Foreign Assistance

The Agency for International Development (AID) provided nearly $10 billion in cash grant assistance during fiscal years 1989-92. This report (1) analyzes the use of cash grant assistance to buy U.S. goods and services, (2) assesses AID's systems for ensuring accountability and monitoring of the use of cash grant assistance, and (3) evaluates AID's basis for deciding when to use cash grants rather than other forms of assistance to achieve U.S. objectives. AID prefers, but does not require, that cash grant recipients use the money to buy U.S. goods. AID reports that for fiscal year 1992, recipient countries used an estimated 83 percent of all cash grants to repay debts; about 17 percent was used to purchase goods, of which about half was used to directly purchase U.S. goods, but these data are of doubtful accuracy. At the six missions GAO visited--Bolivia, Egypt, Ghana, Nicaragua, the Philippines, and Tanzania--AID generally maintained adequate accountability and monitoring controls as required by law and AID guidance. GAO recommends, however, that AID provide clear guidance to overseas missions on choosing among various forms of assistance, including cash grants, and that the missions fully document the reasons for their choices.

GAO found that: (1) AID prefers but does not require cash grant recipients to use grant funds to purchase U.S. goods; (2) in fiscal year (FY) 1992, grant recipients used 83 percent of their cash grants to repay debt and 17 percent to purchase goods; (3) the accuracy and reliability of AID data on cash grant usage are doubtful because of significant data and methodology limitations; (4) AID has maintained adequate accountability and monitoring controls for cash grant assistance, but the accountability standards for cash grants are less stringent than the ones required for Commodity Import Programs (CIP) and capital projects; (5) AID has improved its oversight to ensure that recipient governments implement economic reforms as a condition for receiving cash grant assistance; (6) AID officials do not agree on the staffing levels needed to provide adequate accountability for the different types of assistance because of mission personnel's lack of experience and knowledge about the advantages of the different AID assistance programs; (7) AID has not provided clear and consistent guidance to its missions on which form of assistance would best meet U.S. objectives under certain circumstances; (8) AID officials face competing demands in determining which forms of assistance to use; and (9) AID frequently fails to consider all alternative forms of assistance before approving cash grant assistance programs due to a lack of specific guidance.

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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