USCCB - (Office of Media Relations) - Congressional Testimony Endorses Debt Relief Legislation

Congressional Testimony Endorses Debt Relief Legislation

WASHINGTON (June 15, 1999) -- Legislation which would provide broader, deeper, and quicker debt relief to the world's poorest nations received endorsement from two key Bishops today in testimony before the House Banking and Financial Services Committee.

Archbishop Theodore E. McCarrick of Newark, Chairman of the Bishops' International Policy Committee, and Bishop John H. Ricard of Pensacola-Tallahassee, Chairman of Catholic Relief Services, today called the Debt Relief for Poverty Reduction Act (HR 1095) "pivotal legislation."

"We are not for debt relief for its own sake," the Bishops said. "We are for debt relief that will alleviate poverty in the poorest countries."

They urged the committee not to misconstrue their reliance on the key elements of Catholic social teaching -- human dignity, the common good, solidarity, and the preferential option for the poor -- as undermining the contractual obligations of debtors and lenders.

"On the contrary, the presumption is that when countries, like individuals, contract a loan they have the obligation to repay it. But in some circumstances, this presumption may be overridden. One such instance is when a country cannot pay its debt without critical reductions in spending for health, education, housing, social safety nets, and other basic needs, and when debt becomes a serious obstacle to development," they said.

Introduced on March 11 by Banking Committee Chairman James Leach (R-IA), HR 1095 will provide debt cancellation or significant reduction to a greater number of countries under current policy. Archbishop McCarrick and Bishop Ricard said the U.S. Catholic Conference has chosen to support the bill because major provisions "go a long way toward fulfilling the criteria enunciated in A Jubilee Call for Debt Forgiveness," a major statement on debt relief issued by the USCC Administrative Board in March.

The five criteria articulated in the Bishops' statement include:

Include the full range of poor countries that are required to make what we believe are unacceptable sacrifices in human development in order to repay their debt, and provide deeper and more timely relief. According to Archbishop McCarrick and Bishop Ricard, "HR 1095 would be a major advance over current programs, substantially increasing the number of countries eligible for relief, and greatly reducing the share of government revenues which eligible countries would have to devote to debt service payments. It also shortens the time period before receiving relief to a maximum of three years.
Ensure that resources freed through debt relief are, in fact, used for poverty reduction; include mechanisms of accountability, so as to overcome corruption and other obstacles that prevent debt relief from benefiting the poor. HR 1095 requires that recipient governments channel funds no longer required for debt payments through a "human development fund" dedicated to poverty reduction and environmental protection.
Foster the active participation of civil society in decision-making processes. According to the two prelates, HR 1095 adequately addresses the need for government dialogue with churches, associations, philanthropic and other non-governmental organizations in formulating debt relief and national development plans.
Ensure that economic reform policies associated with debt relief make adequate provision for those adversely affected and have poverty reduction as a central goal. "HR 1095 has several provisions which address our concerns about economic" conditions, including requirements for debt relief programs that also prevent the degradation of the environment, among other things.
Contain full funding, with costs shared equitably among creditor governments and international financial institutions. The legislation authorizes the appropriation of funds necessary to cover the cost to the United States of bilateral and multilateral debt relief.

"We would like to make one additional point, and that is that debt relief is in the United States' own economic interest," the Bishops advised. "Giving a country a fresh start through debt relief can help make it more attractive for U.S. investment and for the expansion of export markets. Without debt relief the financial situation of many countries will become increasingly unstable and prevent their full participation in the global economy."

Awareness of the need for third world debt relief has been heightened in recent days due, in part, to the high priority the issue will be given at this weekend's G-7 Economic Summit in Cologne, Germany. Today's testimony follows a meeting yesterday of 16 Bishops from creditor and debtor nations with German Chancellor Gerhard Schroeder, the host of this year's summit. Later this week, 50,000 members of Jubilee 2000, an international movement dedicated to debt relief, will form a human chain around Cologne as a sign of their solidarity for the impoverished in indebted countries.

Archbishop McCarrick and Bishop Ricard's testimony was presented to the House Banking Committee by Father Bryan Hehir, Professor of the Practice of Religion and Society at the Center for International Affairs at Harvard University.