House: Expand Debt Relief

By Dan Robinson

21 April 2008

The House of Representatives has approved by a vote of 285 to 132 a measure supporting forgiveness of debt owed by more of the world's poorest countries. Dan Robinson reports, the legislation is aimed at expanding eligibility, without forcing countries to accept potentially destabilizing economic conditions from lending institutions.

First introduced in 2007, the measure would begin a process that could lead to total debt elimination for another 24 of the world's poorest countries.

While not specifically authorizing debt cancellation, it instructs the U.S. government to negotiate with the World Bank and International Monetary Fund on debt owed by poor nations struggling to meet Millennium Development Goals.

Set by world leaders in the year 2000, these goals include significant reductions in poverty, hunger, and child and maternal mortality, and reversing the spread of HIV/AIDS, malaria and other diseases by 2015.

Under the House measure, nine nations owing billions of dollars to the World Bank, IMF, and other institutions, would be eligible immediately for relief: Cape Verde, Kenya, Lesotho, Georgia, Moldova, Mongolia, Samoa, Vanuatu, and Vietnam.

Fifteen others would be eligible based on further reforms, including Zimbabwe, Angola, Djibouti, and Nigeria in Africa, and Bangladesh, Burma, and Cambodia in Asia.

Lawmakers such as Vermont Democrat Peter Welch stressed that the measure is not a "blank check" and contains conditions countries must attempt to meet:

"Transparent and effective budget processes, do not support terrorism, cooperate in international counter-narcotic efforts, and uphold human rights standards," said Peter Welch.

In addition, funds that become available as a result of loan forgiveness must be used for anti-poverty programs, and governments would have to publish annual reports on how money is spent.

Democrats and Republicans also voiced support for a provision designed to shield poor countries from economically stressful conditions that can be imposed by financial institutions.

Here are Massachusetts Democrat Barney Frank, and California Republican Dana Rohrabacher:

FRANK: "There will be no possibility of using debt relief as a lever for outsiders to impose on these democratic societies choices that ought to be made in the societies."

ROHRABACHER: "People who establish democratic government and replace dictatorships should not be forced to bear the burden of having massive debt. This is what keeps these countries down even once they have replaced their dictators."

More than 20 countries have had nearly all of their debts to international lending institutions forgiven under the Heavily Indebted Poor Country program of the IMF, while others have struggled to meet conditions under that program.

The White House has withheld support from the House debt legislation, saying that providing relief to countries already capable of servicing their debt would send the wrong message.

A similar measure is working its way through committees in the U.S. Senate.

The House measure was supported by more than 80 development, human rights and religious organizations critical of international lending practices in the developing world, while opponents assert it would end up benefiting corrupt leaders.