Aid to Nicaragua:

U.S. Assistance Supports Economic and Social Development

NSIAD-92-203: Published: Aug 14, 1992. Publicly Released: Aug 14, 1992.

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Pursuant to a congressional request, GAO provided information on aid to Nicaragua and the effectiveness and management of the program.

GAO found that: (1) the Agency for International Development's (AID) balance-of-payments support to Nicaragua totalled $265.5 million with $75 million for debt payment assistance to international financial institutions; (2) AID financial assistance relies on implementation of predetermined economic reforms, and AID Nicaraguan bank deposits have accrued $6.7 million in interest; (3) preconditioned reforms include changing to a market economy, unifying exchange rates, stabilizing public revenues, and reducing fiscal debt; (4) U.S. assistance contributed to the reduction of Nicaraguan inflation and the resolution of $303.2 million in debts to the World Bank and International Monetary Fund (IMF); (5) future assistance from IMF and other banks totals $450 million; (6) additional investment promotion and economic growth measures involve settling property disputes and resolving political conflicts; (7) continued U.S. assistance depends upon the settlement and guarantee of rights of an estimated 150 outstanding expropriated U.S. property claims; (8) 9 of 18 projects were immediate-impact projects involving providing schoolbooks and pharmaceuticals; (9) the remaining 9 long-term projects involve natural resource management and strengthening democratic institutions; (10) settlement of the estimated 20,000 former resistance members and their dependents was delayed due to problems in demobilization and repatriation, the government's failure to provide enough land, and an increase of beneficiaries to 117,500; and (11) U.S. aid for the resettlement of resistance members totalled $28.8 million, with an additional $10.9 million for program expansion and $2.8 million to mediate disputes between the resistance and the government.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: P.L. 103-236, Section 527 (April 30, 1994) requires the Secretary of State to report to Congress: (1) a list of every country in which the U.S. government is aware that a U.S. person had an outstanding expropriation claim; (2) the total number of such outstanding expropriation claims made by a U.S. person against each such country; (3) the period of time such claim has been outstanding; and (4) the status of each case and efforts made by the U.S. government and the government in which such claim had been made to return the property; provide adequate compensation; offer procedures to provide prompt, adequate and effective compensation; or submit the dispute to arbitration under the rules of Convention for the Settlement of Investment disputes or other mutually agreeable binding international arbitration procedures.

    Matter: To ensure that it is adequately apprised of the steps being taken by any foreign government to provide relief to any U.S. citizen whose property has been seized or expropriated, Congress may wish to consider amending section 620(e) of the Foreign Assistance Act of 1961 to require the President to report to Congress the factual basis for any conclusion that the foreign government has taken or is taking the appropriate steps to provide such relief.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The agency responded to this recommendation in its response to the GAO report "Foreign Assistance: Cost Reductions Possible From Improved Cash Transfer Management" (GAO/NSIAD-93-58). In March and August 1993, AID issued new guidance for cash transfer payment procedures as GAO recommended. AID now requires the direct payment or the return to the United States interest earnings to lower federal borrowing costs.

    Recommendation: To ensure that U.S. assistance does not exceed the amount intended by Congress, the Administrator, AID, should revise the policy for structuring grant agreements for cash transfers held in Federal Reserve accounts to minimize the cost of providing assistance to other countries.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: U.S. AID/Nicaragua issued a mission order on February 3, 1992, establishing the mission's evaluation policy. Its mission policy now is to have all activities evaluated fully. The mission also updated its evaluation schedule.

    Recommendation: The Administrator, AID, should direct the AID mission in Nicaragua to: (1) make timely evaluations of projects; and (2) complete appropriate evaluations before projects are extended.

    Agency Affected: United States Agency for International Development


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