Pursuant to a congressional request, GAO reviewed the $400-million housing loan guaranty program authorized for Israel to help it cope with the housing needs of Soviet immigrants, focusing on: (1) the impact of the guaranties on Israel's debt servicing capabilities; (2) whether Israel used the $400-million loan guaranty in accordance with applicable agreements and understandings; (3) whether Israel is offering Soviet Jewish immigrants special incentives or subsidies to settle in occupied territories; and (4) whether Israel's basis for estimating the future immigration of Soviet Jews is reasonable.

GAO found that: (1) Israel is expected to certify in February 1992 that it used the loan guaranty to finance about 12,300 loans valued at $425 million, as consistent with the provisions of the guaranty program; (2) although Israel encourages settlement in the occupied territories, it does not direct or require Soviet immigrants to settle there; (3) the Israeli government has reasonably estimated that one million Soviet Jews will immigrate to Israel during the current wave; (4) if the United States provides the additional $10 billion requested by the Israeli government in loan guaranties, Israel will probably be able to fully service its external debt and continue its past record of payment; and (5) the additional loan to Israel involves more risk, but that risk could be minimized if it fully implements its major absorbtion plans.