article: SECTION 1. SHORT TITLE. This Act may be cited as ``Foreign Credit Reform Act of 2004''. SEC. 2. FINDINGS. Congress finds the following: (1) Unsustainable debt in the world's poorest countries constitutes a serious impediment to the development of stable democratic political structures, broad-based economic growth, poverty eradication, and food security. (2) Financing should be appropriate for the purposes for which it is used and should, to the maximum extent possible, generate a return sufficient to pay the principal and interest due. As such, long-term lending for perishable goods, such as food commodities, may be construed as inappropriate to the extent that it places a long-term debt burden on the recipient country without generating sufficient revenues with which to service the debt. (3) Since 1955, the United States has extended more than $27,800,000,000 in loans for food under title I of the Agricultural Trade Development and Assistance Act of 1954 (commonly referred to as ``PL 480''), $10,632,858,000 of which remained outstanding at the end of 2002. (4) As of December 31, 2002, arrears on principal and interest payments under title I of PL 480 totaled $1,241,472,000. (5) Since 1992 the United States provided the independent states of the former Soviet Union with $1,601,500,000 in loans for food under title I of PL 480, for which these countries are estimated to have paid $112,748,000 in principal and interest in 2003. Russia alone has received $1,035,000,000 in credits, paying an estimated $79,695,000 in principal and interest in 2003. (6) Rising debt stocks and debt-to-export ratios may undermine a country's credit worthiness and jeopardize its ability to borrow from commercial lenders. (7) Debt reduction contributes marginally to a country's development prospects if new debt is allowed to create the next generation of heavy indebtedness. Therefore, President Bush's initiative, adopted by Group of Seven (G-7) leaders at the June 2002 summit, to increase World Bank grant assistance to the most heavily indebted poor countries is a crucial step toward alleviating poverty, curbing future unsustainable debt, and providing for urgent human needs in countries in which people live on less than one dollar a day. Replacing loans with targeted grants will eliminate the need for governments to repay long-term investments in people, especially for education, health, nutrition, water supply, and sanitation purposes. (8) The G-7 agreement at the June 2002 summit to fully fund the remaining costs of the enhanced Heavily Indebted Poor Country (HIPC) initiative is essential to ensuring that eligible debt-distressed nations receive full benefits under the HIPC debt relief measure. (9) The United States has been a leading voice for more than a decade in international debt reduction initiatives for poor countries, including a 1991 initiative to cancel $689,000,000 in food loans under title I of PL 480 owed by 15 sub-Saharan African countries. (10) The United States must continue its leadership role to encourage full participation by all Paris Club creditors in multilateral debt negotiations. (11) Several poor countries that are not eligible for enhanced HIPC debt reduction terms face a severe debt overhang that undermines increased resource allocation for development and discourages productive investment. (12) The World Bank, which has provided over $1,700,000,000 since 1986 to fight the spread of HIV/AIDS, should continue to place the highest priority on programs to combat infectious diseases, including HIV/AIDS, malaria, and tuberculosis. (13) Debt reduction is an important, but only partial solution to long-term development. Promoting an environment that will stimulate internal economic growth, promote trade and external investment, and encourage responsible governance are the most important ingredients for sustainable growth. TITLE I--MULTILATERAL DEBT RELIEF SEC. 101. SUPPORT FOR THE HIPC TRUST FUND. Section 801(b)(1) of H.R. 5526 of the 106th Congress, as introduced on October 24, 2000, and enacted into law by section 101(a) of Public Law 106-429 (and contained in the appendix thereto) is amended by striking ``2003, $435,000,000'' and inserting ``2006, such sums as may be necessary''. SEC. 102. DEBT SERVICE REINVESTED INTO THE GLOBAL FUND. The Bretton Woods Agreements Act (22 U.S.C. 286-286oo) is further amended by adding at the end the following: ``SEC. 64. DEBT SERVICE REINVESTED INTO THE GLOBAL FUND. ``(a) Negotiation of Agreement.--The Secretary of the Treasury shall seek to negotiate an agreement among the member countries of the Bank and the Fund, under which, on approval by the Global Fund of a grant proposal originating from an eligible country, the Bank and the Fund shall make a contribution to the Global Fund in an amount equal to the amount of the grant award for the year, except that the total amount of the contributions so made with respect to the country during a year shall not exceed the total amount of debt service payments made by the country to the Bank and the Fund during the year. ``(b) Definitions.--In this section: ``(1) Global fund.--The term `Global Fund' means the public-private partnership known as the Global Fund to Fight AIDS, Tuberculosis and Malaria that was established upon the call of the United Nations Secretary General in April 2001. ``(2) Eligible country.--The term `eligible country' means a country-- ``(A) which has received debt relief under the Enhanced HIPC Initiative; and ``(B) in which the prevalence of HIV/AIDS among individuals who have attained 15 years of age but have not attained 49 years of age is not less than 5 percent. ``(3) Enhanced hipc initiative.