Order Code RL31286
CRS Report for Congress
Received through the CRS Web
Debt-for-Nature Initiatives and the
Tropical Forest Conservation Act:
Status and Implementation
Updated July 12September 29, 2004
Pervaze A. Sheikh
Natural Resources Policy Analyst
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
Debt-for-Nature Initiatives and the Tropical Forest
Conservation Act: Status and Implementation
Summary
In the late 1980s, extensive foreign debt and degraded natural resources in
developing nations led to the creation of debt-for-nature initiatives that reduced debt
obligations, allowed for debt repayments in local currency as opposed to hard
currency, and generated funds for the environment. These initiatives, called debt-fornature swaps, typically involved restructuring, reducing, or buying a portion of a
developing country’s outstanding debt, with a percentage of proceeds (in local
currency) being used to support conservation programs within the debtor country.
Most early transactions involved debt owed to commercial banks and were
administered by nongovernmental conservation organizations and referred to as
three-party swaps. Since 1987, three-party transactions have generated more than an
estimated $117 million in local currency for conservation projects, as a result of the
purchase of approximately $168 million in debt (face value) for $49 million (all
monetary values are in U.S. dollars in this report, unless otherwise noted). Other
debt-for-nature initiatives involved official (public) debt and were administered by
creditor governments directly with debtor governments (termed bilateral swaps).
In the early 1990s, the United States restructured, and in one case sold, debt
equivalent to a face value of nearly $1 billion owed by Latin American countries;
these transactions were authorized by Congress as part of the Enterprise for the
Americas Initiative (EAI), which broadened the scope of debt swaps to include a
number of social goals. Nearly $178 million in local currency for environmental,
natural resource, health protection, and child development projects within debtor
countries was generated from these swaps. The model for debt-for-nature initiatives,
outlined in the EAI, was expanded in the Tropical Forest Conservation Act (TFCA)
to include countries around the world with tropical forests. Under this program, debt
can be restructured in eligible countries, and funds generated from the transactions
are used to support programs to conserve tropical forests within the debtor country.
Since 1998, $42.849.3 million has been used under the TFCA to restructure loan
agreements in seven countries, and nearly $7081.4 million in local currency will be
generated in the next 12-26 years for tropical forest conservation projects. Creditor
countries other than the United States have also used bilateral debt-for-nature
transactions to reduce debt and generate funds for the environment in developing
nations. For example, Paris Club countries have swapped over $1.6 billion in debt
for local currency claims as of December 2000. Debt-for-nature transactions are
generally viewed as a success by conservation organizations and debtor governments
because of the funds generated for conservation efforts. The appeal of debt-fornature transactions has been tempered in recent years, however, by higher debt prices
on secondary markets and lower appropriations. As a result, fewer transactions have
taken place.
This report provides a description of debt-for-nature transactions and a summary
of the Tropical Forest Conservation Act and will be updated as developments
The
TFCA was authorized for appropriations until FY2004. Pending legislation passed
by the House on September 7, 2004 (H.R. 4654), and the Senate on September 28,
2004, would reauthorize funding for the TFCA from FY2005 to FY2007. This
legislation would also authorize funding to conduct audits and evaluations of
agreements in place and allow for the principal on debt agreements to be treated by
the debt-for-nature transaction. (Currently interest on debts are treated in most
agreements.)
Debt-for-nature transactions are generally viewed as a success by conservation
organizations and debtor governments because of the funds generated for
conservation efforts. The appeal of debt-for-nature transactions has been tempered
in recent years, however, by higher debt prices on secondary markets and lower
appropriations. As a result, fewer transactions have taken place. This report
provides a description of debt-for-nature transactions and a summary of the Tropical
Forest Conservation Act and will be updated as developments warrant.
Contents
Background Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Debt-for-Nature Initiatives and Their Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . 1
Three-Party Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bilateral and Multilateral Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . 5
U.S. Bilateral Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . . . . . . 6
Tropical Forest Conservation Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Congressional Role in Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . . . . . . 10
Authority for Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rationale for and Criticism of Debt-for-Nature Initiatives . . . . . . . . . . . . . 11
Decline of Debt-for-Nature Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1213
Emergence of Subsidized Debt-for-Nature Transactions . . . . . . . . . . . . . 14
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415
Future Directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Appendix: List of Related Laws and Appropriations That Support
Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1617
List of Tables
Table 1. Countries Participating in Three-Party Debt-for-Nature Swaps,
1987-Present 1987Present (excluding TFCA transactions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Countries Other than the U.S. Participating in Bilateral and
Multilateral Multilateral
Debt-for-Nature Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. U.S. Bilateral Debt-for-Nature Transactions Under EAI . . . . . . . . . . . . 8
Table 4. U.S. Bilateral Debt-for-Nature Transactions Under TFCA . . . . . . . . . . 9
Table 5. Appropriations Provided Under the Tropical Forest Conservation Act
of of
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
List of Figures
Figure 1. An Illustrative Example of a Three-Party Debt-for-Nature
Swap Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Figure 2. An Example of a Bilateral Debt-for-Nature Transaction Modeled
Modeled After the TFCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 3. Three-Party and U.S. Bilateral Debt-for-Nature Transactions,
1987-2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1314
Debt-for-Nature Initiatives and the
Tropical Forest Conservation Act:
Status and Implementation
Background Information
Debt-for-nature initiatives were conceived to address the rapid loss of resources
and biodiversity in developing countries that were heavily indebted to foreign
creditors. Conservationists had noted that the pressure to pay off foreign debts in
hard currency was leading to increased levels of natural resource exports (i.e., timber,
cattle, minerals, and agricultural products) at the expense of the environment. In
many cases, indebted developing countries had difficulty meeting their hard currency
debt obligations and defaulted. Reducing foreign debt and allowing for portions of
it to be paid with local currency while increasing funds for the environment was
thought to improve environmental conditions in developing countries and had the
advantage of relieving the debtor country’s difficulties in procuring sufficient hard
currency to pay off its debts.1 Money generated from debt-for-nature transactions has
been used to fund a variety of projects, ranging from national park protection in
Costa Rica to supporting ecotourism in Ghana and conserving tropical forests in
Bangladesh.
