22 U.S.C. § 286hh — Policy based lending for debt reduction

Page 193 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 286hh Trade Organization’’ is defined in section 3501(8) of title 19). (b) Agreement to eliminate unfair trade prac- tices as condition of financial assistance (1) The Secretary of the Treasury shall in- struct the United States Executive Director of each of the banks and of the Fund, prior to the extension to any country of financial assistance by the banks and by the Fund, to work to have the banks and the Fund obtain the agreement of such country to eliminate, in a manner con- sistent with its balance of payments adjustment program, unfair trade and investment practices with respect to goods and services which the United States Trade Representative, after con- sultation with the Trade Policy Committee, has determined to have a significant deleterious ef- fect on the international trading system. (2) Such practices include— (A) the provision of predatory export sub- sidies, employed in connection with the ex- porting of agricultural commodities and prod- ucts thereof to foreign countries; (B) the provision of other export subsidies, such as government subsidized below-market interest rate financing for commodities or manufactured goods; (C) unreasonable import restrictions; (D) the imposition of trade-related perform- ance requirements on foreign investment; and (E) practices which are inconsistent with international agreements. (c) United States position on requests for loans or drawing under bank and Fund programs; progress made in eliminating unfair trade practices (1) In determining the United States position on requests for loans or periodic drawing under bank and Fund programs, the Secretary of the Treasury shall take full account of the progress countries have made in achieving targets for eliminating or phasing out the practices re- ferred to in subsection (b) of this section. (2) In the event that the United States sup- ports a request for loans or drawing by a coun- try that has not achieved the bank and Fund targets relating to such practices specified in its program, the Secretary of the Treasury shall re- port to the appropriate committees of the Con- gress the reasons for the United States position. (d) ‘‘Multilateral development banks’’ defined For purposes of this section, the term ‘‘multi- lateral development banks’’ means the Inter- national Bank for Reconstruction and Develop- ment, the Inter-American Development Bank, the African Development Bank, and the Asian Development Bank. (July 31, 1945, ch. 339, § 49, as added Pub. L. 98–181, title I [title VIII, § 812], Nov. 30, 1983, 97 Stat. 1275; amended Pub. L. 99–500, § 101(f) [title V, § 555], Oct. 18, 1986, 100 Stat. 1783–213, 1783–240, and Pub. L. 99–591, § 101(f) [title V, § 555], Oct. 30, 1986, 100 Stat. 3341–214, 3341–240; Pub. L. 106–36, title I, § 1002(c), June 25, 1999, 113 Stat. 133.) Editorial Notes CODIFICATION Pub. L. 99–591 is a corrected version of Pub. L. 99–500. AMENDMENTS 1999—Subsec. (a)(3). Pub. L. 106–36 substituted ‘‘Secre- tariat of the World Trade Organization (as the term ‘World Trade Organization’ is defined in section 3501(8) of title 19)’’ for ‘‘GATT Secretariat’’. 1986—Subsec. (a)(1). Pub. L. 99–500 and Pub. L. 99–591, § 101(f) [title V, § 555(b)], inserted ‘‘each of the multilat- eral development banks (in this section referred to as the ‘banks’) and of’’, ‘‘each of the banks and of’’, and ‘‘banks and of the’’, and substituted ‘‘development of fi- nancial’’ for ‘‘development of Fund financial’’. Subsec. (a)(3). Pub. L. 99–500 and Pub. L. 99–591, § 101(f) [title V, § 555(c)], inserted ‘‘each of the banks and of’’ and substituted ‘‘their staff’’ for ‘‘Fund staff’’. Subsec. (b)(1). Pub. L. 99–500 and Pub. L. 99–591, § 101(f) [title V, § 555(d)], inserted ‘‘each of the banks and of’’, ‘‘the banks and by’’, and ‘‘the banks and’’. Subsec. (c). Pub. L. 99–500 and Pub. L. 99–591, § 101(f) [title V, § 555(e), (f)], inserted ‘‘bank and’’ and ‘‘loans or’’ in pars. (1) and (2). Subsec. (d). Pub. L. 99–500 and Pub. L. 99–591, § 101(f) [title V, § 555(a)], added subsec. (d). § 286hh. Policy based lending for debt reduction (a) Criteria The Secretary of the Treasury shall instruct the United States Executive Director of the International Bank for Reconstruction and De- velopment to initiate discussions with other di- rectors of such bank and to advocate and sup- port the facilitation of voluntary market-based programs for the reduction of sovereign debt and the promotion of sustainable economic develop- ment, which, if implemented, would— (1) not require any organization or govern- ment to participate in such a program; (2) result in debt reduction for each partici- pating country tailored to the particular situ- ation of each country; (3) provide assistance to participating coun- tries conditioned on the implementation of economic reforms, and the preservation of eco- nomic reforms previously implemented, by the country that are consistent with the prin- ciples of sustainable development; (4) encourage participating countries to make economic adjustments steadily and over a period of time in order to achieve policy re- form; (5) use debt reduction techniques that would not compensate commercial banks for the re- duction in the value of such debt, but would serve as a catalyst for new lending; (6) involve such bank in lending for purposes of debt reduction and conversion only where such involvement would not lower the credit- worthiness of such bank; (7) not require public sector funding beyond that provided through any capital increase for such bank, and any replenishment for the International Development Association, which is agreed to by the member countries of such institutions; and (8) accomplish debt reduction, not as an end, but as a means to greater growth and invest- ment