Introduction Statement of the Administrator USAID Organization Chart Assisted Countries - World Map Summary of FY 2003 Budget Request Program Highlights Management Improvements Operating & Administrative Expenses Capital Investment Fund Working Capital Fund Operation Expenses of the Inspector General Foreign Service Retirement and Disability Fund Summary Tables Regions     Africa     Asia & the Near East     Europe & Eurasia     Latin America & the      Caribbean Central Programs Glossary Abbreviations and Acronyms Thursday, 30-May-2002 16:21:50 EDT

This chapter describes the FY 2003 budget request for proposed appropriation accounts. All USAID-managed programs, regardless of account, address USAID's strategic framework, as represented by the following four pillars:

• Economic Growth, Agriculture and Trade (EGAT);
• Global Health (GH);
• Democracy, Conflict and Humanitarian Assistance (DCHA); and
• The Global Development Alliance (GDA).

The "Program Highlights" chapter details new priorities and initiatives to address the changing international environment.

For FY 2003, the President is requesting appropriations under the Foreign Operations Subcommittee of $7,292,724,000 in discretionary funds for USAID-administered programs, including those jointly administered with the State Department. Also requested is $1,185,000,000 in P.L. 480 Title II, which is appropriated through the Department of Agriculture but is managed by USAID. The total request including P.L. 480 is $8,477,724,000.

Subsequent tables and descriptions provide further details in support of the budget request. Tables are in dollars thousands and cover a four-year period, except Table II.

Table I lists all the accounts managed by USAID. Where there are transfers of some of these funds to other agencies, these levels are noted. Levels for FY 2000 and 2001 reflect rescissions. The Emergency Response Fund for 2001/2002 is listed as a separate line item under the accounts that received these funds.

However, other supplemental appropriations are included in account totals as follows:

• FY 2000 supplementals were International Disaster Assistance, $25 million; Plan Colombia, $219 million; and Economic Support Fund, $450 million.
• FY 2001 supplementals included International Disaster Assistance, $135 million; USAID Operating Expenses, $13 million; and Assistance to Eastern Europe and the Baltics, $75.8 million.

This budget also reflects adjustments to the international food program that the Administration is proposing to improve its effectiveness. These adjustments include the reduction of food monetization. These reductions will be offset in part by proposed increases in funding for programs for which monetization has been used, such as agriculture and food security, health, basic education and the environment. Increases in these programs collectively exceed $100 million. The Agency will continue to channel resources through its NGO and private sector implementers, and USAID will consult with them in this process.

Table II provides an estimated breakout of the FY 2003 request by the four pillars under all USAID-managed program accounts. Programs of special interest or emphasis are also broken out under the individual pillars.

Tables III through XIII cover the individual USAID-managed accounts.

* Excludes an additional $10 million in local currency

*Funds prior to FY 2003 include both Development Assistance and Child Survival and Diseases Fund (2000-2001), or Development Assistance and the Child Survival and Health Programs Fund (2002).
**For vulnerable children, we are shifting program focus and funding to children impacted by HIV/AIDS.
***Other Infectious Diseases includes tuberculosis and malaria, antimicrobial resistance, surveillance, and other infectious diseases.

The Administration is attempting to simplify and streamline the budget account structure throughout the U.S. Government. As part of this effort, this budget proposes to merge the Development Assistance and Child Survival and Health accounts. This change will not affect overall funding levels for health programs. The Global Health pillar contains the same elements as the former Child Survival and Disease Programs Fund account.

The Administration's request for the Development Assistance account, $2.74 billion, includes funding for three of the Agency's program pillars (Economic Growth, Agriculture and Trade; Global Health, and Democracy, Conflict and Humanitarian Assistance), plus limited funding for the fourth pillar, Global Development Alliance.