Since 1993, there has been a decline in the number of debt-for-nature
transactions involving official (public) and private funds. Accounting changes
requiring new appropriations to support official (public) debt transactions in creditor
countries such as the United States, and a higher price of commercial debt on
secondary markets, are two reasons suggested for the decline of debt-for-nature
transactions. While Congress has periodically authorized U.S. participation in threeparty debt-for-nature swaps and has supported two bilateral debt-for-nature
initiatives, appropriations to support these types of efforts have not been consistently
provided from year to year.
Debt-for-Nature Initiatives and Their Mechanisms
Three-Party Swaps
Three-party debt-for-nature swaps, involving nongovernmental organizations
such as The Nature Conservancy and Conservation International, were the first debtfor-nature agreements to be formed. In a three-party swap, a conservation group
1
Thomas E. Lovejoy III, “Aid Debtor Nations’ Ecology,” New York Times, Oct. 4, 1984,
sec. A, p. 31.
CRS-2
purchases a hard currency debt owed to commercial banks on the secondary market
or in some cases a public (official) debt owed to a creditor government at a
discounted rate compared to the face value of the debt, and then renegotiates the debt
obligation with the debtor country. The proceeds generated from the renegotiated
debt, to be repaid in local currency, are typically put into a fund that often allocates
grants to local environmental organizations for conservation projects (see Figure 1).
In these cases, the fund is administered by the conservation organization,
representatives from local environmental groups, and the debtor government. Money
to buy the debt may come from the nongovernmental organization, governments,
banks, or other private organizations.
Figure 1. An Illustrative Example of a Three-Party
Debt-for-Nature Swap Agreement
Step 1
$200,000 to purchase debt
Bank or Creditor Government
Non-governmental Organization
$1 million of debt
Step 2
$1 million of debt is restructured
Local Conservation Groups
Debtor Government
$300,000 in local currency
Step 3
! Step 1 = An outstanding debt is sold to a NGO at a
discounted rate (e.g., 20% of a face value of $1 million,
which is $200,000).
! Step 2 = The debt is cancelled by the NGO as part of an
agreement that requires the debtor country to provide funds
in local currency equivalents for local conservation groups
(e.g., 30% of the original face value, which is $300,000).
! Step 3 = The debtor country provides the agreed to funds to
local conservation groups.
In 1989, Congress authorized the United States Agency for International
Development (USAID) to provide assistance to nongovernmental organizations to
purchase the commercial debt of foreign countries as part of a debt-for-nature
agreement (P.L. 101-240; 22 U.S.C. 2282-2286). Several nongovernmental
organizations participated in debt-for-nature swaps with financial assistance from
USAID; however, specific information on funds given by USAID to support threeparty debt-for-nature swaps is not available.
CRS-3
While debt initiatives conducted with three-party swaps are numerous, they have
resulted in less reduction in total debt than the debts swapped under bilateral
agreements (government-to-government), and slightly less in conservation funds
generated. In total, $168 million in debt (face value) has been reduced, restructured,
or swapped using this mechanism, generating approximately $117 million in local
currency for conservation purposes (see Table 1).
Table 1. Countries Participating in Three-Party
Debt-for-Nature Swaps, 1987-Present
(excluding TFCA transactions)
Country
BOLIVIA
Total Bolivia
BRAZIL
COSTA RICA
Year
1993
1987
1992
1991
1989
1989
1988
1988
TNC
SW/WWF/
TNC
TNC
Sweden
Holland
NPF
1990
PRCT/TNC
1992
1989
1987
Japan
WWF/FN
WWF
2000
1991
CI
CI/SI
1992
1991
CI/USAID
TNC
1990
Total Costa Rica
DOMINICAN
REP.
ECUADOR
Total Ecuador
GHANA
Total Ghana
GUATEMALA
Total Guatemala
JAMAICA
MADAGASCAR
Total Madagascar
2
(U.S.$, in thousands)2
Purchaser
Cost Face value of
Conservation
Debt funds generated
TNC/WWF
$0
$11,500
$2,860
CI
100
650
250
100
12,150
3,110
TNC
748
2,200
2,200
RA/MCL/
360
600
540
1991 TNC/USAID/
1994
1994
1993
1993
1991
1990
1989
PRCT
WWF/JPM
CI
WWF
CI
CI/UNDP
WWF
WWF/
USAID
1,953
10,574
9,603
784
3,500
5,000
918
12,515
116
5,600
24,500
33,000
5,400
79,674
582
1,680
17,100
9,900
4,050
42,873
582
NA
640
354
994
80
250
330
1,200
75
1,275
300
NA
5,400
1,000
6,400
100
1,000
1,100
1,334
100
1,434
437
1,000
5,400
1,000
7,400
90
1,000
1,090
1,334
90
1,424
437
0
50
909
1,500
59
446
950
1,341
200
1,868
3,200
118
919
2,111
1,072
160
1,868
3,200
119
919
2,111
3,914
9,758
9,449
A cost of $0 indicates that funds were written off by the bank to restructure the debt.
CRS-4
Country
MEXICO
Total Mexico
NIGERIA
PERU
Total Peru
PHILIPPINES
Total Philippines
POLAND
ZAMBIA
Grand Total
Year
Purchaser
1998
1996
1996
1996
1995
1994
1994
1994
1993
1992
1991
1991
CI
CI
CI
CI
CI/USAID
CI
CI
CI
CI
CI/USAID
CI
CI
1991
1993
2002
WWF
NCF
WWF, CI,
TNC, U.S.
WWF
1993
WWF/USAID
1992
1990 WWF/USAID
WWF
1989
1990
1989
WWF
WWF
Cost Face value of
Conservation
Debt funds generated
256
550
318
192
391
254
327
496
443
440
671
561
246
488
337
399
480
480
236
280
280
248
290
290
208
252
252
355
441
441
0
250
250
183
250
250
3,092
4,838
4,155
65
150
93
NA
2,860
1,573
5,500
14,000
10,600
5,500
13,000
5,000
439
200
18,639
11
454
16,860
19,000
10,000
900
390
30,290
50
2,270
12,173
17,100
9,000
900
390
29,090
50
2,500
49,001
168,193
117,627
Sources:
M. Moye, Commercial Debt-for-Nature Swaps: Summary Table (Washington, DC: World Wildlife
Fund, 2003).
M. Guerin-McManaus, Ten Years of Debt for Nature Swaps 1987-1997 (Washington, DC:
Conservation International, 2000).
