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Highlights

In compliance with a legislative requirement, GAO determined the impact of the Overseas Private Investment Corporation's (OPIC) activities on employment in the United States.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Overseas Private Investment Corporation 1. The President, OPIC, in consultation with the Administrator of the Agency for International Development (AID) should develop formal policies and a comprehensive system for screening and monitoring the economic effects on the United States of OPIC-assisted projects, including a methodology that more clearly and accurately: (1) estimates the direct economic effects on the United States of projects being considered for OPIC assistance; and (2) calculates the actual effects of ongoing projects on the economy of the United States.
Closed - Implemented
OPIC stated that it has developed formal guidelines and a comprehensive system for monitoring the economic effects of its projects. However, it has apparently not modified its methodology to estimate the direct effects of proposed projects nor to calculate the actual effects of ongoing projects. The methodological differences between OPIC and GAO probably cannot be resolved.
Overseas Private Investment Corporation 2. The President, OPIC, in consultation with the Administrator, AID, should, in annual reports to Congress concerning the effects of OPIC-assisted projects on the U.S. economy, report: (1) without offsetting alternatives, the aggregate results of the operations of projects expected to have positive direct impacts on U.S. trade and employment separately from the aggregate results of those expected to have negative direct impacts; (2) separately the economic effects on the United States of any alternatives and assumptions that were considered and analyzed as part of the project approval process; and (3) separately the effect on trade and employment of project construction and start-up procurement.
Closed - Not Implemented
OPIC has not taken action on this recommendation as it believes it would result in an inaccurate portrayal of the effects of OPIC-supported projects. GAO testified on this matter in July 1988 before the Senate Committee on Foreign Relations. However, in absence of clear congressional interest, GAO is closing this recommendation.
Overseas Private Investment Corporation 3. The President, OPIC, in consultation with the Administrator, AID, should determine the appropriateness and circumstances for including in future assistance arrangements, authority to discontinue assistance to projects whose operations are found to have adverse impacts on the U.S. economy.
Closed - Implemented
OPIC stated that it is identifying critical assumptions made by investors and is recommending that their inclusion as covenants in its agreements. If such representation proves false, OPIC states that under the current standard language in its contracts, the Corporation can terminate its insurance or accelerate loan repayments.
Overseas Private Investment Corporation 4. The President, OPIC, in consultation with the Administrator, AID, should establish a documentation system for screening and monitoring that will record actions taken, help ensure the accuracy of results obtained, and be useful in performing future screening and monitoring analysis.
Closed - Implemented
OPIC implemented a system to maintain better documentation of people and organizations contacted during the course of screening and monitoring.
Overseas Private Investment Corporation 5. The President, OPIC, in consultation with the Administrator, AID, should assess the adequacy of staff resources devoted to the screening and monitoring processes.
Closed - Implemented
OPIC stated that in a memorandum dated September 1, 1988, it has embarked on a more aggressive monitoring program and will devote more financial resources and staff to the monitoring process.
Overseas Private Investment Corporation 6. The President, OPIC, in consultation with the Administrator, AID, should provide for selection verification of monitoring data and improved use of monitoring results through formal feedback to the screening process.
Closed - Implemented
OPIC stated that this recommendation will be carried out under its aggressive monitoring regime.

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