House votes to expand debt relief to more poor countries

from the Houston Chronicle

By JIM ABRAMS

WASHINGTON — The House voted Wednesday to expand by some 25 countries the list of those poorest states eligible for debt relief, allowing them to divert scarce resources from loan repayment to health and education programs.

The legislation instructs the administration to begin talks with international financial institutions such as the World Bank on an agreement allowing the new countries to receive debt cancellation.

To be eligible the countries, mainly from Africa, must be committed to reducing poverty, holding free elections, practicing good governance, combating corruption and rejecting terrorism and human rights violations.

Since 1996, when industrialized countries and the financial institutions came together on the Heavily Indebted Poor Countries Initiative, more than 30 nations have received some form of debt relief equal to about $80 billion.

Rep. Maxine Waters, D-Calif., a chief sponsor of the legislation, said that under this program Uganda has been able to divert $58 million from debt repayments to addressing electricity shortages, malaria and contaminated water, while Zambia has shifted $24 million to eliminating fees for health care in rural areas.

"Tragically, many other countries are still starving their children in order to pay their debts," she said.

The legislation, which would bring debt relief within reach of almost all of the world's poorest countries, still requires Congress to approve agreements to cancel the debts of specific countries.

The 285-132 vote in favor of the bill marked the second time this month that the House has put aside its election-year battling to extend help to the world's poorest. Two weeks ago the chamber overwhelmingly passed legislation to spend $50 billion over five years to combat AIDS, malaria and tuberculosis in Africa and elsewhere. Both bills still need to be taken up by the Senate.

Rep. Spencer Bachus of Alabama, top Republican on the House Finance Committee, said the new round of debt relief would cost every American only about $2. Debt relief "is dollar for dollar the most effective program in assuring our national security," he said. "We cannot just simply watch as these countries slip into chaos and discord."

House Speaker Nancy Pelosi, returning from a White House ceremony to welcome Pope Benedict XVI, said the timing was apt to take action "eliminating some of the factors that contribute to the fury of despair that leads to violence that makes the world less safe."

Bishop Thomas G. Wenski of the United States Conference of Catholic Bishops wrote lawmakers this week that the Catholic Church has long advocated debt relief and the House bill "represents a major new step" toward making debt cancellation a reality for virtually all very poor countries.

The White House, while avoiding a veto threat, said it did not support the bill because some of the countries covered are managing their debts or are actively working toward expanded access to international capital markets. "Providing debt relief to countries that can service their debt sends the wrong message," it said in a statement.

The Bush administration also expressed concern about the cost of forgiving debt, estimated at up to $1 billion over nine years.

The countries designated in the legislation, which include Cape Verde, Mongolia, Vietnam and Georgia, owe about $2 billion to the International Monetary Fund, $24 billion to the World Bank and $11 billion to the African Development Bank and Asian Development Bank.