new sections 1623--1625 to amend title XVI 
of the International Financial Institutions Act.
    Sec. 1623--Improvement of the Heavily Indebted Poor 
Countries Initiative; Ensuring Equitable Burden Sharing. 
Section 1623(a) urges the President to commence efforts to 
accomplish the following modifications in the HIPC Initiative: 
(1) de-linking debt reduction from IMF programs; (2) promoting 
poverty alleviation and environmental protection; (3) revising 
the Cologne eligibility criteria to include Nigeria; (4) 
requiring as a condition of debt relief an action plan for 
human development that includes a HDF; (5) requiring as a 
condition of debt relief a requirement that Southeast Asian 
countries cooperate with the U.S. on POW/MIA issues; (6) 
requiring a natural resources development plan, which (A) 
covers at least a 5-year period for the development of the 
country's natural resources in a manner that will benefit the 
people of the country, (B) includes provisions for transparency 
of government contracts with foreign or multinational 
corporations, and (c) provides technical assistance from the 
IFIs to countries in developing such plans and negotiating or 
renegotiating contract with foreign or multinational 
corporations for the development of natural resources; (7) 
provides an amount of debt reduction sufficient to reduce the 
net present value of country's debt to less than 100% of its 
annual exports and annual debt service payments not greater 
than 10% of government revenues; (8) provides greater 
transparency and participation in HIPC decision making; (9) 
fosters additional or faster relief for countries with a 
sustained commitment to poverty reduction and special 
consideration for a country emerging from civil conflict or 
that has recently suffered a natural disaster; (10) requires an 
external assessment of the modified HIPC Initiative, including 
the reformed ESAF as it relates to that Initiative, by December 
31, 2001; and (11) terminating of the HIPC Initiative when all 
contemplated debt relief is accomplished. In addition, a 
freestanding provision is added stating that on the request of 
the country, the World Bank should provide technical assistance 
to the country regarding the establishment and management of 
the HDF.
    Sec. 1623(b)--Promotion of Equitable Burden Sharing.--This 
subsection urges the President to commence efforts to ensure 
that creditors draw upon their own resources to finance debt 
reduction under the modified HIPC Initiative without diverting 
funds from other high priority poverty alleviation programs.
    Sec. 1623(c)--Contributions to the HIPC Trust Fund.--This 
subsection authorizes such sums as may be necessary for the 
World Bank's HIPC Trust Fund, but only for the purposes of debt 
relief, for FY 2000-2004, except that no sums are authorized 
for such purpose for the fiscal year unless the President 
determines that, during the preceding fiscal year (1) 
satisfactory progress was made in accomplishing improvements in 
the HIPC Initiative and (2) the United States' contributions to 
multilateral debt relief under the Initiative were matched, by 
a ratio of at least two to one by resources provided in the 
aggregate by all other donors.
    Sec. 1623(e)--Report to Congress.--This subsection requires 
that not later than December 31 of each year, the President 
shall submit to the appropriate congressional committees a 
public report on the progress made in reforming the HIPC 
Initiative and achieving multilateral debt relief.
    Sec. 1623(f)--Definitions.--This subsection repeats the 
definition of ``modified HIPC Initiative'' and ``decision 
point.''
    Sec. 1624--Reform of the Enhanced Structural Adjustment 
Facility. This section requires the Secretary of the Treasury 
to instruct the U.S. Executive Directors at the World Bank and 
IMF to use their voice and vote to promote the establishment of 
poverty reduction strategy policies and procedures at those 
institutions which have the following components: (1) the 
development of country-specific poverty reduction strategies, 
that (A) will be set out in poverty reduction strategy papers 
(PRSPs); (B) will reflect the relevant expertise of the World 
Bank and IMF; (C) will make Fund and Bank advice and operations 
fully consistent with the objectives of poverty reduction and 
broad-based growth; (D) should include a participatory poverty 
assessment, social impact assessments, a balance between 
poverty reduction and macroeconomic objectives, and transparent 
budget procedures; (2) the adoption of periodic comprehensive 
reviews of ESAF and IDA programs; (3) the publication of PRSPs; 
(4) the establishment of a standing evaluation unit at the IMF, 
similar to the Operations Evaluation Department at the World 
Bank, that wouldreport directly to the Executive Board of the 
Fund and that would undertake periodic reviews of IMF operations, 
including ESAF, with all such reports released promptly to the public; 
(5) the promotion of simpler and clearer conditionality in IDA and ESAF 
programs; (6) the reform of ESAF programs that are consistent with the 
Poverty Reduction Strategies; (7) policies that ensure that IDA lending 
operations in HIPC countries are consistent with the Poverty Reduction 
Strategies; (8) strengthening the linkage between borrower country 
performance and lending operations by IDA and ESAF; (9) the full public 
disclosure of the proposed objectives, financial organization and 
operations of the successor to ESAF at least 90 days before any 
decision by the Executive Board to consider its adoption; and (10) the 
abolishment of ESAF, and its replacement with a Poverty Reduction and 
Growth Facility, which will be a subordinate part of a new approach to 
defining the economic framework for low-income countries.
    Sec. 1625--Transparency and Participation of Civil Society 
in new IFI Lending. This section requires the Secretary of the 
Treasury to instruct the U.S. Executive Directors at the 
international financial institutions to use their voice and 
votes to vigorously encourage their respective institutions to 
adopt transparency and other measures to facilitate 
participation of civil society in developing countries in the 
design of poverty reduction strategies and in decisions to 
borrow from such institutions in support of such strategies, 
including: (1) the disclosure of Policy Framework Papers, 
Public Expenditure Reviews, Country Assistance Strategies, IMF 
Letters of Intent, appraisal documents and other similar 
reports; and (2) the provision of detailed information to the 
Board of Directors of such an institution and to the public, 
prior to the approval of a lending operation for a developing 
country, as to the nature and extent of civil society 
participation in the design of, and approval process for, such 
operation.

Sec. 4. Enhanced Structural Adjustment Facility/HIPC Trust Fund

    Section 4 amends the Bretton Woods Agreements by adding at 
the end the following new Section 62.
    Sec. 62--Approval of Contributions to the ESAF/HIPC Trust 
Fund. Subsection (a)(1) authorizes the Secretary of the 
Treasury to instruct the U.S. Executive Director of the IMF to 
vote to approve the sale of up to 14 million ounces at a 
market-related price to a member of members that have large 
repayment obligations to the IMF. Simultaneously, the IMF 
agrees to accept the same amount of gold, valued at the same 
market-related price, in settlement of some or all of the 
member's repayment obligations. It is the Committee's 
understanding that under the mechanics of the contemplated 
transaction, the IMF's gold would be available to the member 
only to settle its obligations and thus would effectively 
remain in the IMF's possession. This provision further requires 
that the earnings on the invested profits of such sales be 
placed within a separate subaccount within the ESAF/HIPC Trust, 
and used only for providing debt relief from the Fund under the 
modified HIPC Initiative. Subsection (a)(2) authorizes the U.S. 
to support the transfer of resources from the SCA-2 to the 
ESAF/HIPC Trust, including some $330 million attributable to 
the United States, which funds shall be used only for debt 
relief. Section 62(b) adds a requirement that within 15 days 
after the U.S. Executive Director consents to mobilizing IMF 
gold holds and the SCA-2 transfer, the Secretary of the 
Treasury shall certify to the appropriate congressional 
committees that: (1) the IMF's estimate of the net present 
value of the interest earnings on the total amount of gold sold 
shall not be greater than the net present value of the costs of 
the Fund's participation in the modified HIPC Initiative; (2) 
the interest earnings on the invested profits shall be 
deposited in a separate subaccount and used only for debt 
relief from the Fund under the Initiatives; and (3) any funds 
attributable to the U.S. participation in the transfer of 
resources from SCA-2 shall be used only for debt relief from 
the Fund under the Initiative.

