Representatives Waters (D-CA), Leach (R-IA), Frank (D-MA), Bachus (R-AL), Lee (D-CA), and Maloney (D-NY) re-introduced the JUBILEE Act (HR 1130) in March 2005.  

The JUBILEE Act is groundbreaking legislation that would require the U.S. Treasury Department to work in appropriate multilateral settings to achieve 100 percent cancellation of the debts of 50 nations by the multi-lateral development institutions including the International Monetary Fund (IMF), World Bank, African Development Bank (AfDB), Asian Development Bank (ADB) and Inter-American Development Bank (IDB). The bill urges that the debt cancellation be paid for from the international financial institutions’ own resources and that it come without harmful conditionality attached.

1. The JUBILEE Act will help build a better, safer world by providing impoverished nations the fresh start necessary for development.

The cancellation of debts owed to the IMF, World Bank and regional development banks would remove a major impediment to poverty reduction and economic growth in Asia, Africa and Latin America and enable the nations to invest its resources in health care, education, and poverty reduction.

Resources freed up through debt cancellation can be used to fight AIDS and to help achieve Millennium Development Goals (MDGs), thus building healthier and more sustainable communities, which will in turn build regional stability.

Over the past eight years we have found that initial debt relief has proven highly effective. When a country has more access to their own resources these resources have enabled nations to raise health and education spending by 40 percent to 90 percent. Imagine the impact of 100 percent cancellation by the largest creditors, the multilateral development institutions.

2. The JUBILEE Act encourages recipient nations to commit 20 percent of their budgets to meeting the basic needs of their nations in accordance with the UN’s 20/20 initiative.

3. The JUBILEE Act will require that the institutions pay their fair share of the burden of debt cancellation, and will not cost the U.S. taxpayer a dime.

The IMF and World Bank are the first creditors to be paid back by an indebted country. A country will service the debt to the IMF and World Bank, not only before servicing other debt, but also at the expense of other government expenditures, especially health care and education.

These multi-lateral development institutions, as a primary creditors for the most impoverished nations have made equally risky loans as bi-lateral creditors like the U.S. that have already committed to 100 percent cancellation. It is high time for the multi-lateral institutions to do their fair share.

4. The JUBILEE Act suggests that the institutions to find a way to finance this cancellation from their vast existing resources (which includes gold holdings at the IMF and reserve accounts at the World Bank), so the JUBILEE Act will not place a financial burden on the U.S.

• The IMF and World Bank can afford to cancel the debt of impoverished nations from their own resources without inhibiting their ability to lend to other developing nations.
• The IMF and World Bank will respond to the call for 100 percent cancellation by pleading poverty. But reports by British accounting firms, and just last fall by Jubilee Research in the UK have shown that the World Bank and IMF have enough resources to cancel 100 percent of the Heavily Indebted Poor Country (HIPC) debts without any impact on their credit rating or ability to lend, and could probably expand to cover cancellation for many countries outside the HIPC Initiative.
• The JUBILEE Act goes beyond the July 2005 G-8 debt deal in addressing the debt crisis of impoverished nations.
• The G-8 agreement is limited to 38 countries within the HIPC initiative. The JUBILEE Act covers 50 countries, including other low-income countries and middle-income countries that have substantial odious/illegitimate debt burdens such as the Philippines.
• For the additional 20 countries that will benefit from 100 percent debt cancellation beyond the initial 18 under the G-8 agreement, they are required to implement the harmful economic policies contained in the HIPC initiative in order to qualify. The JUBILEE Act does not mandate structural adjustment policies be followed to obtain debt cancellation. These economic policies have not been proven to increase per capita income growth or reduce poverty. Also, it is worth noting that it took the last nine years for all of these 18 countries receiving immediate debt cancellation to reach HIPC “completion point” and therefore becom eligible. Cameroon, one of the countries waiting to reach completion point has been at the step prior to completion point (called decision point) for the past five years.

Debt to the Inter-American Development Bank and Asian Development Bank are excluded from the G-8 deal. The JUBILEE Act would cancel the debts due to these regional development banks. As an example of how much money is due to the IDB, the four Latin American HIPC countries will together pay almost $1.4 billion in debt service over the next five years to the IDB. These four countries are Bolivia, Guayana, Honduras, and Nicaragua.