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AIMD-94-55 1 (1993-11-18)

handle is hein.gao/gaobabsxn0001 and id is 1 raw text is: Comptroller General of the United States Washington, D.C. 20548 B-159292 November 18, 1993 To the President of the Senate and the Speaker of the House of Representatives Section 408(b)(3)(I) of the Rural Electrification Act of 1936, as amended by the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), requires us to annually review the interest rate charged to borrowers, referred to as the cost of money rate, as determined by the Governor of the Rural Telephone Bank (RTB) for the preceding fiscal year. We are to report to the Congress on the accuracy of this interest rate determination within 15 days of receiving it. In addition, due to the passage of the Federal Credit Reform Act of 1990, RTB must calculate a second cost of money rate. In accordance with Public Law 100-203 and the Federal Credit Reform Act of 1990, RTB now calculates the following two rates: (1) the interest rate used for advances made during fiscal year 1993 on loans approved prior to 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). On November 4, 1993, we received RTB's rate determinations which established RTB's fiscal year 1993 cost of money rates at 6.05 percent and 6.35 percent for advances from the liquidating account and financing account, respectively. We reviewed these rate determinations and found them to be in accordance with the requirements of section 1411 (c) of the Omnibus Budget Reconciliation Act of 1987 and 7 CFR Part 1610. We traced the dollar amounts and rates used in calculating the cost of money rates to summary financial records provided by RTB and recomputed each cost of money rate calculation. Enclosed is a copy of RTB's interest rates notice along with additional details of its calculations of the rates to be applied to advances made during fiscal year 1993. GAO/AIMD-94-55

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