Sec. 5. U.S. international financial agreements; transmission to 
        Congress

    Section 5 amends Sec. 112b of Title 1, U.S.C., the so-
called ``Case Act,'' to require the Treasury Department to 
transmit to the House and Senate Banking Committees a copy of 
any international financial agreements entered into by the 
government of the United States. The Committee is seriously 
disturbed that the Department of the Treasury has failed to 
notify it of international financial agreements, most recently 
the renewal of the North American Framework Agreement. This 
provision is intended to remedy that egregious lack of 
consultation and notice with this Committee and, more 
generally, the Congress as a coequal branch of government on 
fundamental issues of U.S. international economic and financial 
policy.

Sec. 6. Corruption in foreign governments

    Subsection (a) states the Sense of the Congress with 
respect to U.S. government policies to prevent money laundering 
and systemic corruption in other countries, and (b) amends 
Title XV of the International Financial Institutions Act to add 
a new section 1504. Section 1504 requires the Secretary of the 
Treasury to instruct the U.S. Executive Directors of the 
multilateral development banks to use aggressively their voice 
and vote to promote policies that would make their institutions 
more effective mechanisms for promoting good governance and 
anti-corruption principles within recipient countries. An 
identical statutory provision already applies to the IMF. 
Subsection (c) adds an annual reporting requirement on U.S. 
efforts consistent with the above objectives.

Sec. 7. Safeguards on the use of IMF resources

    The Bretton Woods Agreements Act, (22 U.S.C. 286-286mm) is 
amended by adding a new Section 63.
    Section 63 requires the Secretary of the Treasury to 
instruct the U.S. Executive Director at the IMF to use their 
voice and vote to: (1) require independent audits of central 
banks on a more systematic basis; (2) ensure such audits occur 
before IMF financing is disbursed; (3) develop a systematic 
approach to reducing inappropriate uses of foreign exchange 
reserves; and (4) strongly encourage countries receiving 
exceptional levels of financial support to adopt and comply 
with Fund standards on foreign reserve management. In the wake 
of the FIMACO scandal involving efforts by the Central Bank of 
Russia to mislead the IMF, these provisions reflect the 
Committee's deep concern that safeguards should be 
significantly strengthened on the use of IMF resources by 
borrowing countries.

Sec. 8. U.S. lending policies toward countries receiving debt relief

    This section of the bill requires the GAO to prepare a 
report on efforts to ensure that the lending policies of the 
U.S. and the IFIs toward countries eligible for debt relief 
avoid moral hazard and promote economic growth and poverty 
reduction. The report shall be submitted to the appropriate 
congressional committees not later than September 30, 2000.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

             PART VI OF THE FOREIGN ASSISTANCE ACT OF 1961


    PART VI--CANCELLATION OF DEBT OWED TO THE UNITED STATES BY POOR 
                               COUNTRIES

SEC. 901. CANCELLATION OF DEBT.

  (a) Cancellation of Concessional Debt.--
          (1) In general.--Subject to amounts provided in 
        advance in appropriations Acts, the President shall, 
        prior to September 30, 2004, cancel all amounts owed to 
        the United States (or any agency of the United States) 
        by countries eligible under section 902 as a result of 
        concessional loans made or credits extended prior to 
        June 20, 1999, under any of the provisions of law 
        described in paragraph (2).
          (2) Provisions of law.--The provisions of law 
        described in this paragraph are the following:
                  (A) Part I of this Act, including chapter 4 
                of part II of this Act, or predecessor foreign 
                economic assistance legislation.
                  (B) Title I of the Agricultural Trade 
                Development and Assistance Act of 1954 (7 
                U.S.C. 1701 et seq.).
  (b) Cancellation of Nonconcessional Debt.--
          (1) In general.--Subject to amounts provided in 
        advance in appropriations Acts, the President shall, 
        prior to September 30, 2004, cancel all amounts owed to 
        the United States (or any agency of the United States) 
        by countries eligible under section 902 as a result of 
        nonconcessional loans made, guarantees or insurance 
        issued, or credits extended prior to June 20, 1999, 
        under any of the provisions of law described in 
        paragraph (2).
          (2) Provisions of law.--The provisions of law 
        described in this paragraph are the following:
                  (A) Sections 221 and 222 of this Act.
                  (B) The Arms Export Control Act (22 U.S.C. 
                2751 et seq.).
  (c) Immediate Relief from Debt Service Payments.--A country 
eligible under section 902 for debt cancellation under this 
section shall not be obligated to make debt service payments 
with respect to amounts owed to the United States for which 
debt cancellation is to be provided beginning on the date on 
which the country is determined to be so eligible under section 
902 so long as the country remains in compliance with the other 
provisions of this part.

SEC. 902. ELIGIBLE COUNTRIES.

  (a) In General.--Except as provided in subsection (b) and 
subject to the fulfillment of the additional requirement in 
subsection (c), a country that is performing satisfactorily 
under an economic reform program shall be eligible for 
cancellation of debt under section 901 if the country--
          (1) as of December 31, 2000, is eligible to borrow 
        from the International Development Association;
          (2) as of December 31, 2000, is not eligible to 
        borrow from the International Bank for Reconstruction 
        and Development, or is Nigeria; and
          (3)(A) has outstanding public and publicly guaranteed 
        debt, the net present value of which on December 31, 
        1996, was at least 150 percent of the average annual 
        value of the exports of the country for the period 1994 
        through 1996; or
          (B) has outstanding public and publicly guaranteed 
        debt, the net present value of which, as of the date 
        the President determines that the country is eligible 
        for debt relief under all the criteria set forth in 
        this section, is--
                  (i) at least 150 percent of the annual value 
                of the exports of the country, for the most 
                recent year for which such information is 
                available; or
                  (ii) at least 250 percent of the annual 
                fiscal revenues of the country, and the country 
                has a minimum ratio of exports to gross 
                domestic product of 30 percent and a minimum 
                ratio of fiscal revenues of the country to 
                gross domestic product of 15 percent, for the 
                most recent year for which such information is 
                available.
  (b) Exceptions.--A country shall not be eligible for 
cancellation of debt under section 901 if--
          (1) the government of the country has an excessive 
        level of military expenditures;
          (2) the government of the country has repeatedly 
        provided support for acts of international terrorism, 
        as determined by the Secretary of State under section 
        6(j)(1) of the Export Administration Act of 1979 (50 
        U.S.C. App. 2405(j)(1)) or section 620A(a) of the 
        Foreign Assistance Act of 1961 (22 U.S.C. 2371(a));
          (3) the government of the country is failing to 
        cooperate on international narcotics control matters;
          (4) the government of the country (including its 
        military or other security forces) engages in a 
        consistent pattern of gross violations of 
        internationally recognized human rights;
          (5) the government of the country supports or 
        condones the practice of slavery or there is documented 
        evidence of the existence of slavery in the country and 
        the government is not making a concerted effort to 
        eradicate the practice; or
          (6) the country is located in Southeast Asia, and the 
        government of the country is failing to fully cooperate 
        with the United States on all issues involving United 
        States prisoners of war/missing in action (POW/MIA), as 
        determined by the Secretary of State.
  (c) Additional Requirement.--A country which is otherwise 
eligible to receive cancellation of debt under section 901 may 
receive such cancellation only if--
          (1) the government of the country has established, 
        through transparent and participatory processes, 
        including participation of civil society--
                  (A) a human development fund (hereinafter 
                referred to as the ``Human Development 
                Fund'')--
                          (i) the resources of which shall be 
                        dedicated to reducing the number of 
                        persons living in poverty, expanding 
                        access of the poorest members of 
                        society to basic social services, 
                        including education, health, clean 
                        water and sanitation, and preventing 
                        the degradation of the environment; and
                          (ii) into which shall be deposited 
                        all savings generated by debt reduction 
                        pursuant to section 901 and section 
                        2(c) of the Debt Relief for Poverty 
                        Reduction Act of 1999;
                  (B) arrangements to ensure that all 
                expenditures from the Human Development Fund 
                during a year will be used to the extent 
                possible to increase annual expenditures for 
                human development by the government above the 
                greater of--
                          (i) the total amount of annual 
                        expenditures for human development by 
                        the government for the preceding year; 
                        or
                          (ii) the average total amount of such 
                        expenditures for the 3 years 
                        immediately preceding the year in which 
                        such fund is established; and
                  (C) arrangements for monitoring the 
                operations and financial transactions and 
                accounts of the Human Development Fund by an 
                oversight body which includes representatives 
                of civil society; or
          (2) the country has developed and committed to an 
        integrated strategy, of the type described in section 
        1624(a)(1) of the International Financial Institutions 
        Act, for poverty reduction developed in cooperation 
        with the International Bank for Reconstruction and 
        Development and the International Monetary Fund, and in 
        consultation with civil society, which--
                  (A) uses economic reform and technical 
                assistance programs developed and jointly 
                administered by the International Bank for 
                Reconstruction and Development and the 
                International Monetary Fund;
                  (B) includes monitorable poverty reduction 
                goals (such as increasing literacy, reducing 
                infant and child mortality, lowering the 
                incidence of AIDS, and improving environmental 
                conditions) developed in cooperation with the 
                International Bank for Reconstruction and 
                Development, relevant agencies of the United 
                Nations, civil society groups, and other 
                appropriate organizations;
                  (C) takes steps so that the financial 
                benefits from debt relief pursuant to the 
                modified Heavily Indebted Poor Countries (HIPC) 
                Initiative, including savings realized as a 
                result of debt relief pursuant to section 901 
                and section 2(c) of the Debt Relief for Poverty 
                Reduction Act of 1999, are applied to poverty 
                reduction programs dedicated to achieving the 
                goals described in subparagraph (B);
                  (D) includes transparent policymaking and 
                budget procedures, good governance, and anti-
                corruption measures; and
                  (E) broadens public participation and popular 
                understanding of the principles and goals of 
                poverty reduction, sustainable development, and 
                good governance.
On request of the country, the Secretary of the Treasury shall 
provide or otherwise arrange for technical assistance to the 
country regarding the establishment and management of the Human 
Development Fund in accordance with paragraph (1) of this 
subsection. The Secretary of the Treasury should also encourage 
international financial institutions to provide funds for the 
country to hire technical assistance consultants regarding the 
establishment and management of the Human Development Fund in 
accordance with paragraph (1) of this subsection.
  (d) Definition.--In this section, the term ``modified Heavily 
Indebted Poor Countries Initiative'' means the multilateral 
debt initiative presented in the Report of G-7 Finance 
Ministers on the Koln Debt Initiative to the Koln Economic 
Summit, Cologne, Germany, held from June 18-20, 1999.

