§5331 International initiative

Summary

The Secretary of the Treasury must study whether it makes sense to set up an International Debt Management Authority and, unless the Secretary finds that talking about it would make sovereign debt markets worse in specific ways, must begin talks with chosen industrialized and developing countries to try to create it. The proposed authority would buy poorer countries’ government debt from private lenders at a discount, negotiate debt restructurings to ease repayment burdens and help economic growth, and help banks sell or manage their loans to developing countries. If the Secretary decides starting talks would materially raise the discount on sovereign debt, increase the chance of default, or make debt-service problems more likely, the Secretary must explain why in interim reports to Congress. In those talks, the Secretary should propose that any debt relief require debtors to promise better economic policies, steps to stop capital flight, and a plan for steady growth so they can meet new debt terms. Support should come from industrialized countries, with more expected from those running strong current account surpluses. The authority should work closely with the IMF, the World Bank, and regional development banks, be designed to fund itself without regular government appropriations and follow applicable legal limits, and have a set end date plus a plan to restore debtor countries’ creditworthiness within that time. The Secretary must report progress at the end of the 6-month and 12-month periods beginning August 23, 1988, to the House Committee on Banking, Finance and Urban Affairs and to the Senate Committees on Banking, Housing, and Urban Affairs and on Foreign Relations, consult with those committees after each report, and send a final detailed report and any legislative recommendations to the same committees when the study or talks end.