“A bill to provide for debt reduction for developing countries for purposes of developing resilience, and for other purposes.”
No CRS summary available for this bill.
This section establishes authority under a new Title VI of the Foreign Assistance Act of 1961 for the President to reduce debt owed to the United States (or its agencies) by eligible countries from loans under part I of the act, chapter 4 of part II, or predecessor authorities; to authorize necessary appropriations for such reductions; and to waive specified assistance limitations (including those under FAA §620(r) and §321 of P.L. 94-161). It further authorizes debt-for-resilience swaps—by selling, reducing, or canceling such loans to eligible purchasers with satisfactory swap plans—and debt buybacks, including purchasing an eligible country's privately held debt for not more than 65% of face value (with proceeds available until expended for program activities). Eligibility requires a low-, lower-middle-, or upper-middle-income country (per World Bank) or small island developing state (per UN) with a democratically elected government that does not engage in gross human rights violations and that has a plan targeting freed resources to climate resilience activities, preventative disaster risk reduction (including nature-based solutions), or recovery from extreme weather events or slow-onset disasters (with 15-day prior congressional notification of eligibility determinations and preferences for plans involving local communities, Indigenous peoples, and reductions in gender, income, or social inequalities). Debt reductions must be implemented by exchanging new obligations for outstanding ones, with account adjustments by the administering agency.
This section directs the U.S. Executive Directors at specified international financial institutions—including the International Monetary Fund, International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, Multilateral Investment Guarantee Agency, African Development Fund, African Development Bank, Asian Development Fund, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, IDB Invest, and North American Development Bank—to use the U.S. voice and vote to advocate for policies reducing or restructuring the debt load of eligible countries with high vulnerability to extreme weather events and slow-onset climate disasters (terms as defined in section 901 of the Foreign Assistance Act of 1961). Such policies include (1) debt forgiveness agreements, (2) debt buybacks, (3) debt-for-resilience and debt-for-nature swaps, and (4) other similar programs. It defines eligible country as a low-income, lower-middle-income, or upper-middle-income country (per World Bank classification) or a small island developing state (per United Nations).
This section directs the U.S. representatives to the World Bank to advocate for the establishment of a parametric international climate insurance program to provide immediate insurance payments to eligible countries for recovery needs following natural disasters. Eligible countries include low-income, lower-middle-income, or upper-middle-income countries, as determined by the World Bank, or small island developing states, as determined by the United Nations; natural disasters encompass hurricanes, tornadoes, storms, floods, earthquakes, volcanic eruptions, landslides, mudslides, snowstorms, droughts, fires, or other catastrophes causing substantial damage to property, persons, ecosystems, or ecosystem services. Program elements, as determined by the World Bank, may include (1) payments to small producers, vulnerable sectors, and governments for program restoration, disaster cleanup, climate adaptation, ecosystem restoration, nature-based solutions, and other recovery efforts; (2) eligibility criteria comparable to those for debt reduction; (3) consideration of aggregate risk across eligible countries to reduce premiums; and (4) support for existing programs such as the Caribbean Catastrophe Risk Insurance Facility.