SEC. 903. PRIORITY.

  In carrying out section 901, the President should seek to 
leverage scarce foreign assistance dollars and give priority to 
those heavily indebted poor countries with demonstrated need 
and the capacity to use such relief effectively.

SEC. 904. SPECIAL PROVISIONS.

  (a) Cancellation of Debt Not Considered To Be Assistance.--
Except as the President may otherwise determine for reasons of 
national security, a cancellation of debt under section 901 
shall not be considered to be assistance for purposes of any 
provision of law limiting assistance to a country.
  (b) Inapplicability of Certain Prohibitions Relating to 
Cancellation of Debt.--The authority to provide for 
cancellation of debt under section 901 may be exercised 
notwithstanding section 620(r) of this Act or any similar 
provision of law.
  (c) Other Debt Cancellation Authorities.--The authority to 
cancel debt under section 901 is in addition to the authority 
to cancel debt under any other provision of law and does not in 
any way limit or otherwise affect such other authority.
  (d) Child Labor and Workers Rights.--In exercising the 
authority under section 901, the President shall take into 
account the country's record on international child labor and 
international workers rights.
  (e) Female Genital Mutilation.--In exercising the authority 
under section 901, the President shall take into account the 
country's record with regard to female genital mutilation.

SEC. 905. ANNUAL REPORTS TO THE CONGRESS.

  (a) In General.--Not later than December 31 of each year, the 
President shall prepare and transmit to the appropriate 
congressional committees a report, which shall be made 
available to thepublic, concerning the cancellation of debt 
under section 901 and section 2(c) of the Debt Relief for Poverty 
Reduction Act of 1999, determinations made under section 904(a), 
activities undertaken under section 2(d) of the Debt Relief for Poverty 
Reduction Act of 1999, the progress made in accomplishing the purposes 
of such section 2(d), and other debt restructuring activities for the 
prior fiscal year. The report shall also include a list of the 
countries that have received debt cancellation under section 901 and a 
list of the countries that, although eligible under section 
902(a)(3)(A), have been denied debt cancellation under section 902 and 
the reasons therefor. The report shall also include a description of 
the extent to which countries that receive debt cancellation under 
section 901 or under section 2(c)(1) of the Debt Relief for Poverty 
Reduction Act of 1999 have complied with the requirements described in 
section 902(c) or section 2(c)(4) of such Act, respectively.
  (b) Definition.--In this section, the term ``appropriate 
congressional committees'' means--
          (1) the Committee on Banking and Financial Services, 
        the Committee on Appropriations, and the Committee on 
        International Relations of the House of 
        Representatives; and
          (2) the Committee on Banking, Housing, and Urban 
        Affairs, the Committee on Foreign Relations, and the 
        Committee on Appropriations of the Senate.

SEC. 906. SENSE OF THE CONGRESS.

  It is the sense of the Congress that the amounts that would 
otherwise be provided by the United States for development aid 
or other debt relief should not be reduced on account of any 
appropriations made pursuant to section 907.

SEC. 907. AUTHORIZATION OF APPROPRIATIONS.

  For the cost (as defined in section 502(5) of the Federal 
Credit Reform Act of 1990) of the cancellation of any debt 
under section 901 of this Act, there are authorized to be 
appropriated to the President such sums as may be necessary for 
each of the fiscal years 2000 through 2004.
                              ----------                              


INTERNATIONAL FINANCIAL INSTITUTIONS ACT

           *       *       *       *       *       *       *


TITLE XV--OTHER POLICIES

           *       *       *       *       *       *       *


SEC. 1504. UNITED STATES VOTES IN INTERNATIONAL FINANCIAL INSTITUTIONS.

  The Secretary of the Treasury shall instruct the United 
States Executive Director at each multilateral development bank 
(as defined in section 1701(c)(4)) to use aggressively the 
voice and vote of the United States to promote vigorously 
policies that would make the institution more effective 
mechanisms, in concert with appropriate international 
authorities and other international financial institutions (as 
defined in section 1701(c)(2)), for promoting good governance 
principles within recipient countries by fostering structural 
reforms, including procurement reform, that reduce 
opportunities for corruption and bribery, and drug-related 
money laundering. In addition, the Secretary of the Treasury 
shall instruct the United States Executive Director at each 
multilateral development bank (as defined in section 
1701(c)(4)) to use aggressively the voice and vote of the 
United States to oppose loans or other assistance by such bank 
to a country located in Southeast Asia if the government of 
such country is failing to fully cooperate with the United 
States on all issues involving United States prisoners of war/
missing in action (POW/MIA), as determined by the Secretary of 
State.

           *       *       *       *       *       *       *


TITLE XVI--HUMAN WELFARE

           *       *       *       *       *       *       *


SEC. 1623. IMPROVEMENT OF THE HEAVILY INDEBTED POOR COUNTRIES 
                    INITIATIVE; ENSURING EQUITABLE BURDEN SHARING.

