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The Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2007

For decades, many impoverished countries owed billions of dollars each year to donor countries and international financial institutions. Many of these loans were given for political reasons during the Cold War to prop up particular governments, and in many cases, were wasted by corrupt and unaccountable regimes. These large debts became a serious impediment to poverty reduction and economic development. Countries began taking on new loans to repay old ones, resulting in many countries spending more in debt repayment than on their people’s health or education.  The Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2007 (HR 2634/S. 2166) is sponsored by Representative Maxine Waters (D-CA) and Spencer Bachus (R-AL) and Senators Robert Casey (D-PA), Richard Lugar (R-IN), and Christopher Dodd (D-CT). The bill extends previous debt cancellation initiatives to a larger group of countries without imposing harmful conditionalities on impoverished countries that are striving to meet the Millennium Development Goals (MDGs).

Why Debt Cancellation is Crucial
  
For the world’s most impoverished countries, the cost of debt can overshadow their ability to provide access to clean water, education and basic healthcare.  Some countries spent more of their annual budgets servicing their debt, than was spent on education or healthcare.  The U.S. and other industrialized countries have taken action to relieve debt burdens in many of the most impoverished countries and these commitments have proven effective.  Debt relief has been extended through two initiatives: the Highly Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).  To date 23 of 40 countries that are eligible for the HIPC program have obtained 100% cancellation.

On April 16, 2008, the Jubilee Act (HR 2634) passed the U.S. House of Representatives by a vote of 285 to 132. In the Senate, the Foreign Relations Committee held a hearing on the legislation on April 24, 2008.

About the Jubilee Act

• Calls on the U.S. Treasury to support 100% cancellation of bilateral and multilateral debts and to establish a framework to ensure more transparent and responsible creditor behavior.
• Prohibits harmful conditions including the imposition of user fees on health and education and mandated privatization of water
• Contains a provision that governments should allocate 20% of their budgets on social services and development, including education and health care
• Multilateral debt cancellation would be financed through the sale of the IMF’s gold reserves and reserves from the World Bank’s International Bank for Reconstruction and Development (IBRD) to the extent possible

Check the Factsheet

STATUS OF THE BILL

H.R. 2634 in the House: http://www.thomas.gov/cgi-bin/bdquery/z?d110:HR02634:@@@P

ONE PARTNERS AND ALLIES WORKING ON THE BILL

• Jubilee USA
• The Episcopal Church
• The Evangelical Lutheran Church of America
• American Jewish World Service