Review of Rural Telephone Bank's 1993 Loan Interest Rate Calculation

GAO is required to review each year the interest rates charged to borrowers, referred to as the cost of money rate, as set by the Rural Telephone Bank for the preceding fiscal year. The Rural Telephone Bank now calculates the following two rates: (1) the interest rate used for advances made during fiscal year 1993 on loans approved before fiscal year 1992 (referred to as loans from the liquidating account) and (2) the interest rate used for advances made during fiscal year 1993 on loans approved on or after October 1, 1992 (referred to as loans from the financing account). The Rural Telephone Bank's fiscal year 1993 cost of money rates were pegged at 6.05 percent and 6.35 percent for advances from the liquidating account and financing account, respectively. GAO found these rate determinations to be in accordance with the law.

GAO found that the RTB interest rate: (1) determination for FY 1993 is accurate; (2) for advances from the liquidating and financing accounts for FY 1993 is accurate; and (3) determination were accurate and consistent with applicable laws and regulations.