International Finance and Monetary Organizations
As a senior Democrat on the Financial Services Subcommittee on Domestic and International Monetary Policy, Trade and Technology, I am responsible for overseeing the United States’ participation in international monetary and finance organizations. These include the Multilateral Development Banks, Multilateral Financial Institutions, the International Monetary Fund, and the Export- Import Bank of the United States, among others. In the 109th Congress, this Subcommittee worked closely with the Small Business Committee to produce a bipartisan bill, which passed the House, to reauthorize the Export- Import Bank while providing further direction to the Bank to reinforce its mandate to support small business. We also conducted hearings on the United States’ role in the International Development Association, in the wake of the historic agreement of the G-8 to forgive the debts of some of the world’s poorest countries, and on the U.S. role in the International Fund for Agricultural Development.
In recent years, debt relief has proven to be an effective development tool that can be used to address poverty and meet essential human needs. The case for debt cancellation is particularly compelling in the Highly Indebted Poor Countries (HIPC), as well as in other very poor countries whose debt burden consists of “odious debt” – the internationally recognized term for debt taken on by a country for the personal benefit of corrupt leaders or for the oppression of a people.
I have a long record of support for debt relief for the HIPC nations. In the 109th Congress I cosponsored H.R. 1130, the Jubilee Act of 2005, which would amend the International Financial Institutions Act to require the Secretary of the Treasury to commence immediate efforts, within the Paris Club, the International Monetary Fund, the World Bank, and other international financial institutions to cancel all debts owed to each institution by 50 eligible poor countries. The bill would limit any waiting period before receipt of debt cancellation to one month from the date of an eligible poor country's application for it – to prevent the World Bank and the IMF from seeking economic reforms from creditor countries in exchange for the given debt relief. It would also encourage the government of each eligible poor country to allocate at least 20% of its national budget, including the savings from such debt cancellation, for the provision of basic public health care, education, and clean water to its citizens.
In the 108th Congress, I introduced H.R. 2482, the Iraq Freedom from Debt Act, legislation requiring the Treasury Secretary to urge the World Bank and IMF to cancel or radically reduce the approximately $150 million of debt Iraq owes to the institutions. The Paris Club's Iraq agreement, reached in November 2004, provided an 80% total reduction and set the parameters for the ongoing debt reduction efforts with non-Paris Club and commercial creditors.
MDB and MFI Oversight
The United States participates in the MDBs and MFIs as a donor nation. Congress can require that the United States representative use the “voice and vote” of the United States to achieve particular policy goals and we have done so to achieve debt relief and other priorities.
The term Multilateral Development Banks (MDBs) typically refers to the World Bank Group and four Regional Development Banks: The African Development Bank, The Asian Development Bank, The European Bank for Reconstruction and Development, and The Inter-American Development Bank Group. These banks, whose membership includes both borrowing developing countries and developed donor countries such and the U.S., are institutions that provide financial support and professional advice for economic and social development activities in developing countries, through long-term loans, credits, and grants. Several other banks and funds that lend to developing countries are often grouped together as Multilateral Financial Institutions (MFIs). They differ from the MDBs in having a more narrow ownership/membership structure or in focusing on special sectors or activities. These include the International Monetary Fund and the International Fund for Agricultural Development (IFAD), among others.