in, and the restoration of voluntary pri- vate lending to, participating countries for en- vironmentally and economically sustainable development. (b) Policy based lending for debt reduction and sustainable growth The Secretary of the Treasury shall instruct the United States Executive Director of the Page 194 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 286ii 1 So in original. Probably should be capitalized. International Bank for Reconstruction and De- velopment to initiate discussions with other di- rectors of such bank and to propose that policy based loans be made by such bank for, among other reasons, facilitating a reduction in the debt service burden of any country which is par- ticipating in a voluntary market-based program for debt reduction described in subsection (c). (c) Voluntary market-based program for debt re- duction and sustainable growth In connection with the discussions initiated pursuant to subsection (b), the Secretary shall instruct the United States Executive Director of the International Bank for Reconstruction and Development to propose that a country be con- sidered to be participating in a voluntary mar- ket-based program of debt reduction for pur- poses of subsection (b) if the creditors of such country agree to significantly reduce the debt service of such country through forgiveness of a percentage of the interest owed by such country on any sovereign debt or through any other means. (d) Reports Not later than March 1, 1989, March 1, 1991, and March 1, 1993, respectively, the Secretary of the Treasury shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate 3 reports each of which— (1) describes the long term strategy and lending programs of the International Bank for Reconstruction and Development for re- ducing and managing the debt burden of the countries designated as ‘‘Highly Indebted Countries’’ in the 1987–1988 World Debt Tables published by such bank, and summarize the long term strategy and lending programs of such bank for other seriously indebted coun- tries; (2) contains an explanation of the measures taken by such bank to facilitate the reduction of the debt burden of the countries designated as ‘‘Highly Indebted Countries’’ in the 1987–1988 World Debt tables 1 published by such bank; (3) describes the extent (if any) to which such bank has implemented the measures de- scribed in subsections (b) and (c); and (4) describes the success each of such coun- tries has had in managing and reducing their debt burdens and achieving sustainable and equitable economic growth as measured by criteria including the ratio of debt service to exports, the ratio of debt to gross national product, net resource flows, and per capita in- come. (e) Review by House Banking Committee On receipt of each report required to be sub- mitted pursuant to subsection (d), and after con- sultation with the Secretary of the Treasury, the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall for- ward such report to the Committee on Appro- priations of the House of Representatives with an assessment by the Committee on Banking, Finance and Urban Affairs describing the effect on the international debt situation of funding the subscription of the United States to the shares of capital stock of the International Bank for Reconstruction and Development due for payment by the United States in the then next fiscal year. (Pub. L. 100–461, title V, § 555, Oct. 1, 1988, 102 Stat. 2268–36; Pub. L. 111–203, title IX, § 939(f), July 21, 2010, 124 Stat. 1886.) Editorial Notes CODIFICATION Section is based on section 3 of H.R. 4645, One Hun- dredth Congress, as reported Sept. 28, 1988, and enacted into law by Pub. L. 100–461. Section was not enacted as part of act July 31, 1945, ch. 339, 59 Stat. 512, known as the Bretton Woods Agree- ments Act, which comprises this subchapter. AMENDMENTS 2010—Subsec. (a)(6). Pub. L. 111–203 substituted ‘‘cred- it-worthiness’’ for ‘‘credit rating’’. Statutory Notes and Related Subsidiaries CHANGE OF NAME Committee on Banking, Finance and Urban Affairs of House of Representatives treated as referring to Com- mittee on Banking and Financial Services of House of Representatives by section 1(a) of Pub. L. 104–14, set out as a note preceding section 21 of Title 2, The Con- gress. Committee on Banking and Financial Services of House of Representatives abolished and replaced by Committee on Financial Services of House of Rep- resentatives, and jurisdiction over matters relating to securities and exchanges and insurance generally trans- ferred from Committee on Energy and Commerce of House of Representatives by House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 2 years after July 21, 2010, see section 939(g) of Pub. L. 111–203, set out as a note under section 24a of Title 12, Banks and Banking. § 286ii. Limitations on Bank policy based lending; actions required to be taken to oppose exces- sive policy based lending by Bank The Secretary of the Treasury shall— (1) take all necessary steps to encourage the International Bank for Reconstruction and Development to limit— (A) the aggregate value of the policy based loans made by such bank (other than for the purpose described in section 286hh(b) of this title) in any fiscal year of such bank begin- ning after June 30, 1989, to 25 percent of the aggregate value of all loans made by such bank in such fiscal year; and (B) the aggregate value of the policy based loans made by such bank to the government of a particular country (other than for the purpose described in section 286hh(b) of this title) in any fiscal year of such bank begin- ning after June 30, 1989, and occurring dur- ing any period of 3 consecutive fiscal years of such bank (determined after disregarding any such fiscal year in which such bank did not make a policy based loan to such gov- ernment), to 50 percent of the aggregate