SUMMARY OF USAID
FISCAL YEAR 1998 BUDGET REQUESTFor Fiscal Year 1998, the President is requesting appropriations of $7,201,855,000 for USAID-administered programs, including those jointly administered with the State Department. The FY 1998 request compares to the FY 1997 appropriation level of $6,725,176,000. The FY 1998 USAID request includes funding for Development Assistance (DA), the Development Fund for Africa (DFA), the Economic Support Fund (ESF), Support for East European Democracy (SEED), and Assistance for the New Independent States (NIS) of the former Soviet Union. P.L. 480 Titles II and III Food for Peace resources administered by USAID are formally requested as a part of the U.S. Department of Agriculture (USDA) budget.
The following chart and subsequent descriptions provide further details in support of the budget request.
(in $ thousands) Appropriation FY 1996
Appropriated
LevelFY 1997
Appropriated
LevelFY 1998
Budget
RequestSustainable Development Assistance (DA) 1,617,306 1,132,500 998,000 Child Survival and Disease Programs Development Fund for Africa (DFA is included in the 1997 DAF level above) -- 500,000 700,000 International Disaster Assistance 180,951 190,000 190,000 Credit Programs 13,000 11,500 11,000 USAID Operating Expenses 494,317 488,250 473,000 Inspector General Operating Expenses 30,163 30,000 29,047 Foreign Service Disability & Retirement 43,914 43,826 44,208 Economic Support Fund & International Fund for Ireland 2,341,000 2,362,600 2,497,600 Assistance to the New Independent States 516,000 625,000 900,000 Assistance for Eastern Europe and the Baltics 644,000 475,000 492,000 P.L. 480 Food For Peace Title II 821,100 837,000 837,000 P.L 480 Food For Peace Title III 50,000 29,500 30,000 USAID Total: 6,751,751 6,725,176 7,201,855 DEVELOPMENT ASSISTANCE
The Sustainable Development Assistance account and the Development Fund for Africa provide support for activities worldwide that are designed to promote sustainable development in some of the poorest countries in the world. These nations represent the world's last great underdeveloped markets; USAID strongly believes that the modest and well targeted investments we make today in the form of human capital and the partnerships we establish with their communities will pay economic and political dividends to the United States well into the future.Sustainable Development Assistance
The request for this acount in FY 1998 is $998 million. Sustainable Development Assistance is the core of USAID's program and is based on four integrated, interrelated and mutually reinforcing goals that are aimed at addressing the long-term interests of the United States. (The fifth goal of humanitarian Assistance includes USAID's request for International Disaster Assistance and the Food For Peace accounts.) These four goals include activities aimed at promoting broad-based and sustainable economic growth ( $508 million); stabilization of population growth rates and protecting human health ($765 million); protection of the environment ($290 million); and increased democratic participation in open governments ( $136 million). Through these programs USAID strives to create the economic and social stability needed for the next wave of U.S. trading partners to evolve, to increase our democratic allies around the world, and to enhance U.S. security by helping to prevent costly crises.
USAID's programs address the primary causes of social instability and underdevelopment by joining in partnership with the government and citizens of the country to address mutually identified problems. Development is sustainable when it permanently enhances the capacity of a society to improve its quality of life. Thus, while addressing problems in any one of the agency's four major goals, USAID also can achieve the facilitation of progress in the other areas. This is because USAID programs aim at increasing participation and empowerment; the impact of agency activities is felt far beyond any one specific development problem. USAID programs bring people at all income levels into the economic, social, and political processes in order that they may contribute to and benefit from national progress, with women and ethnic minorities emphasized. This is what sustainability is all about. It is also the process to create lasting trade and social linkages between the United States and the developing world.
Development Fund for Africa.
USAID has also implemented high impact, innovative programs under the Development Fund for Africa, for which $700 million is requested in FY 1998. The Administration is requesting reinstatement of a separate appropriation to underscore the United States' commitment to tackling Africa's complex development challenges. Though modest in scope, the resources requested for the DFA are a sound and critical investment for improving millions of lives in sub-Saharan Africa and will enable the United States to meet the challenges and opportunities for sustainable development in that region. As with the Sustainable Development Assistance account, DFA programming incorporates the four goals listed above. These resources are concentrated in those countries which are committed to sound economic policies and democratic governance. USAID is also making investments which reduce the likelihood of costly future humanitarian and disaster relief requirements and growing new markets for American trade and investment. Our efforts to promote market-based economic policies and stimulate economic growth in Africa also help fuel demand for U.S. goods and services from those countries.
