Foreign Assistance:

U.S. Efforts to Spur Panama's Economy Through Cash Transfers

NSIAD-93-56: Published: May 10, 1993. Publicly Released: May 10, 1993.

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GAO provided information on economic aid to Panama, focusing on cash grant programs implemented pursuant to the Dire Emergency Supplemental Appropriation Act.

GAO found that: (1) the Agency for International Development (AID) has not justified the size and composition of Panama's economic aid package with sufficient documentation; (2) although AID believes that the economic assistance program has been a success, the Panamanian economy began recovery before U.S. economic assistance was introduced; (3) AID could not determine the impact of private- and public-sector programs on the Panamanian economy, standard of living, debt, and unemployment due to unspecified target areas, delays in program implementation, and the lack of implementation guidelines; (4) Panama's economy began to recover once political and economic burdens were removed; (5) Panama's gross domestic product was restored to nearly pre-1987 levels and grew by about 9.3 percent in 1991 despite delays in cash grant program implementation; (6) AID needed to thoroughly analyze targeted countries' economies, set economic reform conditions, and withhold funds until conditions were met before providing assistance; and (7) AID assistance could have been effective if private-sector reactivation funds were disbursed after economic reforms were implemented.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Agency officials indicated that new guidance was issued in May 1994 concerning project and non-project assistance (cash transfer payments are classified as non-project assistance). This new guidance stipulates that all missions must incorporate strategic objectives abd measurable indicators of projects for all efforts (non-project as well as project assistance). This new guidance is in response to the Re-engineering Government effort based on the National Performance Review. Agency officials said that not all missions have complied, but they are working with them.

    Recommendation: The Administrator, AID, should require that cash transfer program assistance approval documents, including those not directly linked with policy reform objectives such as the Private Sector Reactivation Program, contain: (1) specific program objectives; (2) time frames or milestones for their accomplishment; and (3) expected impacts to facilitate measuring program success.

    Agency Affected: United States Agency for International Development


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