B-233880, Nov 3, 1989

B-233880: Nov 3, 1989

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Or by Office of Management and Budget decision) where the equivalent dollar amount is charged against the agency's regular appropriations. Our views are consistent with those of the Department. We understand that the major source of new accruals of foreign currency by the Department of Agriculture is the sale of agricultural commodities to friendly developing countries under the Agricultural Trade Development and Assistance Act of 1954. The sales are financed by long-term. The commodities are usually resold in the recipient countries. The payments are called currency use payments. Specific purposes within those categories are stated in individual government-to-government agreements. The use of local currencies generally is subject to the normal budgetary and appropriation restrictions.

B-233880, Nov 3, 1989

APPROPRIATIONS/FINANCIAL MANAGEMENT - Budget Process - Funding - Agricultural programs - Foreign countries - Foreign currencies DIGEST: The Department of Agriculture may use foreign currencies received through the sale of agricultural commodities to friendly developing countries to fund its programs abroad (unless otherwise restricted by law, international agreement, or by Office of Management and Budget decision) where the equivalent dollar amount is charged against the agency's regular appropriations.

Honorable Steve Symms

United States Senate:

This responds to your letter of December 2, 1988, in which you ask about the availability of U.S. owned foreign currencies for funding U.S. Department of Agriculture programs abroad. In preparing our response, we obtained and considered the views of the Department of Agriculture. Our views are consistent with those of the Department. The Department of the Treasury reviewed the Department of Agriculture's submission and informally advised us that it concurs as well.

You first ask about the Department of Agriculture's authority to use foreign currencies received by the United States to fund its programs abroad.

We understand that the major source of new accruals of foreign currency by the Department of Agriculture is the sale of agricultural commodities to friendly developing countries under the Agricultural Trade Development and Assistance Act of 1954, as amended, 7 U.S.C. Sec. 1691 et seq. (1982), commonly known as Public Law 480. The sales are financed by long-term, low-interest credits. The commodities are usually resold in the recipient countries, and, if provided for in the sale agreements, the credits may be paid in part by the local currency so generated. The payments are called currency use payments.

Public Law 480 (at 7 U.S.C. Sec. 1703(b) and 1704) authorizes the use of accrued foreign currencies for:

-- payment of U.S. obligations overseas;

-- foreign market development, educational and cultural exchange, scientific cooperation, building purchases, and analysis of foreign publications;

-- loans to business firms; and

-- financing health and nutrition programs.

According to the Department of Agriculture, specific purposes within those categories are stated in individual government-to-government agreements. Agriculture advises that current intergovernment agreements deal only with the first category, payment of U.S. obligations. The use of local currencies generally is subject to the normal budgetary and appropriation restrictions, so that they are available to fund the Department of Agriculture's programs abroad when the equivalent dollar amount is charged against the Department's regular appropriations (and credited to the Commodity Credit Corporation, which finances the underlying commodities sale).

Your second question concerns the Department of Agriculture's authority for access to foreign currencies available in excess of the levels reserved by Treasury.

U.S. owned excess foreign currencies exist in countries where the currencies or credits exceed those needed to pay for U.S. agency programs or are not otherwise earmarked by virtue of an agreement with the country concerned. See 22 U.S.C. Sec. 2362(b); Office of Management and Budget (OMB) Circular A-20. /1/ According to the Department of Agriculture, the only country in which the U.S. presently owns excess currency is Burma.

Excess currencies in most cases are obtained through repayments of loans or other legal obligations owed to the United States by a host government. /2/ If not restricted, pursuant to Public Law 480, international agreement, or determination of the Director of OMB to "country-use" (that is, to loans or grants for economic development or the common defense in foreign countries), excess currencies are available for payment of U.S. obligations and for U.S. agency programs. However, because of their U.S. ownership, use of these currencies (like use of non- excess currencies) requires an equivalent dollar charge against the agency's appropriation. 22 U.S.C. Sec. 2362(b). The U.S. agency concerned in effect "purchases" the local currency from the Secretary of the Treasury by requesting the Secretary to charge the dollar value of the foreign currency against the appropriation. An equal dollar amount is then credited to the fund owning the currency or to miscellaneous receipts. See OMB Circular A 20.

Unless released by your office earlier, this opinion will be made publicly available 30 days from today.

/1/ This Circular sets out a system for control of foreign currencies received by the U.S. without payment of dollars.

/2/ By contrast, local currencies deposited by the host government into a special account to be used for purposes agreed upon by that government and the United States are host government-owned. Such currencies are "generated" by or associated with the furnishing of dollar assistance for specific purposes such as economic development.