Debt-for-Drugs Exchange Act

Debt-for-Drugs Exchange Act - Declares that the U.S. representatives to the United Nations should propose the establishment within the United Nations Fund for Drug Abuse Control (UNFDAC) of debt-for-drugs exchanges whereby UNFDAC would enter into agreements with eligible countries that would agree to combat the international drug trade in exchange for: (1) the cancellation of up to 20 percent of their foreign commercial indebtedness, to be purchased by UNFDAC on the commercial secondary market; and (2) the commitment to cancel a specified amount of government-to-government indebtedness held by such countries' creditor governments. Authorizes the Secretary of State to commit the United States to contribute to UNFDAC one-third of the amount required to purchase such indebtedness. Authorizes appropriations.

Subjects such agreements to specified terms and conditions. Provides that such agreements shall include provisions to reinstate debt obligations and release parties from agreement commitments if, after one year, the terms of the agreement have not been fulfilled. States that the agreement and exchange will only take effect after two-thirds of the participating creditor governments making contributions to UNFDAC have approved the agreement. Declares that an advisory role should be provided for representatives from major multilateral development institutions to ensure that such exchanges would be in keeping with other debt reduction and economic reform measures.

Cancels the obligation of a participating country to make the first scheduled payment on indebtedness to the U.S. Government that would otherwise be due after the agreement date. Provides that on the date that the second payment would be due to the U.S. Government, an amount equal to the face-value indebtedness which could have been purchased on the commercial secondary market with the amount of the forgiven payment shall be deducted from the total principal amount of indebtedness due to the United States.

Directs the Secretary of the Treasury to instruct the U.S. executive directors of the International Bank for Reconstruction and Development, the International Development Association, and the Inter-American Development Bank to: (1) provide advice and assistance to borrowing and lending country governments desiring to execute debt-for-drugs exchanges; and (2) consider, in making loans and negotiating payment schedules for borrowing governments of drug-producing countries, the history of compliance by such governments with, and the extent to which such governments have honored, agreements entered into for such exchanges.

Declares that the President, the Secretary of State, the Secretary of the Treasury, and the Director for National Drug Control Policy should: (1) organize a consultative group of creditor governments in an appropriate forum in which such governments could make contributions and commitments to facilitate debt-for-drugs exchanges; and (2) encourage other creditor governments to participate in such group and support such exchanges.