Foreign Aid:

Problems and Issues Affecting Economic Assistance

NSIAD-89-61BR: Published: Dec 30, 1988. Publicly Released: Jan 11, 1989.

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In response to a congressional request, GAO identified key issues and problems relating to the U.S. foreign economic assistance program.

GAO found that U.S. bilateral assistance programs had been undermined due to: (1) recipients' inability to provide agreed-upon funding and recurrent cost financing; (2) U.S. failure to effectively use Economic Support Fund and food aid to achieve economic development and policy reforms overseas; (3) recipients' inability to service existing debt and borrow new funds; (4) unsuccessful efforts by the Agency for International Development (AID) to reduce narcotics cultivation through crop substitution and area development; (5) the impact of Acquired Immune Deficiency Syndrome on recipients, which would likely increase their demands for assistance; and (6) recipients' inadequate financial management and accounting procedures over cash transfers and local currency to ensure that assistance is used for intended purposes.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in the report.

    Matter: Congress should structure U.S. bilateral assistance according to the recipient's capability to support projects. Options include emphasizing projects that lessen the administrative and financial burden on recipients, stressing alternatives to project assistance, and making new and continued project funding contingent on recipient compliance with counterpart and recurrent cost-funding agreements.

  2. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in the report.

    Matter: Congress should strengthen efforts to encourage recipient economic policy reform by clarifying specific reform objectives, establishing time frames or milestones for achieving stated reforms, and periodically assessing reform progress and impact of U.S. assistance.

  3. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in the report.

    Matter: Congress should develop budget strategies to minimize the pipeline problem, consider alternatives to earmarking funds and to programming development assistance by functional accounts, and streamline reprogramming requirements.

  4. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in this report.

    Matter: Congress should focus AID programs on more manageable units by decreasing the total number of countries in which AID missions and field offices are located, concentrating AID resources and personnel on key countries, and maintaining a limited in-country presence through U.S. embassy staff in other nations, concentrating resources on fewer or larger projects, and setting a minimum funding level per project.

  5. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in the report.

    Matter: Congress should develop an overall debt relief policy that determines how much aid is needed, the U.S. share, and the most appropriate mechanisms for delivery.

  6. Status: Closed - Not Implemented

    Comments: GAO is closing this recommendation because GAO General Management Review of AID will monitor: (1) action taken on these proposals; and (2) the extent matters are considered in the report.

    Matter: Congress should determine if AID should play a greater role in U.S. efforts to reduce narcotics production and, if so, what that role should be.

 

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