The World Bank, World Debt Tables, 1996 (Washington, DC: The World Bank, 1996).
Notes: Funds generated may be cash or bonds. Figures given do not include interest earned over the
life of the bonds. Full titles of abbreviations are given below. Grand total given is an estimate since
some figures were not available.
USAID = Agency for International Development NPF = National Parks Fdn. of Costa Rica
CABEI = Central American Bank for Economic PRCT = Puerto Rican Conservation Trust
RA = Rainforest Alliance
Integration
SI = Smithsonian Institution
CI = Conservation International
TNC = The Nature Conservancy
FN = Fundacion Natura
UNDP = United Nations Development Prog.
JPM = J. P. Morgan Chase and Co.
U.S. = U.S. federal government
MBG = Missouri Botanical Garden
WWF = World Wildlife Fund
MCL = Monteverde Conservation League
NCF = Nigerian Conservation Foundation
CRS-5
Bilateral and Multilateral Debt-for-Nature Initiatives
Bilateral debt transactions are conducted with official (public) funds directly
between the creditor and debtor governments. The creditor government determines
the criteria for eligibility, which usually involve the existence of certain financial and
political conditions in the debtor country. Debt agreements are usually cancelled and
then restructured to extend payback periods, or in some cases, debt is bought back
by the debtor country for a discounted price. Money for the environment can be
generated through interest payments from the debtor country if the debt is
restructured, or from a percentage of the buyback price (see Figure 2). Multilateral
debt-for-nature agreements have also been conducted between more than one creditor
country and a debtor country (see Table 2). Poland, for example, benefitted from a
multilateral debt-for-nature agreement from 1991 to 1997. During this time, five
countries restructured debt obligations with Poland, generating over $473 million in
local currency for environmental projects. The United States was the primary
participant in this deal, swapping 10% of Poland’s debt to generate $367 million for
environmental programs.3
Table 2. Countries Other than the U.S. Participating in
Bilateral and Multilateral Debt-for-Nature Initiatives
Creditor
Canada
Belgium
Finland
France
Germany
Holland
Norway
Sweden
3
Debtor
Country
Columbia
El Salvador
Honduras
Nicaragua
Peru
Bolivia
Poland
Peru
Egypt
Philippines
Poland
Peru
Indonesia
Peru
Costa Rica
Costa Rica
Egypt
Egypt
Nigeria
Costa Rica
Tunisia
Tunisia
Bolivia
(U.S.$, in thousands)
Year
Face value
Face value of Conservation
reduction
debt funds generated
1993 67% reduction
18,000
12,000
1993 100% forgiven
7,500
6,000
1993
n/a
22,000
15,000
1993
n/a
12,000
9,000
1994 75% reduction
15,000
3,800
1992
n/a
13,000
n/a
1990
n/a
n/a
14,000
1995 70% reduction
27,000
8,100
1992
n/a
n/a
11,600
1992
n/a
n/a
4,000
1993 10% reduction
520,000
52,000
1994 70% reduction
22,970
6,100
2003
15,000,000
n/a
n/a
1996
n/a
n/a
n/a
1996 100% reduction
17,000
17,000
1988
5,000,000
33,000
9,900
1993
n/a
17,300
n/a
1993
n/a
6,200
n/a
1993
n/a
10,200
n/a
1989
3,500,000
24,500
17,100
1992 100% reduction
1,100
1,100
1993 100% reduction
520
520
1993
n/a
35,400
3,900
Organization for Economic Cooperation and Development, “Swapping debt for the
environment: The Polish EcoFund,” Paris: EU Phare program (1996).
CRS-6
Creditor
Debtor
Country
Switzerland Peru
Tanzania
Poland
Bulgaria
Egypt
Guinea Bissau
Philippines
U.K.
Nigeria
Tanzania
Year
1992
1993
1993
1995
1995
1995
1995
1993
1993
Face value
reduction
n/a
n/a
10% reduction
20% reduction
20% reduction
100%
50% reduction
7,300,000
n/a
Face value of Conservation
debt funds generated
130,800
32,600
22,200
3,300
480,000
48,000
83,500
16,700
115,000
69,000
8,400
400
32,300
16,100
7,300
n/a
15,400
15,400
Source: R. Curtis. “Bilateral Debt Conversions for the Environment, Peru: An Evolving Case Study,”
IUCN World Conservation Congress, Montreal (1996). n/a = information not available.
U.S. Bilateral Debt-for-Nature Initiatives. The model for bilateral debtfor-nature agreements conducted by the United States was first defined in 1990 by
the Enterprise for the Americas Initiative (Title 15, Section 1512 of the Food,
Agriculture Conservation and Trade Act of 1990, “1990 Farm Bill,” P.L. 101-624;
7 U.S.C. 1738) and has since been expanded numerous times (see Appendix). It was
last amended by the Tropical Forest Conservation Act (TFCA) in 1998 (P.L. 105214; 22 U.S.C. 2431).
Figure 2. An Example of a Bilateral Debt-for-Nature Transaction
Modeled After the TFCA
Step 1
New debt agreement is created
Debtor Government
United States
Step 2
Principal payments to the United States
Interest from the principal of the loan
Tropical Forest Fund
Local Conservation Groups
Interest earned from the Tropical Forest Fund
Step 3
! Step 1 = The current debt agreement is cancelled and a
new one is created.
! Step 2 = A Tropical Forest Agreement is created and
interest payments for the principal of the loan are deposited
in local currency equivalents into a Tropical Forest Fund.
! Step 3 = Interest earned and the principal of the Tropical
Forest Fund is generally given in the form of local currency
as grants to local conservation groups.
CRS-7
The Enterprise for the Americas Initiative legislation authorizes the sale,
reduction, cancellation and country buyback of eligible P.L. 4804 (P.L. 101-624; 7
U.S.C. 1738m, p-r, etc.), AID5 (P.L. 102-549; 22 U.S.C. 2430 and 2421), CCC6 (P.L.