The $1.11 billion in funds requested under the Economic Growth, Agriculture and Trade pillar will help address poverty and hunger, globalization and trade, education (especially basic education for children and young adults), and environmental issues. The request for this pillar has increased over FY 2002 particularly for the agriculture sector. This increase is in support of multi-year commitments with implementing partners to the Agency's new priority for agriculture and food security. The request addresses this new direction where USAID is going to support the type of programs previously supported through food monetization. Funding for environmental programs includes $50 million for the President's forestry initiative ($30 million from Development Assistance and $20 million from other accounts).

The Global Health request of $1.4 billion, $60.5 million over the FY 2002 appropriation. A total of $640 million will be devoted to HIV/AIDS. Of this amount, $540 million ($500 million from DA and $40 million from other accounts) is for the HIV/AIDS bilateral program and $100 million is for the Global Fund to Fights AIDS, Tuberculosis, and Malaria. The increased funding for HIV/AIDS will allow USAID to strengthen and expand prevention, care and support, and treatment activities in countries most impacted by the pandemic, and in countries posed for dramatic increases in HIV prevalence. The request also supports programs in child survival and maternal health, orphans and vulnerable children, other infectious diseases, and family planning and reproductive health.

The request for Democracy, Conflict, and Humanitarian Assistance funding is $225 million. Development Assistance will fund democracy and governance, human rights, and conflict-prevention programs, and there will be a new focus on reducing the conditions that give rise to terrorism. The request includes $50 million for a new conflict-management effort and additional funds to directly address the related problems of governance and corruption.

The Global Development Alliance capitalizes on USAID's extensive field presence, network of local development partners, and technical expertise to facilitate public-private alliances and mobilize external resources in achieving development objectives. The Agency is requesting $30 million to establish new partnerships and alliances.

*Appropriations for FY 2000 and 2001 included supplementals of $25 million and $134.7 million respectively. Actual emergency program levels were higher and were funded from prior-year resources, including carryover. Actual relief obligations were also higher and also funded from prior-year resources, including deobligations. In FY 2000, the International Disaster Assistance (IDA) account included funding for the Office of Transition Initiatives. Beginning in FY 2001, Congress established a separate Transition Initiatives account for these programs, which is discussed below.

The IDA account provides funding for humanitarian assistance to victims of civil crisis and disaster. For example, after the earthquakes in El Salvador and India, IDA funds assisted in such sectors as emergency shelter, health, water, and sanitation. In addition, IDA funds help with prevention, preparedness, economic recovery, and rehabilitation as part of a comprehensive response to reduce developing country vulnerability to emergencies. The supplemental funds provided during FY 2002 as part of the Emergency Response Fund have been assisting the people of Afghanistan. The use of current and future IDA funds is contingent on future events, therefore the allocation of these funds remains to be determined.

(See additional detail in Central Programs annex, chapter on the pillar bureau, Democracy, Conflict, and Humanitarian Assistance.)

*Before 2001, transition assistance was part of the International Disaster Assistance account.

The Transition Initiatives account provides funding that advances peace and stability by conducting fast and flexible interventions in priority conflict-prone countries. The funds address the needs of pre- and post-transition countries experiencing significant political changes or facing critical threats to basic stability and democratic reform. In the Balkans, for example, Transition Initiatives funds are being used to increase public understanding of democratic reform efforts, to engage citizens in projects emphasizing community decision-making, and to provide support to independent media and nongovernmental organizations.

The request for FY 2003 includes $7.59 million for administrative costs to manage this program. No new authority for subsidy costs is being requested at this time. For FY 2003, the Administration has requested authority to use any remaining, unused balance of the FY 2002 authority to transfer up to $18.5 million to the DCA; the requested transfer authority would apply to FY 2003 appropriatons and funds transferred would remain available for use through FY 2007.

Private investment and effective credit markets are critical for economic growth in developing countries. Development Credit Authority (DCA) assistance induces local-currency lending to creditworthy but historically under-served markets. DCA is principally intended for use where a development activity is financially viable, where borrowers are creditworthy, and where there is true risk sharing with private lenders.

DCA is an alternative use of existing appropriations, whereby funding from other USAID-managed accounts can be transferred to the DCA account, subject to an annual Congressional ceiling, and used to pay for the costs of more disciplined, less costly credit assistance. DCA augments grant assistance by mobilizing private capital in developing countries for sustainable development projects, thereby supporting the capacity of host countries to finance their own development.

