Debt relief is urgent. It is, in many ways, a precondition for the poorest countries to make progress in their fight against poverty.. . . We have to ask, however, why progress in resolving the debt problem is still so slow. Why so many hesitations? Why the difficulty in providing the funds needed even for the already agreed initiatives? It is the poor who pay the cost of indecision and delay.
Current Status of Legislation
House. The House Foreign Operations Appropriations Subcommittee is scheduled to vote on a foreign aid spending bill for FY2001 next Tuesday, June 13. Debt relief for poor countries will be one of the principal matters under consideration.
Senate. As mentioned in our Action Alert issued last month, when the Senate Appropriations Committee approved the FY2001 foreign aid spending bill on May 9, it allocated only $75 million for debt reduction for the world's poorest countries This amount falls far short of the $435 million needed this year. (See "Background" below.)
The $75 million approved by the Senate committee should meet the FY2001 needs for reduction of "bilateral" debt, or debt owed directly to the United States Government. It will leave nothing for reducing the much larger "multilateral" debt, or money owed to institutions such as the Inter-American Development Bank and the African Development Bank. In last month's Action Alert, we said that the full Senate might act on the spending bill during May. However, the Senate leadership has decided to defer floor action until the House has acted on its version of the bill.
- Thus, House action on the bill is critical at this stage.
Urge your Representative to approve $435 million in the FY2001 foreign aid spending bill to fund multilateral and bilateral debt relief for the world's poorest countries.
While this message is important for all House members, if your Representative sits on the Foreign Operations Subcommittee of the House Appropriations Committee, it is urgent that you call or fax him/her as soon as possible, as the scheduled Subcommittee foreign aid mark-up date is June 13. Members of the Subcommittee are listed below.
Members of House Subcommittee on Foreign Operations
Last year, President Clinton and leaders of other industrial countries agreed to write off approximately $90 billion in debt for about 33 poor countries, while promoting poverty reduction, economic growth and greater openness and transparency in these countries. This $90 billion in debt cancellation would cost creditors $27 billion primarily due to heavy discounting of the face value of the loans. This plan is consistent with HR 1095 and S 1690, legislation introduced last year in the House and Senate, and strongly supported by the US Catholic Conference and Catholic Relief Services.
Unfortunately, Congress has yet to fully fund the Administration's commitment of $920 million over four years toward this global debt reduction plan. Funding, particularly the amount needed for "multilateral" debt reduction, is critical to the success of the plan, as other wealthy nations are waiting for the U.S. to take the lead before unlocking billions of dollars in contributions. The delay is already being felt by debtor countries. Bolivia, for example, has been declared eligible for new debt relief under the plan, but must wait because the necessary funding is not available.
Thus far, Congress has authorized cancellation of 100% of United States "bilateral" debt owed by heavily-indebted poor countries, and it appropriated $110 million for this purpose for FY2000. The Senate Appropriations Committee has approved appropriation of $75 million for bilateral debt reduction for FY2001. In the House, a decision on the amount to be included for debt relief in the foreign aid appropriations bill for FY2001 is pending before the Subcommittee on Foreign Operations.
No funds have been appropriated so far for multilateral debt reduction. However, the House Banking Committee (last year) and the Senate Foreign Relations Committee (this year) authorized appropriation of the amounts needed for "multilateral" debt reduction. The Senate Banking Committee has also taken the matter under consideration, and the committee chairman (Sen. Gramm, R-TX) wants to make authorization of multilateral debt reduction conditional on reform of the International Monetary Fund. (If your Representative raises the issue of IMF reform, we suggest you say that while IMF reform is needed, it is likely to be a long, complex process and should not be allowed to cause further delays in debt relief for struggling countries.) The appropriation needed for multilateral debt reduction in FY 2001 is $360 million.
The total appropriation needed for FY2001 is $435 million ($75 million bilateral, $360 multilateral). Another $375 million will be needed for multilateral and bilateral debt reduction in FY2002 and 2003. These amounts, added to the $110 million appropriated last year, will complete the U.S.'s $920 million contribution to the global plan. The Administration has requested an advance appropriation of $375 million covering the needs for FY2002 and FY2003, but we suggest focusing at this time on the $435 million needed for FY2001.
For more information, contact: Gerry Flood or Joan Rosenhauer, US Catholic Conference of Bishops, (202) 541-3199 or Kathy Brown or Kathy Selvaggio, Catholic Relief Services, (410) 625-2220.