--The term `Enhanced HIPC Initiative' means the multilateral debt initiative for heavily indebted poor countries presented in the Report of G-7 Finance Ministers on the Cologne Debt Initiative to the Cologne Economic Summit, Cologne, June 18-20, 1999. ``(4) HIV/AIDS.--The term `HIV/AIDS' means, with respect to an individual, an individual who is infected with HIV or living with AIDS. ``(5) HIV.--The term `HIV' means the human immunodeficiency virus, the pathogen that causes AIDS. ``(6) AIDS.--The term `AIDS' means the acquired immune deficiency syndrome.''. TITLE II--BILATERAL DEBT RELIEF SEC. 201. ACTIONS TO PROVIDE BILATERAL DEBT RELIEF. Section 501(i) of H.R. 3425 of the 106th Congress, as introduced on November 17, 1999, and enacted into law by section 1000(a)(5) of Public Law 106-113 (and contained in Appendix E thereto), is amended by striking ``2004'' and inserting ``2005''. SEC. 202. DEBT FORGIVENESS UNDER TITLE I OF PUBLIC LAW 480. (a) Debt Forgiveness.--For each of the fiscal years 2005 and 2006, the President is authorized and encouraged to use the authority of section 411 of the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 1736e) to waive payments of principal and interest that a country described in subsection (b) would otherwise be required to make to the Commodity Credit Corporation under dollar sales agreements under title I of such Act (7 U.S.C. 1701 et seq.). (b) Country Described.--A country referred to in subsection (a) is a country-- (1) which has outstanding public and publicly guaranteed debt, the net present value of which on December 31, 2003, was at least 150 percent of the value of exports of the country in 2003; or (2) whose debt service payments on public and publicly guaranteed debt exceeded 8 percent of the value of its exports in 2003. (c) Applicable Provisions.--Except to the extent inconsistent with the provisions of this section, section 411 of the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 1736e) (except subsection (e) of such section) shall apply with respect to the authority to waive payments of principal and interest under this section to the same extent and in the same manner as such section applies to the authority to waive payments of principal and interest under section 411 of such Act. (d) Authorization of Appropriations.--For the cost (as defined in section 502 of the Federal Credit Reform Act of 1990) for the reduction or cancellation of any debt pursuant to this section, there are authorized to be appropriated to the President for each of the fiscal years 2005 and 2006 such sums as may be necessary. SEC. 203. MISCELLANEOUS AMENDMENTS. (a) Financing Assistance Under Title I of Public Law 480.--Section 101(b) of the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 1701(b)) is amended-- (1) by striking ``To carry out the policies'' and inserting the following: ``(1) In general.--To carry out the policies''; (2) by striking ``developing countries'' and inserting ``developing countries described in paragraph (2)''; and (3) by adding at the end the following: ``(2) Developing country described.--A developing country referred to in paragraph (1) is a developing country that meets the following requirements: ``(A) The country is not prohibited from receiving assistance under the Foreign Assistance Act of 1961 by reason of the application of section 620(q) of such Act and irrespective of whether or not the President has determined that assistance to the country is in the national interest of the United States. ``(B) The country is not in default, during a period in excess of six calendar months, in payment to the United States of principal or interest on any loan made to such country under this title or under any other provision of law. ``(C) The country is not a low-income country or lower-middle income country, as defined by the International Bank for Reconstruction and Development in its World Development Indicators Report (issued in April 2004 and updated annually). ``(D) The country is not a severely-indebted country or moderately-indebted country as defined by the International Bank for Reconstruction and Development in its World Development Indicators Report (issued in April 2004 and updated annually).''. (b) Economic Assistance Under the Foreign Assistance Act of 1961.-- Section 620(q) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(q)) is amended-- (1) by inserting after ``under this Act'' the second place it appears the following: ``or under title I of the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 1701 et seq.)''; and (2) by adding at the end the following: ``A determination by the President under the preceding sentence that assistance to a country is in the national interest of the United States shall be effective for a period not to exceed one calendar year.''.
summary: Foreign Credit Reform Act of 2004 - Amends Federal law to extend authorization of appropriations for the U.S. contribution to the Heavily Indebted Poor Country (HIPC) Trust Fund. Amends the Bretton Woods Agreements Act to direct the Secretary of the Treasury to negotiate an agreement under which the International Bank for Reconstruction and Development and the International Monetary Fund shall contribute to the Global Fund to Fight AIDS, Tuberculosis and Malaria an amount equal to the amount of a country's annual debt service made to the Bank and the Fund. Authorizes the President to waive certain Agricultural Trade Development and Assistance Act of 1954 principal and interest payments owed to the Commodity Credit Corporation by eligible debt-heavy countries for FY 2005 and 2006. Amends such Act to define "developing country" for purposes of title I assistance.