See separate chapter in this volume for a more detailed Operating Expense narrative and tables.

USAID's programs and expertise play an important role in support of U.S. foreign policy and help implement the U.S. strategy for international development, peace, and stability. The Operating Expenses budget of USAID is critical since it provides funding for salaries and support costs of the staff responsible for managing these programs.

The FY 2003 request for USAID Operating Expenses is $586.1 million, excluding the Office of the Inspector General and the Capital Investment Fund, which are requested separately. These funds will provide resources needed to maintain current staffing levels associated with USAID's presence in key developing countries. The request includes an estimate of $13.9 million to implement the Administration's proposal to fully reflect costs of future retirees in Agency budgets.

The Operating Expenses of USAID are financed not only from the new budget authority, but also other sources of nonappropriated sources including recoveries. These other sources (trust funds and recoveries) continue to drop from $71 million in FY 2002 to $51 million in FY 2003. This decrease makes it critical that the full request for Operating Expenses be provided to meet expected requirements. A large portion of the OE budget is either fixed or directly related to staffing levels; reductions in the requested funding would immediately impact the ability of USAID to maintain staff necessary to monitor and manage programs.

USAID requests establishment of a Capital Investment Fund (CIF) in FY 2003. These no year funds will provide the Agency with greater flexibility to manage investments in technology systems and facility construction that the annual appropriation for Operating Expenses does not allow. In this fund, $13 million is for information technology, which will support major systems and infrastructure improvement projects that have substantial impact on Agency operations and results. In addition, $82 million is for construction overseas to build new USAID office facilities and to collocate on embassy compounds when new embassies are constructed. Funds for building construction have previously been part of the Department of State budget request, not USAID's.

See separate chapter in this volume for a more detailed IG Operating Expense narrative and tables.

The FY 2003 request of $34.046 million covers operations, including salaries, expenses, and support costs of the Office of the Inspector General associated with USAID programs and personnel operating in over 80 countries around the world. This request will enable the Office to reduce the Agency's exposure to fraud and waste and increase the credibility of and confidence in USAID programs operating in highly vulnerable areas of the world.

The goal of the Office of the Inspector General is to assist USAID with implementation of its economic development strategies and provide USAID managers with information and recommendations that improve program and operation effectiveness and efficiency. The Office has statutory responsibilities to (1) conduct audits and investigations relating to the programs, operations, and personnel of USAID; (2) provide leadership and coordination and recommend policies for activities designed to promote economy, efficiency, and effectiveness and to detect waste, fraud, and abuse in the programs and operations of USAID; (3) provide a means for keeping the USAID Administrator and Congress informed about problems and deficiencies; and (4) provide audit and investigative services and oversight for the Inter-American Foundation and the African Development Foundation.

The Economic Support Fund supports the economic and political foreign policy interests of the United States. The request focuses on the top U.S. priority-the war on terrorism-providing assistance to the front-line states and building new relationships as the campaign against global terrorism widens. To the extent possible, the use of Economic Support Funds also conforms to the basic policy directions underlying development assistance and programs that support USAID's three strategic pillars.

Near East. The FY 2003 request of $2.3 billion will be used largely to support Middle East stability and a comprehensive peace between Israel and its neighbors ($1.6 billion). Funding includes $600 million for Israel, $615 million for Egypt, $75 million for the West Bank and Gaza, and a substantial increase in economic assistance to Jordan (for a total of $250 million). In addition, funding of $10 million is earmarked to support Yemen's efforts in the war on terrorism, $32 million for Lebanon, and $25 million for the Iraq opposition program. The request continues programs to strengthen regional cooperation, promote democracy and civil society, and encourage economic growth and integration through increased trade reforms.

Europe and Eurasia. The request for Cyprus is $15 million and $25 million is requested for Ireland, as well as $4 million for the final year of the Ireland intake program.