  (a) Improvement of the HIPC Initiative.--In order to 
accelerate multilateral debt relief and promote human and 
economic development and poverty alleviation in heavily 
indebted poor countries the Congress urges the President to 
commence immediately efforts, within the Paris Club of Official 
Creditors, as well as the International Bank for Reconstruction 
and Development (World Bank), the International Monetary Fund 
(IMF), and other appropriate multilateral development 
institutions to accomplish the following modifications in the 
Heavily Indebted Poor Countries (HIPC) Initiative:
          (1) Prohibition on structural adjustment programs.--
        The provision of debt reduction under the modified HIPC 
        Initiative shall not be conditioned on any country 
        adopting or implementing any structural adjustment or 
        stabilization program of the Enhanced Structural 
        Adjustment Facility of the IMF or any other structural 
        adjustment or stabilization program operated solely or 
        jointly by the IMF, or any other program of the IMF.
          (2) Promotion of poverty alleviation and 
        environmental protection.--The social and economic 
        reforms on which debt reduction under the modified HIPC 
        Initiative is conditioned shall incorporate effective 
        measures for poverty reduction and environmental 
        protection.
          (3) Revision of country eligibility requirement.--A 
        country shall be regarded as having an unsustainable 
        debt burden for purposes of qualifying for debt 
        reduction (or for further debt reduction) under the 
        modified HIPC Initiative if the country is Nigeria or 
        has outstanding public and publicly guaranteed debt, 
        the net present value of which at the decision point, 
        is--
                  (A) at least 150 percent of the annual value 
                of the exports of the country for the most 
                recent year for which such information is 
                available; or
                  (B) at least 250 percent of the annual fiscal 
                revenues of the country, and the country has 
aminimum ratio of exports to gross domestic product of 30 percent, and 
a minimum ratio of fiscal revenues to gross domestic product of 15 
percent, for the most recent year for which such information is 
available.
          (4) Requirement for an action plan for human 
        development.--Debt reduction under the modified HIPC 
        Initiative shall not be provided for the benefit of a 
        country unless the government of the country has 
        established, through transparent and participatory 
        processes, including the participation of civil 
        society--
                  (A) a plan of action for human development 
                (in this section referred to as the ``Action 
                Plan'') which includes policies, programs, and 
                projects designed to reduce the number of 
                persons living in poverty, expand access of the 
                poorest members of society to basic social 
                services, including health, education, clean 
                water, and sanitation, and prevent the 
                degradation of the environment;
                  (B) a human development fund (in this section 
                referred to as the ``Human Development 
                Fund'')--
                          (i) the resources of which are 
                        dedicated to achieving the purposes of 
                        the Action Plan; and
                          (ii) into which are required to be 
                        deposited all savings generated by debt 
                        reduction provided for the benefit of 
                        the country under the modified HIPC 
                        Initiative and under other debt 
                        reduction programs;
                  (C) arrangements to ensure that all 
                expenditures from the Human Development Fund 
                during a year will be used, to the extent 
                possible, to increase annual expenditures for 
                human development by the government above the 
                greater of--
                          (i) the total amount of annual 
                        expenditures for human development by 
                        the government for the preceding year; 
                        or
                          (ii) the average total amount of such 
                        expenditures for the 3 years 
                        immediately preceding the year in which 
                        such fund is established; and
                  (D) arrangements for monitoring the 
                operations, financial transactions, and 
                accounts of the Human Development Fund by an 
                oversight body which includes representatives 
                of civil society, and a majority of the members 
                of which are citizens of the country.
          On request of the country, the World Bank should 
        provide technical assistance to the country regarding 
        the establishment and management of the Human 
        Development Fund in accordance with the preceding 
        sentence.
          (5) Requirement of southeast asian countries to 
        cooperate with united states on pow/mia issues.--Debt 
        reduction under the modified HIPC Initiative shall not 
        be provided for the benefit of a country located in 
        Southeast Asia if the government of the country is 
        failing to fully cooperate with the United States on 
        all issues involving United States prisoners of war/
        missing in action (POW/MIA), as determined by the 
        Secretary of State.
          (6) Requirement for a natural resources development 
        plan.--
                  (A) In general.--Debt reduction under the 
                modified HIPC Initiative shall not be provided 
                for the benefit of a country unless the 
                government of the country has established 
                through transparent and participatory processes 
                (including the participation of civil society) 
                a plan (in this section referred to as the 
                ``Natural Resources Development Plan''), 
                covering at least a 5-year period, for the 
                development of the country's natural resources 
                in a manner that will benefit the population of 
                the country. The plan shall specify at least 
                the following:
                          (i) The natural resources that are 
                        being developed or will be developed in 
                        the country.
                          (ii) The profits and other benefits 
                        that the government estimates will 
                        accrue to the companies involved in the 
                        development of such natural resources.
                          (iii) The corporate tax revenues, 
                        land use fees, resource extraction 
                        fees, export tariffs, and other 
                        revenues that the government estimates 
                        will be raised as a result of the 
                        development and extraction of such 
                        natural resources.
                          (iv) The plans of the government for 
                        the use of the revenues so raised.
                          (v) The plans of the government to 
                        conserve such natural resources and 
                        protect the environment of the country.
                          (vi) The plans of the government to 
                        protect public health and safety and 
                        the rights of workers.
                          (vii) The plans of the government to 
                        provide for the training and education 
                        of the local population and to ensure 
                        that the companies involved in the 
                        development of such natural resources 
                        provide members of the local population 
                        opportunities for employment and 
                        advancement.
                          (viii) Any other plans of the 
                        government to ensure a fair return to 
                        the country and its people for the 
                        development of such natural resources.
                  (B) Transparency.--All contracts between the 
                government (including any enterprise owned or 
                controlled by the government) and a foreign or 
                multinational corporation for the development 
                of natural resources of the country shall be 
                made available to the public.
                  (C) Assistance.--The World Bank, the African 
                Development Bank, the IMF, or other appropriate 
                multilateral development institutions shall, 
