GAO Reviews of Foreign Economic Assistance Programs

Testimony was given concerning recently completed and ongoing GAO work on U.S. economic assistance programs. A major trend in recent years has been the increased use of the Economic Support Fund (ESF) which is used for balance-of-payments support and commodity import programs and to finance infrastructure and other capital projects. The ESF program has increased by over 55 percent since 1981, and the number of countries receiving bilateral ESF assistance has increased at an even greater rate. During the past year, GAO reported that one of the key objectives supported by the ESF program is to ensure continued U.S. access to military facilities in foreign countries. Although the United States remains a leading donor country, its share of the world's total development assistance has steadily declined. In response to this trend, GAO compared the approach used by the United States with those of five other nations and discussed the implications of applying the foreign aid management approaches used by other donors to the Agency for International Development (AID) program. GAO recently evaluated the extent of AID program and financial controls over commodity import programs and reported that AID has not always adequately planned procurements and delivery of commodities or used adequate internal controls or monitoring. In addition, there has been inadequate financial support for the recurring costs associated with the operation and maintenance of some programs. GAO also reviewed AID programs which provide credit guarantees to developing countries and found that, in several countries, such programs have been at a standstill since 1981 due to economic recessions and problems with program management. Finally, GAO has reported that AID has not taken adequate measures to promote the reform of host-government agricultural policies in Africa. GAO found that the lack of host-government financial management capability is most serious in Africa and has in process a review designed to identify how donors can define management training needs and provide related assistance.