 |
NOTE 6. Direct Loan and Loan Guarantees and Loans and Liabilities
for Loan Guarantees
USAID operates the following loan and/or loan guarantee programs:
- Direct Loan Program (Direct Loan)
- Urban and Environmental Program (UE)
- Micro and Small Enterprise Development Program (MSED)
- Israel Loan Guarantee Program
- Development Credit Authority Program (DCA)
- Egypt Loan Guarantee Program
Direct loans resulting from obligations made prior to FY
1992 are reported net of allowance for estimated uncollectible
loans. Estimated losses from defaults on loan guarantees resulting
from obligations made prior to FY 1992 are reported as a liability.
The Credit Reform Act of 1990 prescribes an alternative method
of accounting for direct loans and guarantees resulting from
obligations made after FY 1991. Subsidy cost, which is the
net present value of the cash flows (i.e. interest rates,
interest supplements, estimated defaults, fees, and other
cash flows) associated with direct loans and guarantees, is
required by the Act to be recognized as an expense in the
year in which the direct loan or guarantee is disbursed. Subsidy
cost is calculated by agency program offices prior to obligation
using a model prescribed by the Office of Management and Budget
(OMB). Subsidy relating to existing loans and guarantees is
generally required to be reestimated on an annual basis to
adjust for changes in risk and interest rate assumptions.
Direct loans are reported net of an allowance for this subsidy
cost (allowance for subsidy). The subsidy costs associated
with loan guarantees are reported as loan guarantee liability.
An analysis of loans receivable, loan guarantees, liability
for loan guarantees, and the nature and amounts of the subsidy
costs associated with the loans and loan guarantees are provided
in the following sections.
The following net loan receivable amounts are not the same
as the proceeds that USAID would expect to receive from selling
its loans. Actual proceeds may be higher or lower depending
on the borrower and the status of the loan.
Summary of Loans Receivables, Net
(Dollars in Thousands)
| |
FY 2006 |
FY 2005 |
| Net Direct
Loans Obligated Prior to FY 1992 (Allowance for Loss Method) |
$4,183,220 |
$4,494,975 |
| Net Direct
Loans Obligated After FY 1991 (Present Value Method) |
360,132 |
335,572 |
| Defaulted
Guaranteed Loans from Pre-1992 Guarantees (Allowance for
Loss Method) |
267,263 |
269,702 |
| Total
Loans Receivable, Net as reported on the Balance Sheet |
$4,810,615 |
$5,100,249 |
Direct Loans
Direct Loans
(Dollars in Thousands)
| Loan Programs |
Loans Receivables Gross |
Interest Receivable |
Allowance for Loan Losses |
Value of Assets Related to Direct Loans, Net |
| Direct
Loans Obligated Prior to FY 1992 (Allowance for Loss Method)
as of September 30, 2006: |
| Direct Loans |
$5,288,905 |
$382,077 |
$1,487,761 |
$4,183,221 |
| MSED |
31 |
36 |
67 |
– |
| Total |
$5,288,936 |
$382,113 |
$1,487,828 |
$4,183,221 |
| Direct
Loans Obligated Prior to FY 1992 (Allowance for Loss Method)
as of September 30, 2005: |
| Direct Loans |
$5,867,779 |
$316,253 |
$1,688,991 |
$4,495,041 |
| MSED |
643 |
96 |
805 |
(66) |
| Total |
$5,868,422 |