                under the modified HIPC Initiative, provide 
                assistance to countries in developing their 
                Natural Resources Development Plans and in 
                negotiating or renegotiating equitable 
                contracts with foreign or multinational 
                corporations for the development of natural 
                resources.
          (7) Amount of debt reduction.--The amount of debt 
        reduction provided under the modified HIPC Initiative 
        for the benefit of a country with an unsustainable debt 
        burden shall be sufficient to help catalyze sustainable 
        growth and poverty reduction, by reducing--
                  (A) the net present value of the outstanding 
                public and publicly guaranteed debt of the 
                country to less than 100 percent of the value 
                of the annual exports of the country; and
                  (B) the amount of annual payments due on such 
                public and publicly guaranteed debt to a 
                percentage of government revenues, not greater 
                than 10 percent, that will facilitate higher 
                levels of expenditure in areas that have been 
                identified as key to accelerated poverty 
                reduction as well as ensure that the country is 
                able to meet its current and future external 
                debt-service obligations in full, without 
                recourse to debt relief, rescheduling, or the 
                accumulation of arrears.
          (8) Transparency and participation in hipc decision 
        making.--All decisions under the modified HIPC 
        Initiative concerning the amount, terms and conditions, 
        and timing of debt relief for a country, and the 
        processes by which such decisions are made, shall be 
        subject to procedures which--
                  (A) are transparent, including publication of 
                the content of the decisions and of all 
                relevant analytical, legal, and policy 
                documents, including Debt Sustainability 
                Analyses, Policy Framework Papers, debt relief 
                agreements, and national development programs 
                and budgets;
                  (B) are participatory, including the 
                participation of civil society and 
                organizations with social sector expertise, 
                including United Nations agencies; and
                  (C) require that the published content of the 
                decisions and documents described in 
                subparagraph (A) of this paragraph that affect 
                or pertain to debt relief for the country to be 
                provided to the relevant oversight body 
                referred to in paragraph (4), and require that 
                such oversight body be consulted in the making 
                of key decisions regarding such debt relief.
          (9) Special provisions.--
                  (A) Debt reduction under the modified HIPC 
                Initiative for the benefit of a country that 
                has demonstrated a sustained commitment to 
                poverty alleviation shall be provided in a 
                greater amount or more quickly than would 
                otherwise be the case under that Initiative.
                  (B) A country that is emerging from civil 
                conflict or that has recently suffered a major 
                natural disaster should receive special 
                consideration for debt relief under the 
                modified HIPC Initiative, notwithstanding the 
                country's record of performance under the 
                country's program of social and economic 
                reform.
          (10) HIPC review.--The Secretary of the Treasury, 
        after consulting with the Committees on Banking and 
        Financial Services and on International Relations of 
        the House of Representatives and the Committees on 
        Foreign Relations and on Banking, Housing, and Urban 
        Affairs of the Senate, shall make every effort 
        (including instructing the United States Executive 
        Directors at the IMF and the World Bank) to ensure that 
        an external assessment of the modified HIPC Initiative, 
        including the reformed ESAF program as it relates to 
        that Initiative, take place by December 31, 2001, 
        incorporating the views of debtor governments and civil 
        society, and that such assessment be made public and 
        include--
                  (A) an analysis of the contribution of the 
                modified HIPC Initiative to the poverty 
                reduction and social development goals for the 
                21st century established by the Development 
                Assistance Committee of the Organization for 
                Economic Cooperation and Development; and
                  (B) recommendations to the IMF, World Bank, 
                and the governments of the United States and 
                other creditor countries that may be necessary 
                to strengthen the contribution of the modified 
                HIPC Initiative to the poverty reduction and 
                social goals referred to in subparagraph (A).
          (11) Termination of the modified hipc initiative.--
        The modified HIPC Initiative shall not terminate until 
        all the debt reduction contemplated by this section has 
        been carried out.
  (b) Promotion of Equitable Burden Sharing.--In order to 
promote equitable burden-sharing by bilateral, multilateral, 
and private creditors under the modified HIPC Initiative, the 
Congress urges the President to commence immediately efforts to 
ensure that such creditors draw upon their own resources to 
finance debt reduction under the modified HIPC Initiative to 
the extent possible without diverting funds from other high 
priority poverty alleviation programs.
  (c) Contributions to the HIPC Trust Fund.--For payment to the 
Heavily Indebted Poor Countries Trust Fund of the International 
Bank for Reconstruction and Development, but only for purposes 
of debt relief, there are authorized to be appropriated to the 
President such sums as may be necessary for fiscal years 2000 
through 2004, except that if, with respect to fiscal year 2001, 
2002, 2003, or 2004, the President has not determined that, 
during the then preceding fiscal year--
          (1) satisfactory progress was made in accomplishing 
        the improvements in the HIPC initiative described in 
        subsections (a) and (b); and
          (2) the United States' contributions to the reduction 
        of multilateral debt pursuant to the modified HIPC 
        Initiative were matched, by a ratio of at least two to 
        one, by resources provided in the aggregate by all 
        other donors,
then no sums are authorized to be appropriated for such purpose 
for the fiscal year.
  (d) Sense of Congress.--It is the sense of Congress that the 
amounts that would otherwise be provided by the United States 
for development aid or other debt relief should not be reduced 
on account of any appropriations pursuant to subsection (c).
  (e) Report to the Congress.--Not later than December 31 of 
each year, the President shall submit to the Committees on 
Banking and Financial Services, on Appropriations, and on 
International Relations of the House of Representatives and the 
Committees on Foreign Relations, on Banking, Housing, and Urban 
Affairs, and on Appropriations of the Senate a report, which 
shall be made available to the public, on the activities 
undertaken under this section, and on the progress made in 
accomplishing the purposes of this section, for the prior 
fiscal year. The report shall include a list of the countries 
that have received debt relief under the original or 
modifiedHIPC Initiative, a list of the countries whose request for such 
debt relief has been denied and the reasons therefor, and a list of the 
countries whose requests for such debt relief are under consideration. 
The report shall also include a description of the extent to which 
countries that receive debt relief under the modified HIPC Initiative 
have complied with the requirements described in subsection (a)(4).
  (f) Definitions.--In this section:
          (1) Modified hipc initiative.--The term ``modified 
        HIPC Initiative'' means the multilateral debt 
        initiative presented in the Report of the G-7 Finance 
        Ministers on the Koln Debt Initiative to the Koln 
        Economic Summit, Cologne, 18-20 June, 1999.
          (2) Decision point.--The term ``decision point'' 
        means the point in time at which the Executive Boards 
        of the International Bank for Reconstruction and 
        Development and the International Monetary Fund review 
        the debt sustainability analysis for a country and 
        decide that the country is eligible for debt relief 
        under the modified Heavily Indebted Poor Countries 
        Initiative.

