Economic Support Fund Assistance to the Philippines

In response to a congressional request, GAO reviewed Economic Support Fund (ESF) assistance to the Philippines and examined the progress and constraints encountered in implementing the program and the implications of current program experience for future ESF assistance.

As the result of the Philippines-United States Military Bases Agreement, the United States obligated $200 million in ESF aid over 5 years beginning in fiscal year (FY) 1980. In addition, the President has pledged to obtain appropriations for $475 million in ESF aid over the 5 years beginning in FY 1985. This aid, which has been used to finance development projects, reflects both U.S. strategic and political concerns. GAO found that the Philippine Government did not act quickly to designate a lead agency to work with the Agency for International Development (AID) in programing ESF and that disagreements arose between the Governments over whether the ESF aid was to be programmed according to normal AID procedures. In addition, difficulties arose concerning the appropriate uses of assistance and the extent to which the aid would be used to develop the base lands returned to the Philippines. GAO believes that key issues involving clarification of the purposes and uses of aid, designation of a lead Philippine Government agency for programming assistance, and determination of the type of ESF aid should be resolved early to avoid repetition of these problems.