§286hh — Title 22 Foreign Relations and Intercourse | U.S. Code

Summary

The Secretary of the Treasury must tell the U.S. Executive Director at the World Bank to start talks with other directors and push for voluntary, market-based programs to reduce sovereign debt and support sustainable economic growth. Those programs must be voluntary, give each country a debt cut that fits its situation, link help to economic reforms, promote steady policy changes over time, use debt tools that do not pay banks for losses but spark new lending, involve the Bank only if its credit standing is not hurt, avoid extra public funding beyond agreed Bank capital increases or IDA replenishments, and aim to restore growth and private lending for sustainable development. The Secretary must also ask the U.S. director to suggest that the World Bank make policy-based loans to help cut debt service for countries in such programs. A country counts as participating if its creditors agree to significantly cut its debt service, for example by forgiving part of the interest. By March 1, 1989, March 1, 1991, and March 1, 1993, the Secretary must send reports to the House Committee on Banking, Finance and Urban Affairs and the Senate Committee on Foreign Relations describing the World Bank’s long-term debt strategy for the countries labeled “Highly Indebted Countries” in the 1987–1988 World Debt Tables and other heavily indebted nations, the measures the Bank has taken (including steps under these proposals), and how well each country is reducing debt and achieving sustainable growth using measures like debt-service-to-exports, debt-to-GNP, net resource flows, and per capita income. After consulting the Secretary, the House Banking Committee must forward each report to the House Appropriations Committee with an assessment of how U.S. payments for its World Bank capital subscription in the next fiscal year would affect the international debt situation.

Title 22, §286hh

Foreign Relations and Intercourse — Source: USLM XML via OLRC

(a)The Secretary of the Treasury shall instruct the United States Executive Director of the International Bank for Reconstruction and Development to initiate discussions with other directors of such bank and to advocate and support the facilitation of voluntary market-based programs for the reduction of sovereign debt and the promotion of sustainable economic development, which, if implemented, would—

(1)not require any organization or government to participate in such a program;

(2)result in debt reduction for each participating country tailored to the particular situation of each country;

(3)provide assistance to participating countries conditioned on the implementation of economic reforms, and the preservation of economic reforms previously implemented, by the country that are consistent with the principles of sustainable development;

(4)encourage participating countries to make economic adjustments steadily and over a period of time in order to achieve policy reform;

(5)use debt reduction techniques that would not compensate commercial banks for the reduction in the value of such debt, but would serve as a catalyst for new lending;

(6)involve such bank in lending for purposes of debt reduction and conversion only where such involvement would not lower the credit-worthiness of such bank;

(7)not require public sector funding beyond that provided through any capital increase for such bank, and any replenishment for the International Development Association, which is agreed to by the member countries of such institutions; and

(8)accomplish debt reduction, not as an end, but as a means to greater growth and investment in, and the restoration of voluntary private lending to, participating countries for environmentally and economically sustainable development.

(b)The Secretary of the Treasury shall instruct the United States Executive Director of the International Bank for Reconstruction and Development to initiate discussions with other directors of such bank and to propose that policy based loans be made by such bank for, among other reasons, facilitating a reduction in the debt service burden of any country which is participating in a voluntary market-based program for debt reduction described in subsection (c).

(c)In connection with the discussions initiated pursuant to subsection (b), the Secretary shall instruct the United States Executive Director of the International Bank for Reconstruction and Development to propose that a country be considered to be participating in a voluntary market-based program of debt reduction for purposes of subsection (b) if the creditors of such country agree to significantly reduce the debt service of such country through forgiveness of a percentage of the interest owed by such country on any sovereign debt or through any other means.

(d)Not later than March 1, 1989, March 1, 1991, and March 1, 1993, respectively, the Secretary of the Treasury shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate 3 reports each of which—

(1)describes the long term strategy and lending programs of the International Bank for Reconstruction and Development for reducing and managing the debt burden of the countries designated as “Highly Indebted Countries” in the 1987–1988 World Debt Tables published by such bank, and summarize the long term strategy and lending programs of such bank for other seriously indebted countries;

(2)contains an explanation of the measures taken by such bank to facilitate the reduction of the debt burden of the countries designated as “Highly Indebted Countries” in the 1987–1988 World Debt tables 11 So in original. Probably should be capitalized. published by such bank;

(3)describes the extent (if any) to which such bank has implemented the measures described in subsections (b) and (c); and

(4)describes the success each of such countries has had in managing and reducing their debt burdens and achieving sustainable and equitable economic growth as measured by criteria including the ratio of debt service to exports, the ratio of debt to gross national product, net resource flows, and per capita income.

(e)On receipt of each report required to be submitted pursuant to subsection (d), and after consultation with the Secretary of the Treasury, the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall forward such report to the Committee on Appropriations of the House of Representatives with an assessment by the Committee on Banking, Finance and Urban Affairs describing the effect on the international debt situation of funding the subscription of the United States to the shares of capital stock of the International Bank for Reconstruction and Development due for payment by the United States in the then next fiscal year.

Notes & Related Subsidiaries

Editorial Notes

Codification Section is based on section 3 of H.R. 4645, One Hundredth Congress, as reported Sept. 28, 1988, and enacted into law by Pub. L. 100–461. Section was not enacted as part of act July 31, 1945, ch. 339, 59 Stat. 512, known as the Bretton Woods Agreements Act, which comprises this subchapter.

Amendments

2010—Subsec. (a)(6). Pub. L. 111–203 substituted “credit-worthiness” for “credit rating”.

Statutory Notes and Related Subsidiaries

Change of Name

Committee on Banking, Finance and Urban Affairs of House of Representatives treated as referring to Committee on Banking and Financial Services of House of Representatives by section 1(a) of Pub. L. 104–14, set out as a note preceding section 21 of Title 2, The Congress. Committee on Banking and Financial Services of House of Representatives abolished and replaced by Committee on Financial Services of House of Representatives, and jurisdiction over matters relating to securities and exchanges and insurance generally transferred from Committee on Energy and Commerce of House of Representatives by House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective 2 years after July 21, 2010, see section 939(g) of Pub. L. 111–203, set out as a note under section 24a of Title 12, Banks and Banking.

§286hh Policy based lending for debt reduction