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B-213909 1 (1984-11-28)

handle is hein.gao/gaobadman0001 and id is 1 raw text is: ~OL.LZR 0 .... ,THE COMPTROLLER GENERAL g7 OECISION OP THE UNITED STATUE WASHINGTON. 0.C. 20548 FILE: B-213909 DATE: November 28, 1984 MATTER OF: Agency for International Development - Interest Earned on Grant Funds by Foreign Government DIGEST: The United States cannot recover interest earned by local and provincial elements of the Egyptian Government on grant funds awarded by the Agency for International Development (AID) to the Gov- ernment of Egypt in the Basic Village Services Project (BVSP). Since the statutory provision under which the BVSP was funded contains broad program authority and since the stated purpose of the grant was to support Egypt's policy of decen- tralizing authority for development activities, we believe that the disbursement of the grant funds by the Egyptian Government to the lower governmental levels was a legitimate and proper purpose of the grant entitling them to retain the interest earned on the grant funds. FACTS This decision is in response to a request from the Inspector General (IG) of the Agency for International Development (AID) for a legal opinion from our Office as to whether the United States can recover interest earned by a foreign Government on AID grant funds. The IG's specific question concerns interest earned by local and provincial elements of the Egyptian Government on grant funds awarded by AID to the Government of Egypt in the Basic Village Services Project (BVSP) in the 1981 fiscal year.1/ For the reasons set forth hereafter, it is our view that the interest was earned after the grant funds were applied to a legitimate grant purpose and therefore cannot be recovered by the United States. The BVSP was authorized on August 28, 1980, pursuant to section 532 of the Foreign Assistance Act of 1961, as amended, 1/ The submission we received from the IG also raised ques- tions about the interest earned by the host government in two other grant programs--Development Decentralization and the Agriculture Cooperative Marketing Project. However, the IG's office subsequently agreed informally to limit the scope of the inquiry to the BVSP only. (330,64K

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