$316,349 |
$1,689,796 |
$4,494,975 |
| Direct
Loans Obligated After FY 1991 as of September 30, 2006: |
| Direct Loans |
$1,089,114 |
$16,501 |
$745,777 |
$359,838 |
| MSED |
150 |
133 |
(10) |
293 |
| Total |
$1,089,264 |
$16,634 |
$745,767 |
$360,131 |
| Direct
Loans Obligated After FY 1991 as of September 30, 2005: |
| Direct Loans |
$1,043,132 |
$9,145 |
$716,853 |
$335,424 |
| MSED |
150 |
24 |
27 |
147 |
| Total |
$1,043,282 |
$9,169 |
$716,880 |
$335,572 |
Total Amount of Direct Loans Disbursed
(Dollars in Thousands)
| Direct Loan Programs |
FY 2006 |
FY 2005 |
| Direct Loans |
$6,378,018 |
$6,910,911 |
| MSED |
181 |
793 |
| Total |
$6,378,199 |
$6,911,704 |
Schedule for Reconciling Subsidy Cost Allowance Balances
(Post-1991 Direct Loans)
(Dollars in Thousands)
| |
FY 2006 |
FY 2005 |
| Direct Loan |
MSED |
Total |
Direct Loan |
MSED |
Total |
| Beginning
Balance, Changes, and Ending Balance |
|
|
|
|
|
|
| Beginning
balance of the subsidy cost allowance |
$716,853 |
$27 |
$716,880 |
$237,215 |
$27 |
$237,242 |
| Add: subsidy
expense for direct loans disbursed during the reporting
years by component: |
|
|
|
|
|
|
| (a) Interest rate differential costs |
– |
– |
– |
– |
– |
– |
| (b) Default costs (net of recoveries) |
– |
– |
– |
– |
– |
– |
| (c) Fees and other collections |
– |
– |
– |
– |
– |
– |
| (d) Other subsidy costs |
– |
– |
– |
– |
– |
– |
| Total of the above subsidy expense components |
– |
– |
– |
– |
– |
– |
| Adjustments: |
|
|
|
|
|
|
| (a) Loan modifications |
$21,688 |
$– |
$21,688 |
$480,625 |
$– |
$480,625 |
| (b) Fees received |
– |
– |
– |
– |
– |
– |
| (c) Foreclosed property acquired |
– |
– |
– |
– |
– |
– |
| (d) Loans written off |
– |
– |
– |
– |
– |
– |
| (e) Subsidy allowance amortization |
7,236 |
(37) |
7,199 |
(2,874) |
– |
(2,874) |
| (f) Other |
– |
– |
– |
1,887 |
– |
1,887 |
| Ending balance
of the subsidy cost allowance before reestimates |
$745,777 |
$(10) |
$745,767 |
$716,853 |
$27 |
$716,880 |
| Add or subtract subsidy reestimates by component: |
|
|
|
|
|
|
| (a) Interest rate reestimate |
– |
– |
– |
– |
– |
– |
| (b) Technical/default reestimate |
– |
– |
– |
– |
– |
– |
| Total of the above reestimate components |
– |
– |
– |
– |
– |
– |
| Ending balance of the subsidy cost allowance |
$745,777 |
$(10) |
$745,767 |
$716,853 |
$27 |
$716,880 |
Defaulted Guaranteed Loans
(Dollars in Thousands)
| Loan Guarantee Programs |
Defaulted
Guaranteed Loans Receivable, Gross |
Interest Receivable |
Allowance For Loan Losses |
Value of
Assets Related to Defaulted Guaranteed Loans Receivable, Net |
| Defaulted
Guaranteed Loans from Pre-1992 Guarantees (Allowance for
Loss Method): FY 2006 |
| UE |
$385,728 |
$61,980 |
$180,445 |
$267,263 |
| Total |
$385,728 |
$61,980 |
$180,445 |
$267,263 |
| Defaulted
Guaranteed Loans from Pre-1992 Guarantees (Allowance for
Loss Method): FY 2005 |
| UE |
$382,264 |
$46,915 |
$159,477 |
$269,702 |
| Total |
$382,264 |
$46,915 |
$159,477 |
$269,702 |
Defaulted Guaranteed Loans from Post-1991 Guarantees
In FY 2006, the UE Program experienced $3.2 million in defaults
on payments.
In FY 2005, the UE Program experienced $4.2 million in defaults
on payments.
