ENCOURAGEMENT OF DEBT-FOR-DEVELOPMENT SWAPS THROUGH LOCAL CURRENCY REPAYMENT.

SEC. 531. ENCOURAGEMENT OF DEBT-FOR-DEVELOPMENT SWAPS THROUGH LOCAL CURRENCY REPAYMENT. (a) Statement of Policy.— It is the sense of the Congress that— (1) debt-for-development swaps, where payment is made in local currency at the free market rate, serve a useful purpose by providing banking institutions with constructive opportunities for the reduction of the external debt of highly indented developing countries in a process that involves the participation of private, nonprofit groups in providing a stimulus to the economic and social development of such developing countries; (2) debt-for-development swaps provide highly indebted developing countries with a creative method of reducing external debt burdens, while promoting their economic growth and restructuring objectives; (3) banking institutions should give careful consideration to engaging in such swaps as one means of strengthening overall loan portfolios through the reduction of high external debt burdens while expanding economic opportunities through private sector initiatives; and (4) in order to avoid any bias against such swaps in the regulatory framework applicable to the financial reporting of banking institutions, where payment is made in local currency at the free market rate, appropriate recognition of the fair market exchange value of the currency so received should be made. (b) Notification Relating to Local Currency Repayment Through Debt-for-Development Swaps.—Before the end of the 6- month period beginning on the date of the enactment of this section, each appropriate Federal banking agency shall adopt uniform guide-lines that will effectuate the policy set forth in subsection (a) concerning the regulatory framework and accounting treatment of debt-for-development swaps involving repayment in local currency at the free market rate. For the purpose of such guidelines, the impact of such swaps on reported loan loss reserves shall be determined by valuing currency received in such swaps at fair market exchange value. (c) Definitions.—As used in this section: 103 STAT. 2514 (1) Appropriate federal banking agency.—The term “appropriate Federal banking agency has the meaning given such term in section 903(1) of the International Lending Supervision Act of 1983. (2) Banking institution.—The term “banking institution” has the meaning given such term in section 903(2) of the International Lending Supervision Act of 1983. (3) Debt-for-development swap.—The term “debt-for-development swap” has the meaning given such term in section 1608(b)(2) of the International Financial Institutions Act. (4) Highly indebted country.—The term “highly indebted country” means any country designated as a “Highly Indebted Country” in the annual World Debt Tables most recently published by the International Bank for Reconstruction and Development before the date of the enactment of this section.