USAID Credit Guaranty Programs
USAID's credit guarantee programs include the Micro and Small Enterprise Development Program, the Urban and Environmental Credit Program (formerly the Housing Guaranty program), and a request for new authority to transfer up to $10 million from Sustainable Development Assistance for an Enhanced Credit Authority program. USAID believes there are significant instances in which U.S. development priorities can be best funded through credit, especially in emerging market countries and in countries moving toward graduation status. Credit resources permit the leveraging of private sector resources to support sustainable development and to enable USAID to reach populations it would not otherwise be able to reach. These programs enable people to feed themselves and their families better, educate their children, improve their health, and upgrade housing standards. Ultimately, the goal of all USAID credit programs is to allow the citizens of the developing world to concentrate on something beyond their next meal and free up economic growth potential of the next generation of U.S. economic partners.
Micro and Small Enterprise Development Program
This program requests appropriations totaling $1,500,000 for credit subsidies and $500,000 for program administration. The program uses loans and guaranties to encourage financial institutions to extend and expand credit to microenterpreneurs and small businesses. The Micro and Small Enterprise Development program is a grass-roots program. It is designed to help poor people create employment for themselves, acquire incomes, build assets, and join in the strengthening of the formal sector of the economy. Microenterprise and small loan programs provide the bridge to society for poor people, who until now have had no real connection to the economic mainstream.
Enhanced Credit Authority
The Enhanced Credit Authority will provide the agency with an important and timely tool to address its four strategic priorities. It will leverage agency resources more effectively through the use of market rate loans and guarantees to finance sovereign and non-sovereign development projects that are both developmentally sound and creditworthy and could be used to finance such projects as a municipal bond guarantee program to provide infrastructure project financing or a pilot waste water treatment facility. Budget authority is being requested to use up to $10 million in FY 1998 for this program, including up to $1.5 million for administrative expenses.
Urban and Environmental Credit Program (formerly the Housing Guaranty Program)
This USAID program extends guarantees to U.S. private sector investors who make loans to developing countries to support the formulation and implementation of sound housing and community development activities. These activities are targeted exclusively to meet the needs of lower-income groups in the assisted country with an emphasis on addressing the urban and environmental problems that impair human health, decrease child survival rates and prevent economic growth. The FY 1998 request for these activities totals $3,000,000 for subsidies and $6,000,000 for program administrative costs. The subsidies will leverage approximately $45 million in loan guaranties to help creditworthy borrowers.
International Disaster Assistance
USAID requests $190 million for this program, which includes $165 million for disaster relief managed by the U.S. Office of Foreign Disaster Assistance (OFDA) and $25 million for programs managed by the agency's Office of Transition Initiatives (OTI).
OFDA funds support emergency relief efforts. They also are used to improve the capacity of foreign nations to prepare and plan for disasters, mitigate their effect, and teach prevention techniques increasing the skills available locally to respond when disaster strikes.
OTI funds underwrite longer-term rehabilitation and recovery efforts for countries emerging from complex crises. It focuses on the special post-crises needs of nations that are not addressed by either emergency relief of long-term development programs. These efforts are designed to help nations return to the path of sustainable development, prevent crises from becoming more impacted, and minimize the need for future, ongoing humanitarian and disaster relief.
Operating Expenses
This appropriation covers the salaries and other support costs associated with the operations of USAID worldwide. Operating expenses for USAID's Inspector General, and the costs associated with the administration of USAID's credit programs are requested separately.
During the past four years, USAID has undergone massive changes, some of them very traumatic, such as the reduction in force implemented at the end of FY 1996. Other changes have included: the closing of 26 missions by the end of FY 1996, with six more closing planned by the end of FY 1998; introduction and implementation of reengineering for many agency processes and practices; introduction of new management systems; development and implementation of methods of measuring results of agency development activities; and the pending move of agency headquarters into a single building during 1997. In FY 1998, USAID will continue to reduce staff in both Washington and overseas. As a result of these cost-saving actions, which are offset in part by increases due to worldwide inflation and the impact of pay raises, the FY 1998 request is $473 million, a reduction of about 8% from the FY 1995 appropriated level.
