§635i–6 Debt Reduction; Enterprise for the Americas Initiative

Summary

Lets the President allow old U.S. loans to be sold, cut, or wiped out to help Latin American or Caribbean countries do debt swaps or buy back their own debt under certain rules. Eligible countries must be in Latin America or the Caribbean and must be working with the IMF (for example, a standby, extended, or structural adjustment program, or in rare cases a monitored program). They should also be working with World Bank loans where appropriate, carrying out major investment reforms with the Inter‑American Development Bank or moving toward an open investment system, and, if needed, have agreed a satisfactory plan with their commercial lenders. The President decides which countries qualify and must talk with the country before any sale, reduction, or cancellation. Definitions: “eligible country” = a country the President names; “Facility” = the Treasury entity that runs the program; “IMF” = International Monetary Fund. The loans that can be sold, reduced, or canceled are ones made before January 1, 1992. Sales or cancellations can only be used to enable debt‑for‑equity, debt‑for‑development, or debt‑for‑nature swaps, or a debt buy‑back where the country also spends an extra amount in local currency equal to at least 40 percent of the price paid (or of the price‑to‑face‑value difference) on conservation, community development, and child programs. The President sets the rules, the Facility tells the Bank which buyers are allowed, buyers must show plans the President approves, proceeds go into U.S. accounts to repay the loan, and the actions need Congress to provide money in advance.