The U.S. Economic Assistance Program for Egypt Poses a Management Challenge for AID

NSIAD-85-109: Published: Jul 31, 1985. Publicly Released: Jul 31, 1985.

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GAO reviewed the Agency for International Development's (AID) progress in assisting Egypt in developing its economy, including: (1) the conditions and constraints of establishing and administering the Economic Support Fund (ESF); and (2) the advantages and disadvantages of the current mode of providing ESF assistance and the possible alternative ways of disbursing this assistance.

GAO found that: (1) economic development progress has been somewhat limited by program conditions over which AID had little control; and (2) some actions taken to support the political purpose of the program may not be of optimal value in working toward the longer term economic development goal. GAO found that AID had difficulty influencinge Egypt to quicken its pace in making economic policy reforms because: (1) AID lacked overall program funding leverage; and (2) Egypt was concerned that moving too quickly might be politically destabilizing. GAO also found that the large size of the project portfolio has: (1) made it difficult to administer the program; (2) challenged Egypt's ability to effectively absorb large amounts of assistance; and (3) resulted in a large amount of obligated but undisbursed funds. GAO noted that AID could use nonproject program approaches such as cash transfers, sector grants, and commodity imports as alternative modes for some of the project assistance, but AID needed to objectively and thoroughly assess the various modes to determine the best mix for accomplishing program goals in Egypt.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: While AID disagreed with this recommendation, it stated that it will attempt to improve the quality of its analyses. Current work in Egypt shows that AID has taken steps to analyze Egyptian efforts to improve economy.

    Recommendation: To support AID continuing program design efforts and assist the Government of Egypt in its economic development, including any needed policy reform, the Administrator, AID, should direct the Near East Bureau and the mission to perform the analyses necessary to provide in-depth knowledge of Egypt's development sectors and the policies that affect these sectors.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: While action should be continuous, this recommendation can be considered closed as of May 1986.

    Recommendation: To support AID continuing program design efforts and assist the Government of Egypt in its economic development, including any needed policy reform, the Administrator, AID, should direct the Near East Bureau and the mission to assess the development efforts agreed to and undertaken by the Government of Egypt in response to the provision of recently authorized cash transfers.

    Agency Affected: United States Agency for International Development

 

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