Improved Management of Productive Credit Guaranty Program Can Minimize U.S. Risk Exposure and Costs
NSIAD-84-3
Published: Nov 28, 1983. Publicly Released: Nov 28, 1983.
Skip to Highlights
Highlights
GAO reviewed the Productive Credit Guaranty Program (PCGP) through which the Agency for International Development (AID) provides partial guarantees to private credit institutions in recipient countries to encourage lending to organized groups and individuals in carrying out credit and self-help community development projects.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| U.S. Agency for International Development | The AID Administrator should determine whether a financial audit is needed to determine AID liability in the recipient countries, examine the recoupments made, assess whether the guaranty funds have been adequately protected, and ensure that any future claims are valid. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| U.S. Agency for International Development | The AID Administrator should improve coordination between LAC and PRE so that PRE can benefit from LAC experience and determine the authority it has remaining under the program. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| U.S. Agency for International Development | The AID Administrator should consolidate PCGP in one bureau by transferring all existing program authority to PRE. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| U.S. Agency for International Development | The AID Administrator should seek to amend the Jamaica agreement to: (1) limit the percentage of loans that can be discounted through public institutions; (2) increase that portion of the reserve fund reserved to pay the AID share of the guaranty; (3) collect a fee on each guaranty, to be deposited in a revolving fund of the U.S. Treasury as specified in sections 223(a) and (b) of the Foreign Assistance Act; (4) require that PRE, in conjunction with the Royal Bank Jamaica Limited, prepare a detailed reporting format to include an accounting of the reserve fund, technical assistance provided, collateral held, interest earned, recoupments, and other data deemed necessary to fully monitor the program; and (5) specify a more active role for the mission in program monitoring. PRE should consider these points in drawing up any future agreements with the recipient countries. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| U.S. Agency for International Development | The AID Administrator should direct that PRE establish quantifiable indicators to measure success. |
Closed – Not Implemented
The only ongoing program was suspended in mid-1984, and AID is uncertain as to whether it will be reactivated.
|
| U.S. Agency for International Development | The AID Administrator should direct that the Jamaica project be evaluated after 1 year of issuing guarantees to determine whether AID should continue the program or terminate it. |
Closed – Not Implemented
The Jamaica program was suspended in mid-1984 due to economic recession and banking restrictions imposed by the IMF agreement. AID believes an evaluation is unnecessary since the total loan portfolio is less than $150,000.
|
Full Report
Office of Public Affairs
Topics
Economic analysisForeign economic development creditGovernment guaranteed loansInternational economic relationsLending institutionsReports managementEconomic recessionCentral banksCurrency and coinageFinancial audit