Central America Aid:

Status of the Trade Credit Insurance Program

NSIAD-86-29FS: Published: Dec 31, 1985. Publicly Released: Dec 31, 1985.

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GAO reported on the use, control, and funding of the Trade Credit Insurance Program, which the Agency for International Development (AID) and the Export-Import Bank (Eximbank) jointly administer to guarantee repayment of U.S. commercial credit to finance Central American imports of U.S. goods and services.

GAO found that: (1) as of December 1985, less than 9 percent of the $300 million credit-guarantee ceiling established for the program had been committed; (2) AID and Eximbank attributed the limited program use to start-up difficulties, bank procedures, limited demand, and private-sector reluctance to incur the debt; (3) AID and Eximbank only had data on the specific products imported under the program in Honduras; (4) in Honduras, most of the items imported were being used to produce goods for domestic consumption, but some were ineligible consumer goods; (5) AID has relied on host-country central banks to control the program's use and has sought to avoid complex procedures which could impede program implementation; (6) although AID designed the program to be self-sustaining, it set aside $60 million in fiscal year (FY) 1985 for a bad-debt reserve but reprogrammed $50 million for other purposes; and (7) for FY 1986, AID requested $40 million for the bad-debt reserve, but planned to reprogram a portion of the amount for other purposes late in FY 1986. GAO has not reached any conclusions about the need for reserve program funds.

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