102-549; 22 U.S.C. 2430 and 2421), and Exim7 (P.L. 102-429; 12 U.S.C. 635i-6)
debt of eligible Latin American and Caribbean countries.8 Debtor countries must
meet certain political and macroeconomic criteria in order to be eligible. Eligible
countries are required to (1) have a democratically elected government, (2) not
support terrorism, (3) not fail to cooperate with the United States on drug control, and
(4) not engage in gross violations of human rights. From an economic perspective,
eligible countries are required to have (1) an IBRD (International Bank for
Reconstruction and Development) or IDA (International Development Association)
structural or sectoral adjustment loan or its equivalent, (2) a macroeconomic
agreement with the International Monetary Fund or equivalent, and (3) instituted
investment reforms, as evidenced by a bilateral investment treaty with the United
States, an investment sector loan, or progress towards implementing an open
investment regime. Each country that participates in the EAI must enter into an
America’s Framework Agreement with the United States to establish an America’s
Trust Fund and create enforcement mechanisms to insure payments into the fund and
prompt disbursements out of the fund.9 Funds can be used to support environmental,
natural resource, health protection, and child development programs within the
debtor country.
Debt swaps, buybacks, and restructuring are three mechanisms used to conduct
debt-for-nature transactions under the EAI. Seven of the eight countries that have
participated in debt-for-nature transactions under the EAI used the debt-restructuring
mechanism to generate environmental funds (see Table 3); only Peru took advantage
4
P.L. 480 “Food for Peace” loans were low-interest loans given to developing countries to
purchase U.S. agricultural products. For more information, see CRS Report RS20520,
Foreign Food Aid Programs: Background and Selected Issues, by Geoffrey S. Becker and
Charles E. Hanrahan.
5
USAID Foreign assistance loans.
6
Commodity Credit Corporation loans are given to developing countries to enable them to
import U.S. agricultural products. For more information, see CRS Report IB98006,
Agricultural Export and Food Aid Programs, by Charles E. Hanrahan.
7
Export-Import Bank loans are made to foreign importers of U.S. goods and services. For
more information, see CRS Report 98-568 E, Export-Import Bank: Background and
Legislative Issues, by James K. Jackson.
8
Although debt under the P.L. 480 program was the first to be authorized for debt-for-nature
transactions, authorization quickly followed for reduction of debt owed to the United States
under three other programs: (1) Commodity Credit Corporation programs, (2) Export-Import
Bank loans, and (3) foreign aid loans administered by USAID.
9
The America’s Trust Fund can be either an endowed fund or a sinking fund depending on
the agreement reached by the United States and the debtor country. Interest payments made
by debtor countries on their new restructured loans are deposited into the fund. These
payments form the principal of the fund, and interest earned on this principal and the
principal itself can be used to fund environmental, community development, and child
survival and development programs.
CRS-8
of the debt buyback option. In a debt-restructuring agreement, the original debt
agreement is cancelled (i.e., a percentage of the face value of the debt is reduced) and
a new agreement is created with a provision for an annual amount of money (in local
currency) to be deposited into an environmental fund. In 1992, for example, the
United States reduced 10% of a $310 million (face value) debt owed by Colombia
in return for the deposit of $41.6 million in local currency into an environmental fund
by the Colombian government over 10 years.10 In a debt buyback, the debtor country
purchases its debt at a reduced price. The lesser of either 40% of the repurchase price
or the difference between the face value of the debt and the repurchase price is
deposited in local currency into an environmental trust to support environmental and
child support programs in the debtor country (P.L. 104-107, Title V, Sec. 574). For
example, in 1998 Peru took advantage of this program and bought back $177 million
in debt for $57 million, generating nearly $23 million (40% of the repurchase price)
in local currency funds for conservation and child development programs. For all
eight debtor countries, nearly $1 billion (face value) of debt was reduced from a total
debt of $1.8 billion, and almost $180 million of conservation funds were generated
under the guidelines of the EAI (see Table 3).
Table 3. U.S. Bilateral Debt-for-Nature Transactions Under EAI
Country
Year
(U.S.$, in thousands)
Face value Face value of
Conservation Duration
reduction
Debt funds generated
(years)
30,700
38,400
21,800
15
Bolivia
1991
El Salvador
1992
463,300
613,000
41,200
20
Uruguay
1992
3,700
34,400
7,030
12
Columbia
1992
31,000
310,000
41,600
10
Chile
1991 & 1992
31,000
186,000
18,700
10
Jamaica
1991 & 1993
311,000
406,000
21,500
19
Argentina
1993
3,800
38,100
3,100
14
Peru
1998
120,000
177,000
22,840
n/a
993,998
1,803,300
177,770
TOTAL
Source: The United States Department of Treasury. “The Operation of the Enterprise for the
Americas Facility and the Tropical Forest Conservation Act, Report to Congress,” March, 2001.
Tropical Forest Conservation Act. Acknowledging that tropical
rainforests were valuable for preserving biodiversity, reducing atmospheric carbon
dioxide, and regulating hydrological cycles, Congress sought to expand the EAI
authorization to countries throughout the world with tropical forests. The result was
the 1998 Tropical Forest Conservation Act (TFCA), which was established to
generate funds to conserve tropical forests by reducing external debt in countries with
such forests. TFCA is an extension of the Enterprise for the Americas Act, in that
it allows debt swaps, debt restructuring and debt buybacks to generate conservation
funds. These funds, however, are specifically designated for the conservation of
10
R. Curtis, “Bilateral Debt Conversions for the Environment, Peru: An Evolving Case
Study,” IUCN World Conservation Congress, Montreal (1996).
CRS-9
tropical forests and are not confined to Latin America. To date, seven countries have
participated in this program, establishing agreements that will reduce a total of $18.8
at
least $20.0 million from the face value of their debts to the United States and
generate a total of
$70 $81.4 million in local currency in the next 12-26 years for tropical
forest conservation
projects (see Table 4).
