Delaying U.S. Payments to International Organizations May Not Be the Best Means To Promote Budget Restraint

ID-83-26: Published: Feb 15, 1983. Publicly Released: Feb 22, 1983.

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In response to a congressional request, GAO examined the impact on the United States and on international organizations of a new plan to defer U.S.-assessed contributions to selected international organizations.

GAO found that the extent to which organizations have been affected by the U.S. deferral policy varies. In some cases, GAO was not able to isolate financial difficulties attributable to the deferral from continuing problems due to other factors, such as late payment and arrearages of other members, unrestrained budget growth, political withholding, and poor financial management. Deferred U.S. payments are not solely to blame for financial difficulties at international organizations, but they have contributed to existing cash flow problems. Despite the effects of the deferral, GAO was unable to identify any effect on the organizations' program activities. While the United States will realize a one-time budgetary reduction of over $400 million from fiscal year 1981 to 1983 resulting from the deferral, as organizations take action to remain solvent, higher assessments may partially offset the gain. It is questionable whether the U.S. deferral policy will significantly limit the growth of international organization budgets. Other member states are concerned that: (1) the deferral could penalize members who pay on time by potentially increasing their assessments; (2) the policy does not differentiate between organizations that are financially well managed from those that are not; and (3) paying late violates U.S. legal obligations to the organizations. GAO offered alternatives for congressional and executive branch consideration which ranged from continuing as planned under the new payment cycle to reversing the deferral process.

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