SEC. 1624. REFORM OF THE ENHANCED STRUCTURAL ADJUSTMENT FACILITY.

  The Secretary of the Treasury shall instruct the United 
States Executive Directors at the International Bank for 
Reconstruction and Development and the International Monetary 
Fund to use the voice and vote of the United States to promote 
the establishment of poverty reduction strategy policies and 
procedures at the International Bank for Reconstruction and 
Development and the International Monetary Fund which support 
countries' efforts to honor the commitments as set forth in 
lending operations under programs developed and jointly 
administered by the International Bank for Reconstruction and 
Development and the International Monetary Fund that have the 
following components:
          (1) The development of country-specific poverty 
        reduction strategies (Poverty Reduction Strategies) 
        under the leadership of such countries, that--
                  (A) will be set out in poverty reduction 
                strategy papers (PRSPs) to provide the basis 
                for the lending operations of the International 
                Development Association (IDA) and the Enhanced 
                Structural Adjustment Facility and its 
                successors (ESAF);
                  (B) will reflect the role of the 
                International Bank for Reconstruction and 
                Development in social sector development, 
                structural policies, and poverty reduction, and 
                the role of the International Monetary Fund in 
                macroeconomic issues; and
                  (C) will make the advice and operations of 
                the International Monetary Fund and the 
                International Bank for Reconstruction and 
                Development fully consistent with the 
                objectives of poverty reduction and broad-based 
                growth; and
                  (D) should include--
                          (i) a participatory poverty 
                        assessment, undertaken as a systematic 
                        part of the design of the Poverty 
                        Reduction Strategy, involving 
                        collaboration between the government, 
                        civil society, the International Bank 
                        for Reconstruction and Development, 
                        organizations with expertise in the 
                        social sector, including United Nations 
                        agencies, and donors, which analyzes, 
                        among other things, the economic and 
                        social needs of the poor and the policy 
                        reforms and public investments that 
                        will best address these needs;
                          (ii) social impact assessments, 
                        undertaken as a systematic part of the 
                        design of the Poverty Reduction 
                        Strategy, involving collaboration 
                        between the government, civil society, 
                        the International Bank for 
                        Reconstruction and Development, and 
                        organizations with expertise in the 
                        social sector, including United Nations 
                        agencies, and donors, which analyze the 
                        impact of policies implemented under 
                        the Poverty Reduction Strategy and 
                        related lending operations and which 
                        are completed before International Bank 
                        for Reconstruction and Development and 
                        International Monetary Fund Executive 
                        Board consideration of such operations;
                          (iii) explicit consideration of the 
                        short- and long-term tradeoffs between 
                        alternative policy decisions, such as 
                        the distributional, equity, and poverty 
                        reduction implications of monetary and 
                        fiscal policies or the pace and 
                        sequencing of structural reforms;
                          (iv) implementation of transparent 
                        budget procedures and mechanisms to 
                        help ensure that the financial benefits 
                        of debt relief under the modified HIPC 
                        Initiative result in increased national 
                        expenditures on poverty reduction 
                        programs; and
                          (v) monitorable indicators of 
                        progress in poverty reduction;
          (2) the adoption of procedures for periodic 
        comprehensive reviews of ESAF and IDA programs to help 
        ensure progress toward poverty goals outlined in the 
        Poverty Reduction Strategies and to allow adjustments 
        in such programs;
          (3) the publication of the PRSPs (including social 
        impact assessments) prior to Executive Board review of 
        related programs under IDA and the ESAF;
          (4) the establishment of a standing evaluation unit 
        at the International Monetary Fund, similar to the 
        Operations Evaluation Department of the International 
        Bank for Reconstruction and Development, that would 
        report directly to the Executive Board of the 
        International Monetary Fund and that would undertake 
        periodic reviews of International Monetary Fund 
        operations, including the operations of the ESAF, 
        including--
                  (A) assessments of experience under the ESAF 
                programs in the areas of poverty reduction, 
                rapid growth, and access to basic social 
                services;
                  (B) assessments of the extent and quality of 
                participation in program design by civil 
                society; and
                  (C) verifications that ESAF programs are 
                designed in a manner consistent with the 
                Poverty Reduction Strategies; and
                  (D) prompt release to the public of all 
                reviews by the standing evaluation unit;
          (5) the promotion of simpler and clearer 
        conditionality in IDA and ESAF programs that focuses on 
        reforms most likely to support poverty reduction and 
        broad-based growth;
          (6) the adoption by the International Monetary Fund 
        of policies aimed at reforming the Enhanced Structural 
        Adjustment Facility so that ESAF programs are 
        consistent with the Poverty Reduction Strategies;
          (7) the adoption by the International Bank for 
        Reconstruction and Development of policies to ensure 
        that International Bank for Reconstruction and 
        Development lending operations in HIPC countries are 
        consistent with the Poverty Reduction Strategies;
          (8) strengthening the linkage between borrower 
        country performance and lending operations by IDA and 
        the ESAF on the basis of clear and monitorable 
        indicators;
          (9) full public disclosure of the proposed 
        objectives, financial organization and operations of 
        the successor to the Enhanced Structural Adjustment 
        Facility of the International Monetary Fund at least 90 
        days before any decision by the Executive Board of the 
        International Monetary Fund to consider its adoption; 
        and
          (10) the abolishment of ESAF, and its replacement 
        with a Poverty Reduction and Growth Facility (PRGF), 
        which will be a subordinate part of a new approach to 
        defining the economic framework for low-income 
        countries, in that the new approach will give to the 
        government of a borrowing country the ability to 
        construct its own comprehensive development strategy, 
        and will allow the borrowing country government, at its 
        sole discretion, to request technical assistance, in 
        creating the comprehensive development strategy, from 
        international institutions, such as the World Health 
        Organization, the Food and Agricultural Organization, 
        the International Bank for Reconstruction and 
        Development, and the International Monetary Fund, and 
        from private organizations, businesses, or civil 
        society organizations.

SEC. 1625. TRANSPARENCY AND PARTICIPATION OF CIVIL SOCIETY IN NEW 
                    INTERNATIONAL FINANCIAL INSTITUTION LENDING.

  The Secretary of the Treasury shall instruct the United 
States Executive Directors at the international financial 
institutions (as defined in section 1701(c)(2)) to use the 
voice and votes of the Executive Directors to encourage 
vigorously that their respective institutions adopt 
transparency and other measures that will facilitate 
participation of civil society in developing countries in the 
design of poverty reduction strategies and in decisions to 
borrow from such institutions in support of such strategies, 
including--
          (1) disclosure of Policy Framework Papers, Public 
        Expenditure Reviews, Country Assistance Strategies, 
        International Monetary Fund Letters of Intent, 
        appraisal documents, and other reports relevant to 
        proposed lending operations; and
          (2) provision of detailed information to the Board of 
        Directors of such an institution and to the public, 
        prior to the approval of a lending operation for a 
        developing country, as to the nature and extent of 
        civil society participation in the design of, and 
        approval process for, such operation.
                              ----------                              


BRETTON WOODS AGREEMENTS ACT

           *       *       *       *       *       *       *


  Section 1. This Act may be cited as the ``Bretton Woods 
Agreements Act''.

           *       *       *       *       *       *       *


SEC. 62. APPROVAL OF CONTRIBUTIONS TO THE ENHANCED STRUCTURAL 
                    ADJUSTMENT FACILITY/HEAVILY INDEBTED POOR COUNTRIES 
                    TRUST FUND.

  (a) In General.--For the purpose of mobilizing the resources 
of the Fund in order to help reduce poverty and improve the 
lives of residents of poor countries and, in particular, to 
allow those poor countries with unsustainable debt burdens to 
receive deeper, broader, and faster debt relief, without 
allowing gold to reach the open market or otherwise adversely 
affecting the market price of gold, the Secretary of the 
Treasury may instruct the United States Executive Director of 
the Fund to vote--
          (1) to approve an arrangement whereby the Fund--
                  (A) sells not more than a total of 14,000,000 
                ounces of its gold at prevailing market prices 
                to a member or members in non-public 
                transactions;
                  (B) immediately after, and in conjunction 
                with, each such sale, accepts payment by such 
                member or members of such gold to satisfy 
                existing repurchase obligations of such member 
                or members so that the Fund retains ownership 
                of the gold at the conclusion of such payment; 
                and
                  (C) transfers the earnings on the investment 
                of the profits of such sales to the Trust for 
                Special ESAF Operations for the Heavily 
                Indebted Poor Countries and Interim ESAF 
                Subsidy Operations (ESAF/HIPC Trust Fund), 
                provided that such earnings shall be used, 
                through a separate subaccount, only for the 
                purpose of providing debt relief from the Fund 
                under the modified HIPC Initiative; and
          (2) to support a decision that would make available 
        to the ESAF/HIPC Trust Fund resources in Special 
        Contingency Account 2 (SCA-2) of the Fund derived from 
        the extended burdensharing arrangements adopted 
        pursuant to IMF Decision No. 9471-(90/98), as amended, 
        including any funds attributable to the United States 
        participation in such arrangements, which funds shall 
        be used only for debt relief under the original or 
        modified HIPC Initiative (within the meaning of section 
        1623 of the International Financial Institutions Act).
  (b) Certification.--Within 15 days after the United States 
Executive Director casts the votes necessary to carry out with 
the instruction provided pursuant to subsection (a), the 
Secretary of the Treasury shall certify to the Committee on 
Banking and Financial Services of the House of Representatives 
and the Committee on Foreign Relations of the Senate that the 
Fund has stated that--
          (1) when gold is sold pursuant to the authorization 
        provided under subsection (a), the estimated net 
        present value (as determined by the Fund) of the 
        earnings on the investment of profits from the total 
        amount of gold that has been sold shall not be greater 
        than the estimated net present value (as determined by 
        the Fund) of the cost of the modified HIPC Initiative 
        (within the meaning of section 1623 of the 
        International Financial Institutions Act);
          (2) the earnings on the invested profits of such gold 
        sales shall be deposited in a separate sub-account and 
        used only for the purpose of providing debt relief from 
        the Fund under the original or modified HIPC 
        Initiative; and
          (3) any funds attributable to United States 
        participation in the arrangements referred to in 
        subsection (a)(2) shall be used only for debt relief 
        from the Fund under the original or modified HIPC 
        Initiative.

SEC. 63. SAFEGUARDS ON USE OF INTERNATIONAL MONETARY FUND RESOURCES.