Table 4. U.S. Bilateral Debt-for-Nature
Transactions Under TFCA
Country
a
Year
Bangladesh 2000
Belize
(U.S.$, in thousands)11
Budget
Private Face value
Cost
Funds reduction of
debt
Leveragedb
$6,000
$0.0
$600
Conservation Duration
funds generated (years)
$8,500
18
2001
5,500
1,300
1,400
9,000
26
El Salvador 2001
7,700
0.0
3,000
14,000
18
Peru
2002
5,500
1,100
3,700
10,600
12
Philippines
2002
5,500
0.0
100
8,300
14
Panama
2003
5,600
1,200
10,000
10,000
14
Columbia
2004
7,000
1,400
n/a
10,000
12
$42,800
$5.0
n/a
$70Panama
2004
6,500
1,300
n/a
11,000
12
$49,300
$6.3
n/a
$81,400
TOTAL
Source: Email communications with Scott Lampman and Carrie McKellog, received November 24
and November 25, 2002, respectively. U.S. Agency for International Development, Operation of the
Enterprise of the Americas Facility and Tropical Forest Conservation Act, Report to Congress
(Washington, DC, March 2004).
a
The Republic of Thailand signed a debt reduction agreement in September 2001. The signing of the
second required agreement, the Tropical Forest Agreement (TFA), never took place. The government
annulled the agreement on January 30, 2003, amidst false media reports that warned that the U.S.
government would retain control over forests involved in the agreement. The $5.6 million funds
appropriated to the TFCA was recovered and are available for another TFCA agreement. Email
communication from Scott Lampman, Program Analyst, U.S. Agency for International Development,
March 17, 2003.
b
In some debt-for-nature transactions, a third party is involved (generally a non-governmental
organization or NGO) in the process and subsidizes a portion of the debt-reduction done by the United
States. Non-governmental organizations such as the World Wildlife Fund, The Nature Conservancy,
and Conservation International have subsidized these transactions.
To be eligible for this program, a developing country must contain at least one
tropical forest with unique biodiversity, or a tropical forest tract that is representative
of a larger tropical forest on a global, continental or regional scale.12 Political and
macroeconomic criteria for eligibility are almost identical to those used for
11
In the transaction with Peru in 2002, $1.1 million was given by The Nature Conservancy,
World Wildlife Fund, and Conservation International, and $5.5 million was given by the
U.S. government.
12
Developing country is defined as a “low” or “middle” income country as determined by
the International Bank for Reconstruction and Development in its World Development
Report. In 2001, the cutoff for low-income countries was a per capita annual income of $745
or less. For middle-income countries, the range is $746-$9,205, and the cutoff is $9,205.
CRS-10(continued...)
CRS-10
macroeconomic criteria for eligibility are almost identical to those used for
participation under the EAI.13 Conservation funds (in local currency) from these
transactions are deposited in a tropical forest fund for each country. The fund is
overseen by an administrating body composed of one or more appointees chosen by
the U.S. government and the government of the beneficiary country, and individuals
who represent a broad range of environmental, academic, and scientific organizations
in the beneficiary country (the majority of the board is represented by these
individuals). This fund operates in the same manner as the America’s Fund: Local
currency payments of interest accrued on restructured loans are deposited into a
tropical forest fund and serve as the principal. Interest earned from this principal
balance and the principal itself is usually given in the form of grants to fund tropical
forest conservation projects. Eligible conservation projects include (1) the
establishment, maintenance, and restoration of parks, protected reserves, and natural
areas, and the plant and animal life within them; (2) training programs to increase the
capacity of personnel to manage parks; (3) development and support for communities
residing near or within tropical forests; (4) development of sustainable ecosystem and
land management systems; and (5) research to identify the medicinal uses of tropical
forest plants and their products.
Congressional Role in
Debt-for-Nature Initiatives
Authority for Debt-for-Nature Initiatives
Early debt-for-nature legislation concentrated on understanding and promoting
third-party debt-for-nature swaps (see Appendix for legislation summaries and
The TFCA is currently being considered for reauthorization in pending
legislation (H.R. 4654 and S. 2787). H.R. 4654 has passed both the House and
Senate and is awaiting the President’s signature. This bill would authorize $20
million for FY2005, $25 million for FY2006, and $30 million for FY2007 for the
TFCA. It would also authorize funding to conduct audits and evaluations of debt-fornature programs. Many of the programs under the TFCA are in beginning stages and
have not disbursed grants to local nongovernmental organizations. However, in Peru,
El Salvador, and Belize, some grants have been disbursed for projects and project
monitoring has begun. This bill would also allow the principal of restructured loans
to be used in debt-for-nature transactions. Currently, interest accrued on restructured
loans are deposited into a tropical forest fund for disbursement.
Congressional Role in
Debt-for-Nature Initiatives
Authority for Debt-for-Nature Initiatives
Early debt-for-nature legislation concentrated on understanding and promoting
third-party debt-for-nature swaps (see Appendix for legislation summaries and
12
(...continued)
Report. In 2001, the cutoff for low-income countries was a per capita annual income of $745
or less. For middle-income countries, the range is $746-$9,205, and the cutoff is $9,205.
13
Instead of having in place major investment reforms in conjunction with an IADB loan
or making progress toward implementing an open investment regime, the country must have
in place a bilateral investment treaty with the United States, investment sector loans with
the IADB, World Bank supported reforms, or other measures as appropriate (22 U.S.C.
2431c).
CRS-11
United States Code citations). Congress in 1989 directed the Secretary of the
Treasury to ask the U.S. Executive Director of the World Bank to develop a pilot
debt-for-nature program and other ways of reducing debt owed by foreign countries
while generating funds for the environment. A subsequent law, the International
Development and Finance Act of 1989, authorizes USAID to make grants to
nongovernmental organizations (NGOs) to purchase debt in three-party swaps.
Official (public) P.L. 480 debt owed to the United States by eligible Latin American
countries was authorized to be reduced by the 1990 farm bill (P.L. 101-624; 7 U.S.C.
1738b). The 102nd Congress authorized debt reduction for foreign assistance loans
made by USAID (P.L. 102-549; 22 U.S.C. 2430 and 2421), the Export-Import Bank
(P.L. 102-429; 12 U.S.C. 635i-6), and the Commodity Credit Corporation (P.L. 102549; 22 U.S.C. 2430 and 2421). Together, the P.L. 480, USAID, CCC, and Ex-Im
debt reduction authorizations were undertaken as part of President George H. W.
Bush’s Enterprise for the Americas Initiative. In 1996, USAID was further authorized
by Congress to conduct swaps, buybacks, and cancellations of debt owed to the
United States by eligible Latin American and Caribbean countries (P.L.104-107). In
1998, the Tropical Forest Conservation Act (TFCA) was passed, allowing debt
13
Instead of having in place major investment reforms in conjunction with an IADB loan
or making progress toward implementing an open investment regime, the country must have
in place a bilateral investment treaty with the United States, investment sector loans with
the IADB, World Bank supported reforms, or other measures as appropriate (22 U.S.C.
2431c).