Guaranteed Loans Outstanding:
Guaranteed Loans Outstanding
(Dollars in Thousands)
| Loan Guarantee Programs |
Outstanding Principal,
Guaranteed Loans, Face Value |
Amount
of Outstanding Principal Guaranteed |
| Guaranteed Loans
Outstanding (FY 2006): |
| UE |
$1,510,359 |
$1,510,359 |
| MSED |
17,010 |
8,505 |
| Israel |
12,869,563 |
12,869,563 |
| DCA |
870,636 |
400,440 |
| Egypt |
1,250,000 |
1,250,000 |
| Total |
$16,517,568 |
$16,039,367 |
| Guaranteed
Loans Outstanding (FY 2005): |
| UE |
$1,652,480 |
$1,652,480 |
| MSED |
47,427 |
23,714 |
| Israel |
12,987,372 |
12,987,372 |
| DCA |
911,071 |
405,810 |
| Egypt |
1,250,000 |
1,250,000 |
| Total |
$16,848,350 |
$16,319,376 |
| New Guaranteed
Loans Disbursed (FY 2006): |
| UE |
$– |
$– |
| MSED |
– |
– |
| DCA |
148,025 |
51,550 |
| Israel |
– |
– |
| Egypt |
– |
– |
| Total |
$148,025 |
$51,550 |
| New Guaranteed
Loans Disbursed (FY 2005): |
| UE |
$– |
$– |
| MSED |
– |
– |
| DCA |
177,254 |
88,627 |
| Israel |
750,000 |
750,000 |
| Egypt |
1,250,00 |
1,250,000 |
| Total |
$2,177,254 |
$2,088,627 |
Liability for Loan Guarantees
(Dollars in Thousands)
| Loan Guarantee Programs |
Liabilities for Losses on
Pre-1992 Guarantees, Estimated Future Default Claims |
Liabilities
for Loan Guarantees for Post-1991 Guarantees, Present Value |
Total Liabilities
for Loan Guarantees |
| Liability
for Loan Guarantees (Estimated Future Default Claims for
pre-1992 guarantees) as of September 30, 2006: |
| UE |
$157,266 |
$155,429 |
$312,695 |
| MSED |
– |
(2,152) |
(2,152) |
| Israel |
– |
1,169,363 |
1,169,363 |
| DCA |
– |
10,812 |
10,812 |
| Egypt |
– |
170,191 |
170,191 |
| Total |
$157,266 |
$1,503,643 |
$1,660,909 |
| Liability
for Loan Guarantees (Estimated Future Default Claims for
pre-1992 guarantees) as of September 30, 2005: |
| UE |
$195,344 |
$149,557 |
$344,901 |
| MSED |
– |
(1,811) |
(1,811) |
| Israel |
– |
1,066,734 |
1,066,734 |
| DCA |
– |
4,610 |
4,610 |
| Egypt |
– |
148,051 |
148,051 |
| Total |
$195,344 |
$1,367,141 |
$1,562,485 |
Subsidy Expense for Loan Guarantees by Program and Component:
Subsidy Expense for Loan Guarantees by Program and Component
(Dollars in Thousands)
| Loan Guarantee Programs |
Interest Supplements |
Defaults |
Fees and Other Collections |
Other |
Total |
| Subsidy
Expense for New Loan Guarantees (FY 2006): |
| DCA |
$– |
$5,336 |
$– |
$– |
$5,336 |
| MSED |
– |
86 |
– |
– |
86 |
| Total |
$– |
$5,422 |
$– |
$– |
$5,422 |
| Subsidy
Expense for New Loan Guarantees (FY 2005): |
| DCA |
$– |
$4,297 |
$– |
$– |
$4,297 |
| MSED |
– |
1,110 |
– |
– |
1,110 |
| Total |
$– |
$5,407 |
$– |
$– |
$5,407 |
Subsidy Expense for Loan Guarantees by Program and Component
(Dollars in Thousands)
| Loan Guarantee Programs |
Total Modifications |
Interest Rate Reestimates |
Technical Reestimates |
Total Reestimates |
| Modifications
and Reestimates (FY 2006): |
| UE |
$– |
$– |
$– |
$– |
| MSED |
