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DOCUMENT RESUME
04614 - (B0064953]
Legislative Changes Urged in Loan Program of the Agency for
International Development. ID-76-80; B-133220. Jaauary 5, 1978.
26 pp. * 9 enclosures (28 pp.).
Report to the Congress; by Elmer B. StaatL, Comptroller General.
Issue Area: International Economic and Military Programs: U.S.
Deveiopment Assistance Overseas (603).
Contact: International Div.
Budget Fnnction: International Affairs: Foreign Fcononic and
Financial Assistdnce (151).
Organization Concerned: Zgency for international Development.
Congressional Relevance: House Coumittee on International
Relations; Senate Committpe on Frreigu Relations; Congress.
Authority: Foreign Assistance Act cr 1961, as amended.
The Loan Program of the 1igency for International
Development (AID) consists of roreign economic assistance
lending activities; AID has been making and administering loans
to foreign countzies :dnce 1961. The loans are repayable over
periods (if up to 40 years, including 10-year grace periods
before repayqent; and have variable interest rates which are
genexally low--scvc ies.s than 1%. Fincings/Conclusions: Since
1971, AID has experizanced increased problems in collecting loth
the pxinci-Al and interest due on its loans. These problems ,ave
occurred 'rily because borrower countries lack the abilcy
to pay in 'ance with tieir loan agreements. Collection
problems h S 'ly been resolved by adding uncollected
interest to alance and r ;scheduling principal due
dates to defei s. By June 30, 1975, borrowers in
countries owing illion in dollar-rrivayable loans had
missed paymen* ns having unpaid balances totalling $5.4
billion. Four as--India, Pakistan, Chile, and
Egypt--required u.. relief on all their dollar-repayable loans.
Since 1971, with the exception of India, AID has changed its
lending pattern bat has continued to lend tc most countries
having problem loans. Questions about the continued need for and
iqe of some loans prompted AID to initiate lcan reviews and
establish new lcan implementation criteria. Recommendations:
Cougtoss should consider imending the Foreign Assistance Act of
1961 to: provide specific authorization for the use of any
availabla loan to make debt relief loans; require AID to
prescribe a sys-ematic method of determining annual naximum
levels for additic4al lending to borrowers receiving debt relief
loans; and provide an alternative way to alleviate debt
repayment problems and preserve a country's ability ts obtain
additicnal AID assistance. AID should cancel loans that have
remained undisbursed for long periods and rejustify tbca as new
loans uhn a valid need for the assistance Etill exists. (RES)](ViewImageLocal?handle=hein.gao/gaobaawls0001&div=1&collection=&method=preview&ext=.png&size=3)