CRS-11
swaps, buybacks, and restructuring to generate funds for tropical forest conservation
worldwide. TheFunding for the TFCA was reauthorized by Congress in 2001 (P.L. 107-26)10726) and is currently being considered for reauthorization until FY2007 in the 108th
Congress.
Rationale for and Criticism of Debt-for-Nature Initiatives
Advocates of debt-for-nature initiatives argue that reducing debt in developing
countries will help create free-market systems (as part of the reforms required for
eligibility), stimulate economic growth and trade liberalization, provide incentives
for foreign investment, and help protect the environment. Converting hard currency
debts to local currency debts, advocates argue, will lower debt burdens on developing
countries and in the long run may reduce resource extraction at the expense of the
environment. Critics of debt-for-nature initiatives argue that only a small percentage
of debt is reduced, thereby minimizing the positive benefits of debt reduction in
developing countries. Supporters point out that while the percentage of debt reduced
by debt-for-nature transactions is small, conservation funds generated for debtor
countries are generally significant relative to what the country would have originally
spent on conservation.14 The relationship between debt reduction and lower resource
extraction rates is controversial. Some analysts suggest that debt reduction has no
direct relationship to lower extraction rates of minerals or timber in developing
countries with foreign debt.15
Advocates of debt-for-nature initiatives note that the United States has a history
of supporting debt reduction initiatives in developing countries and appropriating
funds for environmental causes. Recent appropriations by the United States to
support the Heavily Indebted Poor Countries (HIPC) initiative (22 U.S.C. 262p-6)
support the claim for reducing debt in developing countries.16 HIPC was created by
international creditors, the World Bank, and IMF to reduce debt of poor countries
that have demonstrated social and economic policy reforms that enable fluid export
revenues and capital inflows.17 Funds generated for the environment in developing
countries are argued to improve local environmental conditions, promote sustainable
resource use, and help to preserve global biodiversity and ecosystem services.
Advocates also suggest that debt-for-nature transactions that generate funds to
14
For example, Ecuador reduced its external debt of $8.3 billion by only $1 million from a
debt-for-nature swap, yet doubled its budget for parks and reserves with money received
from the resulting conservation fund.
15
Dal Didia, “Debt-for-Nature Swaps, Market Imperfections, and Policy Failures as
Determinants of Sustainable Development and Environmental Quality,” Journal of
Economic Issues (2001), pp. 477-486; and Esben Brandi-Hanson and Kaspar Svarrer, “Debtfor-Nature Swaps: One or the Other, or Both?” Royal Veterinarian and Agricultural
University of Denmark, Department of Economics, 1998, 17 pp.
16
Eligibility requirements for participating in the HIPC program include that a country must
receive only concessional financing from the World Bank and IMF (i.e., borrowing only
from the World Bank’s International Development Association (IDA) and from the IMF’s
Enhanced Structural Adjustment Facility (ESAF)), establish a track record of economic
reforms under IMF and World Bank-sponsored programs, and hold a debt burden that is
unsustainable under existing (Naples terms) relief arrangements.
17
See CRS Report RL30214, Debt Reduction: Initiatives for the Most Heavily Indebted
Poor Countries, by Larry Nowels.
CRS-12
CRS-12
Advocates of debt-for-nature initiatives note that the United States has a history
of supporting debt reduction initiatives in developing countries and appropriating
funds for environmental causes. Recent appropriations by the United States to
support the Heavily Indebted Poor Countries (HIPC) initiative (22 U.S.C. 262p-6)
support the claim for reducing debt in developing countries.16 HIPC was created by
international creditors, the World Bank, and IMF to reduce debt of poor countries
that have demonstrated social and economic policy reforms that enable fluid export
revenues and capital inflows.17 Funds generated for the environment in developing
countries are argued to improve local environmental conditions, promote sustainable
resource use, and help to preserve global biodiversity and ecosystem services.
Advocates also suggest that debt-for-nature transactions that generate funds to
support tropical forest conservation are especially appropriate. Most tropical
countries with high levels of total debt owed to the United States also have some of
the largest areas of tropical forest cover. For example, Brazil and Peru have debts to
the United States totaling over $1 billion each, and have two of the largest areas of
tropical forest cover in the world.18 Other countries, such as the Democratic Republic
of Congo and Sudan, also fit this pattern; however, these countries may be ineligible
for debt-for-nature transactions under the TFCA due to political and economic
eligibility requirements.19
Those who oppose debt-for-nature transactions often argue that they are not
adequately enforced by debtor countries, generate insufficient funds to improve
environmental problems, and may infringe on national sovereignty.20 Three-party
debt swaps have historically had weak enforcement mechanisms; however, bilateral
debt swaps such as those conducted under the EAI generally include safeguards and
default provisions to protect the U.S. government from losing funds. National
sovereignty became an issue in Bolivia when a conservation organization was
reported to have obtained title to forested lands. There was a public outcry and
ensuing political crisis when the Bolivian people thought a large part of their country
16
Eligibility requirements for participating in the HIPC program include that a country must
receive only concessional financing from the World Bank and IMF (i.e., borrowing only
from the World Bank’s International Development Association (IDA) and from the IMF’s
Enhanced Structural Adjustment Facility (ESAF)), establish a track record of economic
reforms under IMF and World Bank-sponsored programs, and hold a debt burden that is
unsustainable under existing (Naples terms) relief arrangements.
17
See CRS Report RL30214, Debt Reduction: Initiatives for the Most Heavily Indebted
Poor Countries, by Larry Nowels.
18
U.S. Department of Treasury and Office of Management and Budget, “United States
Government Foreign Credit Exposure As of December 31st 1999” (2001). Food and
Agriculture Organization of the United Nations, “State of the World’s Forests 2001,” Rome
(2001).
19
Participation in three-party debt-for-nature swaps through USAID is not subject to the
same economic and political criteria required for participation in TFCA and EAI debt-fornature transactions. An eligible country must be committed to, plan for, and have a
government or local nongovernmental organization responsible for the long-term viability
of the programs under the swap agreement.
20
R. T. Deacon and P. Murphy, “The Structure of an Environmental Transaction: The Debtfor-Nature Swap,” Land Economics (1997), pp. 1-24.
CRS-13
had been given to a foreign organization. Consequently, conservation organizations
involved in recent three-party swaps have generally refrained from directly buying
land in debtor countries with conservation funds earned from swaps.