Asia, $393 million is requested, which includes $200 million for Pakistan, $25 million for India, $7 million for Bangladesh; $6 million for Nepal, $4 million for Sri Lanka, $60 million for Indonesia and $19 million for East Timor, $20 million for the Philippines, $17 million for Cambodia, $12 million for Mongolia, $6.5 million for Burma, $5 million for China, and $4 million for regional women' programs. The funding level for rehabilitation and reconstruction programs for Afghanistan is yet to be determined.

Africa. The request includes $77 million, of which $32 million is for African Regional Democracy programs, including funding for the Congo and Nigeria. In addition, $31 million is for Countries in Transition, such as Sierra Leone, Ethiopia, Eritrea, and Angola, $8 million is for Safe Skies, and $6 million is for regional organizations such as the Southern Africa Development Community and the Organization of African Unity.

Other. The request includes $56 million for state-managed programs, including the South Pacific Multilateral Fisheries Treaty and Human Rights and Democracy Funds.

The request of $495 million will help stabilize southeast Europe and support the region's transition into the European and trans-Atlantic mainstream. Although there are no longer USAID missions in the European northern tier, legacy mechanisms are in place for grant-making funds, managed by private foundations, such as the Baltic-American Partnership Fund.

In Southeast Europe, USAID focuses on mitigating conflict, supporting democratic processes, furthering economic reforms, and promoting regional cooperation among these countries and their speedy integration into Europe proper.

The request includes $110 million for Serbia to help speed implementation of economic policy reports and support community development and humanitarian needs. For Kosovo, the $85 million request will support security, democratization, and respect for human rights and rule of law, as well as help revive the economy and provide social services. The Former Yugoslav Republic of Macedonia will receive $50 million to increase employment-generation programs, work with small and medium-sized businesses, basic education, and labor deployment, and help implement constitutional changes. For Bosnia-Herzegovina, $50 million is requested to support economic development, judicial reform, and reform of military and state institutions.

The request for the former Soviet Union totals $755 million to fund continuing programs of USAID and other agencies supporting economic and democratic transition and the war on terrorism. Funding underscores the continued U.S. commitment to the region and the vital role played by the front-line states in the coalition against terrorism.

The shift of funding from core economic and democracy programs in Russia and Ukraine to the Central Asian republics and Azerbaijan continues; it will address the region's economic development needs, porous borders, political instability, and humanitarian concerns. Throughout the former Soviet Union, funds will support small and medium-sized businesses through training, exchanges, and greater access to credit, as well as U.S. investment and trade. Increasing emphasis will be placed on partnerships and dealing with corruption.

Some funds will support health programs, including efforts to improve maternal and infant health, combat infectious diseases, and improve community health services. Other programs will confront trafficking in persons by improving legislative and regulatory remedies, strengthening law enforcement, and helping repatriate and treat the victims. Conflict-prevention efforts will include addressing the root causes of discontent, including lack of jobs, poor social services, and decaying infrastructure.

(For more detail, see Central Programs Annex and Summary Tables)

The United States uses its abundant agricultural resources and food processing capabilities to enhance food security and combat problems of malnutrition in the developing world both through emergency food aid responding to the critical food needs of targeted vulnerable groups and through development food aid focused on enhancing household nutrition or increasing incomes and agricultural production. Provided via private voluntary organizations (PVOs) and the UN World Food Program (WFP), emergency food aid, such as in Kosovo, Serbia, and Sudan, not only saves lives but also mitigates the immediate effects of conflict and contributes to the stabilization of war-torn societies. Development food aid is provided via multi-year commitments to PVOs, as well as through a portion of the biennial pledge to the WFP. Appropriated to the U.S. Department of Agriculture, the Title II program is managed by USAID. The Emergency Response Fund provided during FY 2002 has been assisting people in and around Afghanistan.

As the monetization program is reduced over time, the commitment with implementing partners to address issues of agricultural productivity, food security and the environment remains strong, as evidenced by the increased DA request for these sectors to offset this reduction.

There are some basic programming decisions remaining for current and future Title II funds; therefore, the allocation of these funds remains to be determined.