AID to Nicaragua

Pursuant to a congressional request, GAO provided information on the Agency for International Development's (AID) disbursement of its appropriation for assisting the new Nicaraguan government's efforts to deal with hyperinflation, high unemployment, low productivity, a weakened agricultural sector, and transition to democracy.

GAO found that: (1) AID quickly developed an assistance program after the February 1990 election, and directed first-year assistance toward purchasing large amounts of such commodities as medicines and textbooks, creating jobs and vocational training for the unemployed, strengthening democratic values and institutions, and repatriating and resettling refugees; (2) as of March 31, 1991, AID had initiated 2 cash transfer programs to address Nicaragua's immediate foreign exchange needs, initiated or designed 15 development projects, and funded 2 international programs for refugees; (3) AID began to develop long-term economic strategies and define needed policy reforms after permanent staff arrived in Nicaragua; (4) AID was developing a 5-year country development strategy to identify strategic objectives and performance indicators to evaluate project effectiveness; and (5) AID attributed its disbursement of only half of the budgeted assistance funds to its development of multiyear projects and Nicaraguan government, organization, and legislative delays in meeting some preconditions for receiving funds. GAO also found that: (1) in spite of some success, the Nicaraguan government has not yet been able to bring its fiscal deficit and highly expansionary credit policies under control; and (2) although helpful, U.S. assistance alone would not be sufficient to resolve Nicaragua's social and economic problems.