International Affairs:

Political and Economic Factors Influencing Economic Support Fund Programs

ID-83-43: Published: Apr 18, 1983. Publicly Released: Apr 18, 1983.

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Pursuant to a congressional request, GAO described and analyzed the allocation of bilateral foreign aid through the Economic Support Fund (ESF).

Because foreign aid is used to further U.S. foreign policy objectives, ESF assistance has grown rapidly since 1975. The ESF provided $2.8 billion to 32 countries in 1982 and increased funding has been requested for fiscal year 1984. This growth is also related to a weak world economy and to an expanded range of foreign policy objectives, which include: (1) furthering peace in the Middle East; (2) facilitating the transition to majority rule in southern Africa; (3) strengthening the North Atlantic Treaty Organization allies; (4) ensuring access to the Persian Gulf; and (4) restoring stability to the Caribbean Basin. Although ESF does respond to economic need, higher aid levels may be used to communicate political messages, because few restrictions govern the fund's uses or the countries' eligibilities to receive aid. GAO found that ESF programs: (1) are not governed by an overall formula for determining their composition; (2) are structured on a country-specific basis; and (3) are provided through projects, cash, commodity import financing, and sector assistance. GAO also found that decisions on determining funding terms are not consistently based on per capita income.

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