  The Secretary of the Treasury shall instruct the United 
States Executive Director at the Fund to use the voice and vote 
of the Executive Director to vigorously encourage the Fund to--
          (1) require independent audits of central bank and 
        other relevant entities on a more systematic basis by 
        developing objective criteria to assist in determining 
        when audits are warranted;
          (2) ensure that such audits occur before Fund 
        financing is disbursed;
          (3) develop a systematic approach to reducing 
        inappropriate uses of foreign exchange reserves through 
        laws, regulations, and procedures, by means including 
        the requirement of arms length transactions and the 
        prohibition of preferential access to foreign exchange 
        on a nontransparent basis; and
          (4) strongly encourage all countries receiving 
        exceptional levels of financial support to adopt and 
        comply with Fund standards applicable to management of 
        foreign exchange reserves, particularly with respect to 
        the nature and location of the institutions where such 
        reserves are placed.
                              ----------                              


              SECTION 112b OF TITLE 1, UNITED STATES CODE


Sec. 112b. United States international agreements; transmission to 
                    Congress

  (a) * * *

           *       *       *       *       *       *       *

  (f) The Secretary of the Treasury shall transmit to the 
Committee on Banking and Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a copy of any international 
financial agreement to which this section applies. Any such 
agreement the immediate public disclosure of which would, in 
the opinion of the President, be prejudicial to the national 
security of the United States, shall be so transmitted under an 
injunction of secrecy to be removed only upon due notice by the 
President.

                            ADDITIONAL VIEWS

    Debt relief for heavily indebted poor countries is one of 
the most important matters before Congress this year. The 
governments of these countries have been forced to make drastic 
cuts in essential social services such as health and education 
in order to make payments on their debts. In Mozambique, debt 
service payments in 1997 absorbed about half of all government 
revenue or $7 per person, while only $3 per person was spent on 
health services. In Tanzania, 1997 debt service payments 
equaled nine times the spending on basic health services and 
four times the spending on basic education. In Nicaragua, over 
half of the government's revenue was allocated to debt service 
payments in 1997. This was equivalent to two and a half times 
the spending on health and education combined.
    H.R. 1095, the Debt Relief for Poverty Reduction Act of 
1999, as passed by the Committee on Banking and Financial 
Services of the House of Representatives, requires the complete 
cancellation of debts owed by heavily indebted poor countries 
to the United States and makes substantial improvements in the 
Heavily Indebted Poor Countries (HIPC) Initiative of the 
International Monetary Fund (IMF). The bill requires that poor 
countries establish Human Development Funds or develop 
Integrated Poverty Reduction Strategies to target the savings 
from debt relief to HIV/AIDS treatment and prevention, health 
care, education and poverty reduction programs. The bill also 
includes several amendments that were offered during committee 
consideration to expand and improve bilateral and multilateral 
debt relief programs.

                        the inclusion of nigeria

    H.R. 1095 includes an important amendment that I offered to 
include Nigeria in bilateral and multilateral debt relief 
programs. Nigeria is currently in the process of making a 
transition to democracy and would receive tremendous benefits 
from debt relief. Under the authoritarian rule of General Sani 
Abacha, Nigeria's resources were depleted and the human rights 
of the Nigerian people were routinely violated. Now Nigeria is 
at a turning point and support from the international community 
could make a crucial difference in Nigeria's future.
    Although Nigeria is currently eligible to borrow from the 
International Bank for Reconstruction and Development, it is a 
deeply impoverished country. Nigeria's per capita income is 
only $300 per year and the country spends no more than $5 per 
person per year on health services. Nevertheless, Nigeria owes 
$871 million in debts to the United States and the country's 
total debt stock is over $28 billion. Debt relief will give 
Nigeria a fresh start and a sound basis for a democratic 
future.
    The United States has a history of providing assistance to 
countries overcoming crises and building democracies. Earlier 
this year, the United States led the world in providing 
assistance to the people of Kosovo as they struggled against 
genocide. The United States also provided considerable economic 
assistance and debt relief to Poland, other countries in 
Eastern Europe and the newly independent states of the former 
Soviet Union following the fall of communism. Now the United 
States has an historic opportunity to set an example to the 
rest of the world and support Nigeria's transition to 
democracy.

                  conditions for bilateral debt relief

    I am also pleased that H.R. 1095 includes two amendments 
offered by Congressman Barney Frank to improve the conditions 
for bilateral debt relief. One amendment assures that a 
country's eligibility for bilateral relief is determined by the 
government of the United States and does not depend on terms 
set by the IMF. The other provides that eligible countries will 
not have to make payments on their debts while they are 
implementing policies on which bilateral debt relief is 
conditioned.

                          technical assistance

    H.R. 1095 includes important provisions to ensure that 
technical assistance is available to countries that request it. 
Specifically, the bill requires the Secretary of the Treasury 
to provide or arrange for technical assistance to countries 
regarding the establishment and management of their Human 
Development Funds. The bill also states that Treasury should 
encourage international financial institutions to provide funds 
for countries to hire technical consultants. Finally, the bill 
states that the World Bank should provide technical assistance 
to countries that request it. Many poor countries may not have 
the technical knowledge necessary to comply with the conditions 
in this bill. If poor countries are going to be required to 
establish Human Development Funds or develop Integrated Poverty 
Reduction Strategies in order to receive debt relief, it is 
only reasonable that they be provided technical assistance to 
enable them to do so.

                   amount of multilateral debt relief

    H.R. 1095 includes several provisions to urge the President 
to commence efforts within the Paris Club of Official 
Creditors, the IMF and the World Bank to make several important 
changes in the Heavily Indebted Poor Countries (HIPC) 
Initiative.
    One of these changes would require deeper multilateral debt 
relief for poor countries. Specifically, the bill states that 
the amount of debt relief provided to a country should be 
sufficient to ensure that the value of the country's 
outstanding debts does not exceed the value of the country's 
annual exports. The bill also states that poor countries should 
not have to spend more than ten percent of their annual 
revenues on debt service payments.

             elimination of structural adjustment programs

    H.R. 1095 also urges the President to support the 
elimination of the requirement that countries complete a 
structural adjustment program approved by the IMF as a 
condition for receiving debt relief under the HIPC Initiative. 
Under the current HIPC Initiative, poor countries are required 
to adopt structural adjustment programs as a condition for debt 
relief and implement them over a six-year period. These 
programs usually require cuts in health care, education and 
other social services. Most poor countries have been unable to 
implement the economic reforms required by these programs.
    Many poor countries have become even more impoverished as a 
result of structural adjustment programs. Zimbabwe, for 
example, began implementation of a structural adjustment 
program in 1991. Between 1991 and 1996, manufacturing output in 
Zimbabwe declined by 14% and real gross domestic product (GDP) 
per capita declined by 5.8%. Furthermore, spending on health 
care declined as a share of the budget from 6.4% to 4.3% and as 
a share of GDP from 3.1% to 2.1%. The real wages of health care 
workers in the public sector were reduced, causing many doctors 
to move to the private sector. As a result, the quality of 
public health care dropped and health services became less 
accessible to the poor. Government spending on education was 
also drastically reduced. Between 1991 and 1994, real per 
capita expenditures on primary education were cut by 36%.
    The inability of poor countries to implement painful 
structural adjustment programs should not be an impediment to 
their ability to receive debt relief. Once poor countries have 
made a commitment to use the savings from debt relief to 
provide health care, education and other vital social services 
to their impoverished populations, they should be able to 
receive immediate debt relief.