Decline of Debt-for-Nature Transactions
The number of debt-for-nature transactions has declined in recent years, perhaps
due to accounting changes that require greater appropriations to fund debt-for-nature
transactions with official (public) debt, and a higher price of commercial debt on the
secondary market (see Figure 3). Before 1991, no appropriations were required for
debt cancellations, and the United States cancelled between $11 and $12 billion in
debt between 1988 and 1991. This changed with the Federal Credit Reform Act of
1990 (2 U.S.C. 661a et seq.). This law requires that the net present value (NPV) to
the United States of debts of foreign countries be used to report the cost of debt
restructuring, buybacks, swaps, and cancellations to the U.S. government. The NPV
of the cash flow of the loan is calculated often giving consideration to projected
default losses, fees, and interest subsidies. Therefore, appropriated funds for these
programs must be used to cover the interest fee no longer coming to the United States
18
U.S. Department of Treasury and Office of Management and Budget, “United States
Government Foreign Credit Exposure As of December 31st 1999” (2001). Food and
Agriculture Organization of the United Nations, “State of the World’s Forests 2001,” Rome
(2001).
19
Participation in three-party debt-for-nature swaps through USAID is not subject to the
same economic and political criteria required for participation in TFCA and EAI debt-fornature transactions. An eligible country must be committed to, plan for, and have a
government or local nongovernmental organization responsible for the long-term viability
of the programs under the swap agreement.
20
R. T. Deacon and P. Murphy, “The Structure of an Environmental Transaction: The Debtfor-Nature Swap,” Land Economics (1997), pp. 1-24.
CRS-13
(in the case of funds set up under EAI and TFCA) and the difference in the NPV of
the loan that may result from restructuring.21
A decline in three-party commercial debt-for-nature swaps may also be due to
the conclusion of Brady Plan operations by Latin American countries. The Brady
Plan allowed for partial debt forgiveness with a restructuring of the remaining debt
into bonds that could be traded on the securities markets. When this program was
concluded, the price of debt on the secondary market increased and financing
leverage decreased, making it difficult and less attractive for environmental
organizations to acquire debt for resale.22 Further, debt relief for developing
countries is available through other programs that allow for relatively greater
amounts of debt to be cancelled (e.g., HIPC). These programs may be more desirable
to developing countries with debt than debt-for-nature initiatives under the EAI or
TFCA. Lastly, the political and economic requirements needed to be eligible for
debt-for-nature transactions make it difficult for several countries to participate in
EAI or TFCA programs.
Figure 3. Three-Party and U.S. Bilateral
Debt-for-Nature Transactions, 1987-2002
12
10
8
6
4
2
0
1987
1989
1991
1993
1995
1997
1999
2001
Year
EAI/TFCA (Bilateral Exchanges)
Three-party swaps
21
Stacy Warden, “The Tropical Forest Conservation Act,” PowerPoint presentation, U.S.
Department of Treasury, Washington, D.C., 2001.
22
The World Bank, “World Debt Tables, 1996,” Washington, D.C., 1996.
CRS-14
Figure 3. Three-Party and U.S. Bilateral
Debt-for-Nature Transactions, 1987-2002
12
10
8
6
4
2
0
1987
1989
1991
1993
1995
1997
1999
2001
Year
EAI/TFCA (Bilateral Exchanges)
Three-party swaps
Emergence of Subsidized Debt-for-Nature Transactions
In 2001, a different form of a debt-for-nature transaction emerged under the
TFCA. The Nature Conservancy and the United States joined to buy down a portion
of debt that Belize owed to the United States. This partnership in debt-for-nature
transactions is referred to as a subsidized debt swap. In a subsidized debt swap, an
NGO generally matches 20% of the U.S. government contribution toward a debt-fornature transaction. For example, in a recent transaction with Panama in 2003, the
U.S. government provided $5.6 million and the The Nature Conservancy provided
$1.2 million to reduce Panama’s debt by $10 million and generate $10 million in
conservation funds. The transaction is completed when three agreements are signed:
(1) the U.S. government and the beneficiary country sign a debt restructuring
agreement; (2) the U.S. government and the NGO sign an agreement to transfer NGO
funds; and (3) the NGO and the beneficiary country sign a Forest Conservation
Agreement.23 In a subsidized swap, the U.S. government is not a signatory to the
Forest Conservation Agreement, yet generally has representatives on the oversight
committee.24 Subsidized swaps have been implemented in the last three out of four
transactions under the TFCA (see Table 4).25
23
The U.S. government is a signatory on a Tropical Forest Agreement, which is used with
debt-for-nature transactions that are not subsidized.
24
This agreement generally addresses the structure of the conservation fund, its
administrative council, and the use of monies from the fund, among other things.
25
Scott Lampman, “Debt Swaps Create New Conservation Opportunities,”Biodiversity 13
(continued...)
CRS-15
Appropriations
Appropriations for debt reduction activities authorized by the EAI have totaled
$90 million. Forty million dollars was appropriated for P.L. 480 debt reduction for
FY1993 (P.L. 102-341) and $50 million for other debt restructuring under EAI in
FY1993 (P.L. 102-391). For debt reduction activities under TFCA, funding has
totaled up to $91 million from FY2000 to FY2003 (see Table 5). In 2001, the TFCA
was reauthorized for appropriations of $50 million, $75 million, and $100 million for
FY2002, FY2003, and FY2004 (P.L.107-26). Currently, there is a pending bill (H.R.
4654, introduced June 23, 2004, by Representative Rob Portman) that would extend
the authorization for appropriations for the TFCA until 2007 and authorize funds to
conduct audits and evaluations of the TFCA programs.
23
The U.S. government is a signatory on a Tropical Forest Agreement, which is used with
debt-for-nature transactions that are not subsidized.
24
This agreement generally addresses the structure of the conservation fund, its
administrative council, and the use of monies from the fund, among other things.
25
Scott Lampman, “Debt Swaps Create New Conservation Opportunities,”Biodiversity 13
(2003), pp. 1-3.
