International Environment:

Operations of the Montreal Protocol Multilateral Fund

T-RCED-97-218: Published: Jul 30, 1997. Publicly Released: Jul 30, 1997.

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GAO discussed its work on the Montreal Protocol Multilateral Fund, focusing on: (1) principal contributors to the Fund; (2) principal recipients of disbursements made from the Fund; (3) the purposes for which disbursements were made; (4) what has been accomplished with these disbursements; and (5) the controls and accountability mechanisms in place to ensure proper use of money disbursed from the Fund.

GAO noted that: (1) the United States is the largest contributor to the Multilateral Fund, accounting for about 25 percent of the contributions; (2) for 1997 through 1999, the United States is expected to contribute about $39 million per year; (3) GAO estimates that the United States could avoid interest expenses of between $2 million and $3 million associated with its annual contributions by using an alternative payment method; (4) from its establishment in 1991 through May 1997, the Multilateral Fund has allocated about $570 million for projects in more than 100 Article 5 countries; (5) China has been the largest recipient, accounting for almost $150 million or 26 percent of the total; (6) there are seven broad purposes for which projects have been funded, but over 80 percent of the funds have been for investment projects, which help businesses to convert their operations from the use of ozone-depleting substances and to cease the production of goods containing them; (7) projects approved to date are projected to phase out the annual use of about 84,000 ozone-depleting potential-weighted metric tons of ozone-depleting substances, or about 40 percent of the estimated consumption of ozone-depleting substances, in Article 5 countries; (8) the Multilateral Fund has a number of mechanisms in place that are designed to ensure that funds are properly accounted for and that the amounts of funds allocated to specific projects are reviewed and verified; (9) the Multilateral Fund currently pays a 13-percent administrative fee to the implementing agencies for their costs associated with project implementation; and (10) however, efforts are under way to evaluate the appropriateness of the fees, with the goal of reducing the support costs to about 10 percent over the next 3 years.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The State Department has stated that it does not plan to implement an alternative payment mechanism as GAO recommended.

    Recommendation: Because of the potential for considerable interest savings, the Administrator, EPA, and the Secretary of State should implement an alternative payment method such as promissory notes or letters of credit for the U.S. contribution to the Multilateral Fund and seek the assistance of the Department of the Treasury in implementing this recommendation.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: EPA has implemented an alternative payment mechanism that fully achieves the intent of the recommendation.

    Recommendation: Because of the potential for considerable interest savings, the Administrator, EPA, and the Secretary of State should implement an alternative payment method such as promissory notes or letters of credit for the U.S. contribution to the Multilateral Fund and seek the assistance of the Department of the Treasury in implementing this recommendation.

    Agency Affected: Environmental Protection Agency

 

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