– |
– |
– |
– |
| DCA |
– |
– |
– |
– |
| Israel |
– |
– |
34,372 |
34,372 |
| Egypt |
– |
– |
14,264 |
14,264 |
| Total |
$– |
$– |
$48,636 |
$48,636 |
| Modifications
and Reestimates (FY 2005): |
| UE |
$– |
$– |
$532 |
$532 |
| MSED |
– |
– |
– |
– |
| DCA |
– |
– |
211 |
211 |
| Israel |
- |
- |
187,892 |
187,892 |
| Egypt |
- |
- |
7,335 |
7,335 |
| Total |
$– |
$– |
$195,970 |
$195,970 |
Total Loan Guarantee Subsidy Expense
(Dollars in Thousands)
| Loan Guarantee Programs |
FY 2006 |
FY 2005 |
| DCA |
$5,336 |
$4,508 |
| UE |
– |
532 |
| MSED |
86 |
1,110 |
| Israel |
34,372 |
187,892 |
| Egypt |
14,264 |
7,335 |
| Total |
$54,058 |
$201,377 |
Subsidy Rates for Loan Guarantees by Program and Component:
Budget Subsidy Rates for Loan Guarantees for the Current Year’s
Cohorts
(Percent)
| Loan Guarantee Programs |
Interest Supplements (%) |
Defaults (%) |
Fees and Other Collections (%) |
Other (%) |
Total (%) |
| DCA |
– |
4.07% |
– |
– |
4.07% |
Schedule for Reconciling Loan Guarantee Liability Balances
(Dollars in Thousands)
| (Post-1991 Loan Guarantees) |
DCA |
MSED |
UE |
Israel |
Egypt |
Total |
| FY 2006 |
| Beginning
Balance, Changes, and Ending Balance |
|
|
|
|
|
|
| Beginning
balance of the loan guarantee liability |
$4,610 |
$(1,811) |
$149,557 |
$1,066,734 |
$148,051 |
$1,367,141 |
| Add: subsidy
expense for guaranteed loans disbursed during the reporting
years by component: |
|
|
|
|
|
|
| (a) Interest supplement costs |
– |
– |
– |
– |
– |
– |
| (b) Default
costs (net of recoveries) |
– |
– |
– |
– |
– |
– |
| (c) Fees and other collections |
– |
– |
– |
– |
– |
– |
| (d) Other subsidy costs |
5,336 |
86 |
– |
– |
– |
5,422 |
| Total of the above subsidy expense components |
$5,336 |
$86 |
$– |
$– |
$– |
$5,422 |
| Adjustments: |
|
|
|
|
|
|
| (a) Loan guarantee modifications |
– |
– |
– |
– |
– |
– |
| (b) Fees received |
847 |
55 |
2,334 |
– |
– |
3,236 |
| (c) Interest supplements paid |
– |
– |
– |
– |
– |
– |
| (d) Foreclosed property and loans acquired |
– |
– |
– |
– |
– |
– |
| (e) Claim payments to lenders |
(168) |
(475) |
(3,254) |
– |
– |
(3,897) |
| (f) Interest
accumulation on the liability balance |
879 |
– |
8,784 |
48,272 |
6,625 |
64,560 |
| (g) Other |
(692) |
(7) |
18,604 |
– |
– |
17,905 |
| Ending balance
of the loan guarantee liability before reestimates |
$10,812 |
$(2,152) |
$176,025 |
$1,115,006 |
$154,676 |
$1,454,367
|
| Add or subtract
subsidy reestimates by component: |
|
|
|
|
|
|
| (a) Interest rate reestimate |
– |
– |
– |
– |
– |
– |
| (b) Technical/default
reestimate |
– |
– |
(20,597) |
54,358 |
15,515 |
49,276 |
| Total of
the above reestimate components |
$– |
$– |
$(20,597) |
$54,358 |
$15,515 |
$49,276 |
| Ending
balance of the loan guarantee liability |
$10,812 |
$(2,152) |
$155,428 |
$1,169,364 |
$170,191 |
$1,503,643 |
| FY 2005 |
| Beginning
Balance, Changes, and Ending Balance |
|
|
|
|
|
|
| Beginning