CRS-15
Table 5. Appropriations Provided Under the
Tropical Forest Conservation Act of 1998
Fiscal
Year
Requested Amount
($ in millions)
Appropriated Amount
($ in millions)
Actual amount used
($ in millions)a
2000
$50.0
$13.0
$6.0
2001
$37.0
$13.0
$14.4
2002
$13.0b
Up to $25.0 ($11.0 was
given for the TFCA)c
$11.0
2003
Up to $40.0d
Up to $40.0 ($20.0 was
given for the TFCA)d
$6.0
2004
$20.0
$19.8
n/a
2005
$20.0
n/a
n/a
a
Cells with n/a indicate that funds have not yet been determined.
The original appropriation bill language for FY2002 stated that $5 million and up to $20 million in
funds from unobligated balances may be used for debt reduction activities under the TFCA.
c
This figure consists of $5 million in direct funds and $6 million in funds transferred from unobligated
balances.
d
Funds are to be transferred from the development assistance accounts of U.S. Agency for
International Development.
b
Future Directions
Bilateral debt-for-nature initiatives implemented by the U.S. government have
been supported with appropriations (e.g., under the EAI and now the TFCA
authorization) for 7 of the last 10 years. Transactions under the TFCA are expected
since it is now included in the Administration’s strategy to address global climate
change.26 Tropical forests make up the largest proportion of carbon stored in
terrestrial land masses and are thought to be a carbon sink. Despite uncertainties on
the part of some, it is generally thought that maintaining existing tropical forests will
store carbon, and that preventing deforestation will reduce the entry of carbon into
the atmosphere.27
25
(...continued)
(2003), pp. 1-3.
26
See [http://www.whitehouse.gov/news/releases/2002/02/climatechange.html], last updated
February 2002, and last accessed June 25, 2004. (Hereafter referred to as Climate Change
Policy.)
CRS-16
the part of some, it is generally thought that maintaining existing tropical forests will
store carbon, and that preventing deforestation will reduce the entry of carbon into
the atmosphere.27
27
T. K. Rudel, Sequestering Carbon in Tropical Forests: Experiments, Policy Implications,
and Climate Change, Society and Natural Resources, vol. 14 (2001), pp. 525-531.
CRS-1617
Appendix: List of Related Laws and Appropriations
That Support Debt-for-Nature Initiatives
!
Continuing Appropriations Act for 1988 (P.L. 100-202; Section
537(C)(1-3)). Directs Secretary of the Treasury to analyze initiatives
that would enable developing countries to repay portions of their
debt obligations through investments in conservation activities.
!
International Development and Finance Act of 1989 (P.L. 101240; Title VII, Part A, Section 711) (22 U.S.C. 2282 -2286).
Authorizes USAID to provide assistance to nongovernmental
organizations to purchase debt of foreign countries as part of a debtfor-nature agreement (i.e., three-party swap). Authorizes USAID to
conduct a pilot program for debt-for-nature swaps with eligible subSaharan African countries.
!
Support for East European Democracy (SEED) Act of 1989
(P.L. 101-179; Title I, Section 104) (22 U.S.C. 5414). Authorizes
the President to undertake the discounted sale, to private purchasers,
of U.S. government debt obligations from eligible Eastern European
countries.
!
FY1990 Foreign Operations Appropriations Act (P.L. 101-167;
Title V, Section 533(e)) (22 U.S.C. 262p-4i- 262p-4j). Directs the
Secretary of the Treasury to (1) support sustainable development and
conservation projects when negotiating reduction of commercial
debt and assisting with reduction of official (public) debt
obligations, (2) encourage the World Bank to assist countries in
reducing or restructuring private debt through environmental project
and policy-based loans, and (3) encourage multilateral development
banks to support lending portfolios that will allow debtor countries
to restructure debt that may offer financial resources for
conservation.
!
Enterprise for the Americas Initiative (Title XV, Section 1512 of
the Food, Agriculture Conservation and Trade Act of 1990 (P.L.
101-624; 104 Stat. 3658) (7 U.S.C. 1738b). Amends the Agriculture
Development and Trade Act of 1954 to allow the President to reduce
the amount of P.L. 480 sales credit debt owed to the United States
by Latin American and Caribbean countries.
!
Export Enhancement Act of 1992 (P.L. 102-429; Title I, Section
108) (12 U.S.C. 635i-6). Authorizes the sale, reduction, cancellation,
and buyback of outstanding Export-Import Bank (Exim) loans for
EAI purposes.
CRS-1718
!
Jobs Through Exports Act of 1992 (debt forgiveness authority
under EAI) (P.L. 102-549; Title VI, Section 704) (22 U.S.C.
2430) and (22 U.S.C. 2421). Authorizes the sale, reduction,
cancellation, and country buyback (through right of first refusal) of
eligible Commodity Credit Corporation (CCC) debt. Also authorizes
the reduction of foreign assistance (USAID) debt.
!
Enterprise for the Americas Initiative Act of 1992 (P.L. 102532)(7 U.S.C. 1738m, p-r, etc.). Establishes guidelines for debtfor-nature swaps for Latin American and Caribbean countries.
!
Agriculture Appropriations for FY1993 (P.L. 102-341). Provided
$40 million for P.L. 480 debt reduction under EAI.
!
Foreign Operations Appropriations for FY1993 (P.L. 102-391).
Provided $50 million for debt restructuring under EAI.
!
Foreign Operations Appropriations for FY1995 (P.L. 103-306;
Title II, Section 534). Authorizes nongovernmental organizations
associated with the Agency for International Development to place
funds from economic assistance provided by USAID in interestbearing accounts. Earned interest may be used for the purpose of the
grants given.
!
Foreign Operations Appropriations for FY1996 (P.L. 104-107;
Title V, Section 571). Provides authority to perform debt
buybacks/swaps with eligible loans made before January 1, 1995.
For buybacks, the lesser of either 40% of the price paid or the
difference between price paid and face value must be used to support
conservation, child development and survival, or community
development programs (Title V, Section 574).
!
Tropical Forest Conservation Act of 1998 (P.L. 105-214) (22
U.S.C. 2431). Amends the Foreign Assistance Act of 1961 to
facilitate the protection of tropical forests through debt restructuring,
buybacks, and swaps in eligible developing countries with tropical
forests.
!
Reauthorization of the Tropical Forest Conservation Act (P.L.
107-26). Authorizes the appropriation of $50 million, $75 million,
and $100 million for FY2002, FY2003, and FY2004. Reduces the
magnitude of investment reforms that must be in place for eligible
countries.