Using Local Currency Generated by U.S. Food Aid for Development Purposes

Gao ID: T-NSIAD-90-32 April 18, 1990

GAO discussed issues related to local currencies generated from U.S. foreign assistance programs, focusing on: (1) whether recipient countries used local currencies to achieve development goals; (2) who owned the local currencies; and (3) how to improve local currency accountability. GAO noted that: (1) the Agency for International Development (AID) and the recipient countries viewed local currencies as valued resources for country development; (2) AID did not adequately monitor and oversee the use of local currencies; (3) AID programmed the use of currencies consistent with development goals; (4) in some cases, AID did not timely program large portions of generated local currencies due to the host governments' conflicting opinions; (5) host governments owned the local currencies, but the United States played a major role in determining their use; and (6) AID officials believed that currency ownership would increase accountability requirements, but said that they did not have adequate staff to provide the required local currency oversight.

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