Former Soviet Union:

Creditworthiness of Successor States and U.S. Export Credit Guarantees

GGD-95-60: Published: Feb 24, 1995. Publicly Released: Mar 24, 1995.

Additional Materials:


Benjamin F. Nelson
(202) 512-4128


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed the creditworthiness of the former Soviet Union (FSU) and its successor states in the context of the Department of Agriculture's (USDA) Office of the General Sales Manager (GSM)-102 Export Credit Guarantee Program, focusing on: (1) the countries' general economic and political environment; (2) the relationship between the Soviet debt crisis and Soviet economic reform and creditworthiness; (3) how assessments of creditworthiness and market considerations affect USDA decisions on providing credit guarantees; and (4) the GSM-102 portfolio's exposure to default by FSU and its successor states.

GAO found that: (1) most of the FSU successor states are not creditworthy because of their heavy debt burdens and severe liquidity problems; (2) as a block, FSU and its successor states hold the largest portion of program credits; (3) USDA extended $5 billion in credit guarantees to FSU, Russia, and Ukraine despite their high risk because it believed the states could service the debt; (4) the poor creditworthiness of FSU countries heavily exposes the GSM-102 loan portfolio to default; (5) FSU and Russian loan defaults have already occurred and the U.S. government has expended over $1 billion to settle loan guarantee claims; (6) the countries' continued ability to import food due to credit extensions may have hampered their agricultural reforms and food production and prolonged the existence of state-owned processors; (7) FSU debt arrearages continue to increase despite efforts to defer and reschedule debt and foreign economic assistance; (8) the countries' debt burden has grown out of their increased reliance on imports and credit programs, particularly for food; (9) Russia's debt burden increased significantly when it accepted responsibility for all FSU debt; (10) much of the foreign assistance provided to Russia in 1992 was contingent on Russia's implementation of additional economic reforms; and (11) the successor states are expected to experience further economic decline despite some progress in market reforms.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress did not address this matter in the export title of the 1996 farm bill.

    Matter: To reduce future exposure of the GSM-102 portfolio to default, Congress may wish to consider limiting the total amount of credit guarantees that can be issued each year to high-risk countries and the amount that can be provided to any single high-risk country.

  2. Status: Closed - Not Implemented

    Comments: Congress reviewed this matter as part of its deliberations on the export title of the 1996 farm bill, and decided not to make any changes to the fee.

    Matter: Congress may wish to consider: (1) amending the statutory provision that precludes the Commodity Credit Corporation (CCC) from charging a fee in excess of 1 percent of the amount of the credit guarantee; and (2) requiring CCC to include a risk-based charge as part of its overall fee for GSM credit guarantees.

  3. Status: Closed - Not Implemented

    Comments: Congress reviewed this matter as part of its deliberations on the export title of the 1996 farm bill and decided not to authorize additional food aid to Russia and other successor states to finance the sale of food.

    Matter: If Congress concludes that the United States needs to ensure continued U.S. agricultural exports to Russia and other successor states, and if Congress concludes the states are too risky to receive additional GSM-102 credit guarantees, it may wish to consider authorizing additional foreign aid to finance the sale of the food.


Explore the full database of GAO's Open Recommendations »

Sep 15, 2020

Sep 14, 2020

Aug 27, 2020

Jul 28, 2020

Jun 18, 2020

Jun 9, 2020

May 12, 2020

May 6, 2020

Looking for more? Browse all our products here