Jubilee USA Network Welcomes Senate Foreign Relations Committee Passage of Jubilee Act to Expand, Reform Poor Country Debt Cancellation

Press release yesterday from Jubilee USA highlighting good news this week in the U.S. Congress: passage of the Jubilee Act in the Senate Foreign Relations Committee with some revisions, and some important action towards World Bank reform in the House Financial Services committee.

Network Also Applauds House Panel’s Authorization of World Bank Funding, Including Significant Calls for World Bank Reform

WASHINGTON – Jubilee USA Network, an alliance of 80 religious denominations and faith-based networks, development agencies, and human rights groups today applauded passage of the Jubilee Act for Responsible Lending and Expanded Debt Cancellation (S. 2166) by the Senate Foreign Relations Committee, and passage of legislation to authorize funding for the World Bank (International Development Association), including strong calls for reform at the World Bank.

On Tuesday, June 24, the Senate Foreign Relations Committee passed the Jubilee Act for Responsible Lending and Expanded Debt Cancellation (S.2166), and reported the legislation out of committee for consideration by the full Senate.  The Jubilee Act would expand debt cancellation to up to 24 of the world’s most impoverished countries, provided that they show their ability to use funds transparently to combat poverty. 

The legislation also prohibits the U.S. representative at the International Financial Institutions from conditioning debt relief on policy reforms that would deepen poverty or degrade the environment.

Senator Robert Casey, the initial sponsor of the bi-partisan bill said in a statement, “I’m pleased that at a time when nations around the world are suffering and their citizens are dying of hunger, disease and poverty, the Senate Foreign Relations Committee recognizes the importance of helping the world’s poorest countries.”

Some improvements were made to the Jubilee Act in committee.

An amendment was added urging the Secretary of the Treasury to work for immediate debt cancellation for Haiti in light of the current food crisis.  Revised language to discourage so-called “vulture fund” activity (the purchase of sovereign debt at a discount with the intent to litigate) was included.  The committee also stressed the importance of funding existing commitments to the international financial institutions.

“We are thrilled to see such strong bi-partisan support for the Jubilee Act in the Senate Foreign Relations committee, and we now call on Senate leaders to move this historic, life-saving legislation quickly towards consideration by the full Senate,” said Neil Watkins, National Coordinator or Jubilee USA Network. “We also welcome strong action by the House Financial Services committee this week to approve funding for the World Bank and to require strong reforms at the institution.”

In yesterday’s House Financial Services Committee action, legislation passed which authorized expanded support for U.S. funding to the International Development Association (IDA) arm of the World Bank, which provides grants and concessional loans to the world’s most impoverished countries.

Jubilee USA Network welcomed in particular three amendments offered by Representative Maxine Waters of California and approved by the committee.  The first and second require the Secretary of the Treasury to urge the multilateral development banks to increase significantly their emphasis on food security and agricultural development in developing countries, and to provide immediate debt cancellation to Haiti or an immediate suspension of debt service payments.  The third amendment authorizes up to $5 million to assist Liberia in buying back its commercial debt, which would help pave the way towards free Liberia from the burden of repaying debts owed to private creditors and from the threat of vulture law suits.

In addition to the approval of funds, the committee called on the US Treasury Department to advocate for reforms in the way the World Bank conditions its assistance on economic policy reforms.  The legislation calls on the US Executive Director at the multilateral development banks to use his/her voice and vote to oppose all conditions other than those requiring budget transparency and accountability, civil society and parliamentary inclusion in economic policy decisions and measures to show that assistance is actually spent on poverty reduction.   Similarly, any Country Assistance Strategy developed by the Bank must not undermine a country’s commitment to uphold international conventions, especially those that provide assurances of worker’s rights.

The legislation also calls on the US representative to the multilateral bank boards to work for changes to the World Bank’s Doing Business Report.   It calls on the World Bank to cease use of the Employing Workers Indicator in the Report and as part of the Country Policy and Institutional Assessment score until it is changed to take into account the importance of worker's rights.  The legislation also makes it US policy to work for elimination of the Non-wage Labor Cost Index from the report (as it discouraged provision of benefits like health care).

The last section of the bill focuses on reform to the World Bank Inspection Panel, which was created to address the concerns of the people who may be affected by Bank projects and to ensure that the Bank adheres to its operational policies and procedures.

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