Financial and Management Improvements Needed in the Food for Development Program

Pursuant to a congressional request, GAO reviewed the Food for Development Program, which the Agricultural Trade Development and Assistance Act of 1954 authorized. Under the program, the United States provides food aid to developing countries. If recipients sell the provided commodities and use the local currency proceeds to pay for agreed agricultural or rural development or health or family planning activities, the repayment obligations of the host country are forgiven. GAO evaluated title III programs in Bangladesh, Bolivia, and Senegal, focusing on procedures to forgive repayments, implementation of development projects, and adoption of policy reforms by the recipient countries.

GAO found that program funds: (1) are not always deposited in special accounts or are commingled with other sources of recipient country revenue; (2) were disbursed in excess of amounts budgeted, used to cover shortages in projects sponsored by other donors, or used for other questionable purposes; and (3) were sometimes insufficient for timely project implementation. GAO also found that the Agency for International Development (AID) is hampered in project monitoring because: (1) program agreements do not specify discrete elements of projects which are eligible for support; (2) many recipient countries have difficulty with project implementation because of a lack of experienced administrative personnel; and (3) in countries which also receive other forms of U.S. and other donor assistance, project implementation and monitoring problems can be more severe because of the additional administrative burden imposed on AID missions and recipient governments. In addition, GAO found that: (1) project implementation can be hampered by recipient country policies that inhibit or influence local economies; (2) in Bolivia, planned agricultural and social changes were precluded by political and economic changes; (3) in Senegal, while some improvements were made to regional development organizations and farmer cooperatives, little progress was achieved in resource conservation or commodity marketing and pricing reforms; and (4) in Bangladesh, the program has helped to implement agricultural reforms.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Joseph E. Kelley Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-5790