balance of the loan guarantee liability |
$(2,975) |
$(3,902) |
$103,787 |
$700,856 |
$– |
$797,766 |
| Add: subsidy
expense for guaranteed loans disbursed during the reporting
years by component: |
|
|
|
|
|
|
| (a) Interest supplement costs |
– |
– |
– |
– |
– |
– |
| (b) Default costs (net of recoveries) |
– |
– |
– |
– |
– |
– |
| (c) Fees and other collections |
– |
– |
– |
– |
– |
– |
| (d) Other subsidy costs |
4,298 |
1,110 |
– |
– |
– |
5,408 |
| Total of
the above subsidy expense components |
$4,298 |
$1,110 |
$– |
$– |
$– |
$5,408 |
| Adjustments: |
|
|
|
|
|
|
| (a) Loan guarantee modifications |
– |
– |
– |
– |
– |
– |
| (b) Fees received |
1,443 |
209 |
2,591 |
29,250 |
137,250 |
170,743 |
| (c) Interest supplements paid |
– |
– |
– |
– |
– |
– |
| (d) Foreclosed property and loans acquired |
– |
– |
– |
– |
– |
– |
| (e) Claim payments to lenders |
(310) |
(586) |
(4,167) |
– |
– |
(5,063) |
| (f) Interest
accumulation on the liability balance |
– |
– |
8,279 |
47,110 |
3,109 |
58,498 |
| (g) Other |
3,736 |
4,784 |
48,555 |
(14,153) |
– |
42,922 |
| Ending balance
of the loan guarantee liability before reestimates |
$6,192 |
$1,615 |
$159,045 |
$763,063 |
$140,359 |
$1,070,274
|
| Add or subtract
subsidy reestimates by component: |
|
|
|
|
|
|
| (a) Interest rate reestimate |
– |
– |
– |
– |
– |
– |
| (b) Technical/default reestimate |
(1,582) |
(3,426) |
(9,488) |
303,671 |
7,692 |
296,867 |
| Total of the above reestimate components |
$(1,582) |
$(3,426) |
$(9,488) |
$303,671 |
$7,692 |
$296,867 |
| Ending balance of the loan guarantee liability |
$4,610 |
$(1,811) |
$149,557 |
$1,066,734 |
$148,051 |
$1,367,141 |
Administrative Expense
(Dollars in Thousands)
| Loan Programs |
FY 2006 |
FY 2005 |
| DCA |
$13,215 |
$9,615 |
| UE |
– |
217 |
| MSED |
– |
2 |
| Total |
$13,215 |
$9,834 |
Other Information
- Allowance for Loss for Liquidating account (pre-Credit
Reform Act) receivables have been calculated in accordance
with OMB guidance using a present value method which assigns
risk ratings to receivables based upon the country of debtor.
Seventeen countries are in violation of Section 620q of
the Foreign Assistance Act (FAA), owing $65.1 million that
is more than six months delinquent. Sixteen countries are
in violation of the Brooke-Alexander Amendment to the Foreign
Operations Export Financing and Related Programs Appropriations
Act, owing $553.7 million that is more than one year delinquent.
Outstanding direct loans receivable for countries in violation
of Section 620q totaled $55.1 million. Outstanding direct
loans receivable for countries in violation of the Brooke
Amendment totaled
$514.6 million.
- The MSED Liquidating Account general ledger has a loan
receivable balance of $31 thousand. This includes a loan
pending closure. This loan is being carried at 100% bad
debt allowance.
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