Inspector General Operating Expenses
This appropriation covers salaries and other support costs associated with USAID's Inspector General FY 1997 operations worldwide. Activities covered include audits, investigations, and security relating to USAID's worldwide programs and operations. The Office of Inspector General has reduced the number of supervisors, managers, and Senior Foreign Service-designated positions as well as overall staffing levels worldwide during the past two years. The Inspector General can operate at the requested funding level by using $4 million in no-year and multi-year funds to support FY 1998 operations.
The request of $29.047 million covers both the domestic and overseas operations of USAID's Inspector General.
Foreign Service Retirement and Disability Fund
These funds cover the mandatory costs associated with the inclusion of USAID foreign service employees in the fund. The FY 1998 request is $44.208 million.
ECONOMIC SUPPORT FUND
The Economic Support Fund advances economic and political foreign policy interests of the United States. To the extent feasible, the use of ESF conforms to the basic policy directions underlying sustainable development assistance. ESF can finance balance of payments and economic stabilization programs, frequently in a multi-donor context.The FY 1998 request of $2.497 billion will be used to support countries in transition such as Haiti and Cambodia, to promote peace and stability in such countries as Israel, Egypt, West Bank and Gaza, and Turkey, Ireland and Cyprus and to assist countries in sub-saharan Africa with elections, political party building, and legislative training.
SUPPORT FOR EAST EUROPEAN DEMOCRACY
This funding supports activities authorized under the Support for Eastern European Democracy (SEED) Act of 1989. SEED is a transitional program designed to aid central and eastern European countries through their difficult passage to democracy and market economies. These programs help establish competitive, market-oriented economies, build democratic institutions and establish linkages to the democracies of the west, and help sustain the neediest sector of the population during the transition period. USAID assistance helps provide the skills and attitudes of a modern accountable state, strengthen the rule of law, and advance the restructuring of these formerly socialist economies. As countries consolidate their political and economic transitions, they will be graduated from the assistance category, and funding for bilateral SEED programs will be phased out. The FY 1998 request is $492 million, including $225 million for Bosnian reconstruction and $267 million for other countries in the Northern and Southern Tiers, of which 45% will go to the Southern Tier.ASSISTANCE TO THE NEW INDEPENDENT STATES OF THE FORMER SOVIET UNION
These funds support the activities established under the FREEDOM Support Act. USAID's assistance supports the fundamental U.S. foreign policy goals of consolidating improved U.S. security, building a lasting partnership with the individual New Independent States (NIS) of the former Soviet Union, and providing access to each other's markets, resources and expertise. The FY 1998 request is $900 million, of which $528 million is for the new Partnerships for Freedom program which will build on achievements to date and reorient U.S. assistance program, first to Russia and then for the other NIS countries, towards longer-term and more cooperative activities to spur economic growth and develop lasting links between our peoples.P.L. 480 FOOD FOR PEACE PROGRAMS
USAID's Food for Peace programs (P.L. 480) provide both humanitarian and sustainable development assistance in the form of U.S. agricultural commodities. In addition, P.L. 480 also funds the farmer-to-farmer exchange program and a grant program to U.S. private voluntary organizations and cooperatives implementing P.L.480 activities. Although requested by the Department of Agriculture, P.L. 480, Titles II and III are administered by USAID.Title II provides resources to U.S. private voluntary organizations (PVOs) and the World Food Program to implement sustainable development programs targeted to improve the food security of needy people, either by the direct distribution of agricultural commodities or the use of local currencies generated by the sale of these commodities in the recipient county. Title II also provides the vast majority of U.S. food assistance used to respond to emergencies and disasters around the world. The FY 1998 request is $837 million.
The Title III Food for Development program provides country-to-country grants of agricultural commodities to improve food security in the developing country and to promote agricultural policy reforms that encourage food production. These programs are tightly targeted on the poorest, most food-deficient countries in the world. The FY 1998 request is $30 million.
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