Eastern Europe:

Donor Assistance and Reform Efforts

NSIAD-91-21: Published: Nov 30, 1990. Publicly Released: Nov 30, 1990.

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Pursuant to a congressional request, GAO provided information on international assistance to five eastern European countries.

GAO found that: (1) as of May 1990, donor countries had committed $8.51 billion in assistance to Poland and Hungary, and the European Community had committed $1.02 billion; (2) $3.9 billion of the $8.51 billion committed was in the form of export credits and project financing; (3) although overall U.S. assistance was less than that provided by Germany and Japan, Department of State officials reported that the United States was the largest donor of grant assistance; (4) the European Community and other donor countries were assisting the eastern European countries in the areas of agricultural and environmental development, training, and investment; and (5) other multilateral assistance included the establishment of a fund to stabilize Poland's currency, and a European bank's provision of loans for private-sector projects, infrastructure development, and environmental efforts. GAO also found that socioeconomic conditions affecting the eastern European countries' economic difficulties and reform efforts included: (1) industries suffering from outdated technology, lack of competitive incentives, and shortages of production materials, resulting in low productivity rates; (2) roads, telecommunications, railways, and port facilities that were not adequate to support greater levels of trade with western Europe; (3) severe environmental problems; (4) large hard-currency debt levels that severely hindered the resolution of domestic economic problems; and (5) standards of living that were far below those of western European countries. GAO believes that, despite those economic conditions, all of the countries have economic growth potential, although it is highly dependent upon substantial foreign investment.

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