Pursuant to a congressional request, GAO reviewed the program costs of the Commodity Credit Corporation's (CCC) general sales manager (GSM) 102/103 programs, focusing on the programs': (1) estimated costs; and (2) effect on U.S. exports worldwide.

GAO found that: (1) CCC had about $9.04 billion in outstanding GSM-102/103 guarantees on loan principal and $4.51 billion in accounts receivable resulting from loan guarantee payments on delinquent guaranteed loans; (2) the cumulative program costs are estimated at $6.5 billion out of a total of $13.55 billion; (3) CCC based credit guarantees on assessments of a country's agricultural needs, market development potential, and its credit history; (4) the high cost associated with the loans resulted from loans to high-risk countries; (5) CCC extended guarantees to high-risk countries because of market development reasons and foreign policy considerations; (6) GSM-102/103 program costs are expected to rise to $74 million annually; (7) extending guarantees to new program participants or increasing existing guarantees to high-risk participants could incur additional costs; and (8) there was no evidence that GSM-102/103 programs increased U.S. exports worldwide.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Matter for Congressional Consideration

Matter: Congress may wish to consider whether to limit future program cost increases, since: (1) the additional cost of increasing loan guarantee exposure to existing participants or adding new participants to the programs is high; and (2) program officials were unable to provide GAO with any evidence demonstrating worldwide additionality. One simple way to limit future program cost increases is to restrict most future GSM-102/103 guarantees to current participants at existing levels.

Status: Closed - Implemented

Comments: The Federal Agriculture Improvement and Reform Act became law on April 4, 1996. The agricultural trade title (Title II) of the act is generally responsive to GAO's recommendation about limiting increased costs of the Export Credit Guarantee Program. It authorizes considerable discretion by the Secretary of Agriculture in the management of the program.