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B-118709 1 (1971-02-26)

handle is hein.gao/gaobaaflz0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 INTERNATIONAL DIVISION FEB 2 6 1971 LM095708 Dear Mr. Secretary: The General Accounting Office recently completed a survey of ( disbursement procedures at the U.S. Treasury, Manila Regional Dis- bursing Office (RDO) related to payments made by restricted checks, P I4Z i.e., a U.S. dollar denominated instrument cashable only in local currency (pesos). We estimate that a change in the form of payment from restricted dollar checks to straight peso checks would result in an annual savings to the U.S. Government of about $660,000 and increased benefits to individual payees of about $1.2 million. These benefits would accrue due to elimination of the profit earned by banking institutions which buy pesos at a more favorable rate than they give their customers when cashing restricted checks. PRESENT DISBURSEMENT PROCEDURE At the time of our review the Manila RDO was making monthly disbursements of about $5 million in restricted U.S. dollar checks. These disbursements were generally repetitive monthly benefit pay- ments to individuals. The U.S. Government has a dollar denominated commitment to recipients of restricted dollar checks; however, a U.S. dollar commitment in a foreign country may be paid in either U.S. dollars or in foreign currency. The Manila RDO issues two types of dollar denominated checks cashable only in pesos. One type of restricted dollar check is drawn on a U.S. Treasury depositary in Manila, and is used in dis- charging the U.S. commitment to a certain group of World War II Filipino veterans, This type of dollar denominated check, repre- senting about $2.5 million of the monthly restricted dollar payments, is inscribed as follows: Pay only in pesos the equivalent of U.S. dollars shown. We were advised that in spite of the restricting inscription, a certain amount of these checks have been flowing into the Hong Kong money market, thus circumventing the Philippine Govern- ment foreign exchange regulations. 50TH ANNIVERSARY 1921- 1971

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