Foreign Aid

Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) commodity import programs (CIP) in Egypt, Pakistan, Zambia, and Zaire to assess how CIP could achieve greater development impact.

GAO found that: (1) CIP have helped sustain economic production in countries experiencing foreign exchange shortages; (2) the Egypt and Pakistan CIP, which supplied commodities to public activities at subsidized prices, contradicted the AID goal of encouraging governments to eliminate subsidies; (3) in Zaire and Zambia, AID missions programmed local currencies to support specific development activities; (4) AID officials in Pakistan believed that emphasizing programming of local currency would reduce their leverage in economic policy reform discussions, and they minimized local currency deposit requirements; and (5) as of January 1987, Egypt had accumulated about $325 million in local currencies generated from commodity sales, instead of programming those funds to support development. GAO also found that: (1) in Pakistan, Egypt, and Zambia, AID did not ensure that funds were used for the intended purposes; (2) AID accounting systems for monitoring commodity arrival, disposition, and end use operated on a country-by-country basis and did not consistently account for imported commodities; and (3) when end-use checks showed that commodities were idle or not fully used, AID did not resolve the problems before approving further transactions, and the problems recurred.

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.

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