                            oversight panels

    H.R. 1095 includes a requirement that poor countries 
establish oversight panels to monitor the use of their Human 
Development Funds. The bill also includes a provision to ensure 
that these oversight panels will be consulted by the IMF and 
the World Bank in the making of key decisions regarding debt 
relief in their respective countries and will be given the 
opportunity to review the published content of these decisions 
as well as all relevant analytical, legal, and policy 
documents. The bill also states that each oversight panel shall 
include representatives of civil society and a majority of its 
members shall be citizens of that country.
    The oversight panels should include representatives of 
civil society such as individuals representing labor unions, 
environmental organizations, human rights organizations, 
religious organizations, farmers' organizations, women's 
organizations, indigenous people's organizations and other 
community organizations. The oversight panels may also include 
representatives of UNICEF or other United Nations agencies.
    Each oversight panel should review all conditions for debt 
relief imposed by the United States, other creditor 
governments, the IMF or the World Bank; all actions of its own 
government to comply with those conditions, including the 
establishment and use of the country's Human Development Fund; 
and all actions by its own government, other creditor 
governments and all international financial institutions 
affecting the progress of the country's debt relief program. 
The oversight panel should meet regularly to evaluate and 
report on the progress of the country's debt relief program, 
and its reports should be made available to the public. The IMF 
or the World Bank should provide travel and administrative 
expenses to each oversight panel to allow the panel to fulfill 
its functions.
    These oversight panels will ensure that debt relief 
programs will be participatory and transparent and the people 
that are the most directly affected by these programs will be 
consulted regarding the conditions for debt relief.

                               conclusion

    H.R. 1095, the Debt Relief for Poverty Reduction Act, as 
passed by the Committee on Banking and Financial Services of 
the House of Representatives, will break the cycle of debt and 
enable the world's poorest countries to invest in health care, 
education and other essential services for their impoverished 
populations. I am proud to support this landmark legislation to 
wipe away the debts of heavily indebted poor countries 
throughout the world.

                                                     Maxine Waters.

                            DISSENTING VIEWS

    I am a cosponsor of H.R. 1095, the Debt Relief for Poverty 
Reduction Act, and have been a consistent advocate for 
international debt relief in the past. However, I have two 
particular concerns about the current version of H.R. 1095 as 
passed by the House Banking Committee. Due to my attendance at 
University of Nebraska Master's Week activities in Lincoln, 
Nebraska, on November 3, 1999, I was unable to voice these two 
particular concerns at the Banking Committee markup of H.R. 
1095. My two concerns with the Committee markup of H.R. 1095. 
My two concerns with the Committee-passed version of H.R. 1095 
are as follows:
    1. I am opposed to the amendment, adopted at the House 
Banking Committee markup, which provides that Nigera is 
eligible to receive Highly Indebted Poor Countries (HIPC) debt 
relief. My opposition to this inclusion is based upon Nigeria's 
wealth of oil reserves. Nigeria is the world's 6th largest 
exporter of oil, producing over 2.012 million bbl/day (barrels 
of oil a day). In addition, given the rise in price in oil over 
the past year, Nigeria's oil earnings are estimated to be up 
29% in 1999 over 1998.
    Nigeria's overall bilateral debt to the United States is 
$871 million. This equals a mere 22 days of gross oil exports 
at the current rate of production with the current price of 
$23/bbl. Moreover, Nigeria has already received substantial US 
debt relief. In 1990-91, Nigeria received $64.8 million in 
bilateral debt cancellation through Section 572 Debt Relief. 
Furthermore, Western officials believe that the corrupt 
government of General Sani Abacha of Nigeria may have stolen 
over $3.5 billion. Since Abacha's death, $750 million of this 
has been successfully recovered from the Abacha family and more 
than $250 million has been recovered from Abacha's former 
national security adviser. This recovery alone ($1 billion) 
represents $129 million more than Nigeria's outstanding $871 
million in bilateral debt to the United States.
    On January 25, 1999, Nigeria and the IMF reached an 
agreement that paved the way for debt rescheduling and the 
resumption of World Bank funding. I do believe that the answer 
for Nigeria is debt rescheduling, which is outside the scope of 
H.R. 1095, not HIPC debt relief. Including Nigeria in HIPC will 
result in the failure of other poor countries in Africa and 
elsewhere to receive sufficient debt relief. The choice here, 
for example, is between Nigeria and Tanzania, Madagascar, Niger 
or the Central African Republic. There will not be enough 
appropriated funds to cover Nigeria and the other HIPC 
countries.
    2. My second concern regarding H.R. 1095, as amended by the 
House Banking Committee, relates to Section 903 which sets 
priorities for providing bilateral debt relief by the United 
States. Using the current definition in H.R. 1095, I am 
concerned that a very deserving Bangladesh, which is one of 45 
countries eligible for debt relief under H.R. 1095, will be put 
at the end of the line for HIPC debt relief. My concern is 
based on the limited resources for overall debt relief and 
suggestions from the Administration that Bangladesh, given its 
responsible handling of its debt, would not be considered as a 
priority for debt relief.
    I was ready to offer a prepared amendment at the markup, 
which I was unable to offer for the reason stated above, that 
would have amended the priority section of H.R. 1095. This 
amendment would have required the President to give debt relief 
priority to the HIPC countries. Then, after a reasonable two 
year period, it allows Bangladesh to be equally considered for 
debt relief with the HIPC countries. Designating Bangladesh in 
this manner is justified both because it is one of the few 
countries that has already undertaken the kind of forward-
looking, poverty alleviation and human development reforms 
called for in H.R. 1095 and it has acted responsibly in paying 
its debt. Its failure to receive debt relief previously really 
is the result of errors and failures: it is deserving but its 
case has previously ``fallen through the cracks.'' Without my 
amendment, H.R. 1095 seems to penalize--or at least disregard--
one of only a few countries whose actions should serve as a 
model development partner for other very poor, indebted 
countries.
    Since the House International Relations Committee has 
subject matter jurisdiction over bilateral debt relief, I plan 
to offer amendments to remedy my two concerns at a future H.R. 
1095 markup by the House International Relations Committee.

                                                     Doug Bereuter.

                            DISSENTING VIEWS

    This bill confirms what opponents of the International 
Monetary Fund and World Bank have been saying for some time: 
more money for these institutions is the wrong medicine for a 
serious problem. Every dollar the IMF lends to a poor country 
adds to that country's debt burden. The IMF policy of lending 
new money to pay the debt due by a developing country (plus 
additional interest) is the root of the problem.
    Decades of misguided ``development'' policies have resulted 
in poverty for masses of people and increasing debt burdens for 
developing countries. These policies have finally become 
unsustainable. The jig is up. These policies do not work--not 
for the poor, at least.
    For a select few (politically well connected) officials, 
these policies are working just fine. According to Macroscope, 
``Au Revoir,'' Investor's Business Daily, November 11, 1999, 
IMF bureaucrats average about $114,000 a year (with staffing 
growing five percent annually over the past decade). The agency 
has more than 80 division directors, each making more than 
$180,000 a year--plus benefits. Since 1990, IMF lending has 
soared by about 100 percent. Its assets now total more than $80 
billion. These policies work well for them.
    IMF largesse feeds corruption in developing countries as 
well. The Bank Bali scandal in Indonesia and the ever-unfolding 
embarrassment in Russia are but the latest examples. IMF money 
feeds this endemic corruption that sustains inept governments. 
Propping up unpopular governments postpones economic policies 
that promote growth and prosperity. These policies then trap 
the poor in a vicious cycle.
    The best way to help the poor and encourage economic growth 
and prosperity is to end this damaging cycle. This bill throws 
more money at the cause of the problem. Such an approach will 
only begin a new cycle of indebtedness and renew the poverty 
trap.
    The amendment I offered with Representatives Tom Campbell, 
Bill McCollum and Walter Jones to sunset the Bretton Woods Act 
(after three years with a report from Treasury on alternatives 
after two years) was the best way to stop the cycle of ever-
greater debt burdens of poor countries. Through the IMF and 
World Bank, we take money from the working poor of rich 
countries to give to the rich people in poor countries. The 
poor everywhere deserve better.

                                                          Ron Paul.