Summary

In response to a congressional request, GAO reviewed the Agency for International Development's (AID) efforts to: (1) promote economic policy reform through the Economic Support Fund (ESF) program; and (2) control ESF cash transfer funds.

GAO found that AID: (1) relied on cash transfers to encourage economic policy reforms and to address balance-of-payments problems; (2) did not establish sufficient criteria to guide its policy reform efforts; (3) has had mixed success in encouraging policy reforms; (4) encountered problems in its efforts to implement separate accounting for cash transfers, since recipients continued commingling program funds with foreign exchange accounts; (5) failed to require separate accounting for certain ESF grants and projects because it did not consider them cash transfers; and (6) did not verify that recipients complied with its requirement to keep records on separate account disbursement or ensure that they used the funds for authorized purposes.