Introduction Statement of the Administrator Summary of FY 2002 Budget Request Program, Performance, and Prospects Operating Expenses, USAID Working Capital Fund Operation Expenses, Inspector General Foreign Service Disability and Retirement Fund Summary Tables Regions     Africa     Asia & the Near East     Europe & Eurasia     Latin America & the Caribbean Central Programs Glossary Abbreviations and Acronyms Wednesday, 29-May-2002 18:52:56 EDT

For Fiscal Year 2002, the President is requesting appropriations of $7,716,500,000 in discretionary funds for USAID-administered programs, including those jointly administered with the State Department. This compares to the FY 2001 level of $7,587,278,000 when $223.825 million in supplemental funding is excluded.

The FY 2002 USAID budget is presented in a new, simplified way, which aggregates funding for the various appropriations accounts into the four pillars on which USAID's programs are focused. The Global Development Alliance (GDA) is the over-arching, process pillar and will receive "seed" funding in FY 2002. The GDA is supported by three program pillars.

Because the new Administration had insufficient time to put together a new program account structure to coincide with this newly simplified way of configuring the USAID program, the following "cross-walk" relates this new configuration of pillars to the current appropriations account structure discussed below.

FY 2002 USAID BUDGET REQUEST

($ millions)

The FY 2002 USAID request includes funding for the Child Survival and Disease Programs Fund (CSD), Development Assistance (DA), the Economic Support Fund (ESF), Assistance for Eastern Europe and the Baltics (AEEB), and Assistance for the Independent States of the former Soviet Union (FSA), as well as funding for International Disaster Assistance (IDA), Transition Initiatives (TI), Development Credit programs, and administrative expenses. P.L. 480 (Food for Peace), administered by USAID but formally requested by the U.S. Department of Agriculture, is also discussed below.

The following table and subsequent descriptions provide further details in support of the budget request.

USAID BUDGET

($ thousands)

NOTE: FYs 1999, 2000, and 2001 include enacted supplementals. FY 1999 included $188 million International Disaster Assistance for Kosovo and Hurricane Mitch; $621 million for the Central America/Caribbean Disaster Recovery Fund; $161 million ESF for the Balkans, Jordan and East Timor; $120 million in Assistance for Eastern Europe and the Baltics funds for Kosovo; and $149 million P.L. 480 mainly for Kosovo. Supplementals in FY 2000 included $25 million in International Disaster Assistance funds for Southern Africa floods; $450 million Economic Support Funds for the Middle East; $219 million for USAID's portion of Plan Colombia; and $50 million Assistance for Eastern Europe and the Baltics for Montenegro, Croatia and Kosovo. FY 2001 supplementals included $135 million of International Disaster Assistance funds for Southern Africa floods; $76 million of Assistance for Eastern Europe and the Baltics funding; and $13 million in USAID Operating Expenses to provide administrative support in Kosovo. FY 1999 levels reflect rescissions. FY 2000 levels reflect distribution of a government-wide .38% rescission; the DA account excludes $12.5 million planned for family planning activities which was transferred to the CSD account. FY 2001 levels reflect a rescission from all accounts of .022%.

USAID programs are an integral part of the resources available to the Secretary of State to pursue U.S. foreign policy objectives, especially those objectives directed at fostering economic development and meeting humanitarian needs. USAID programs are targeted principally at developing and transition nations, which represent the world's last great underdeveloped markets. The USAID request is based on the premise that the modest and well-targeted investments the U.S. Government makes today in the form of human capital and partnerships with the overseas communities will pay economic and political dividends to the United States well into the future.

This chapter describes the FY 2002 request in terms of the existing appropriation accounts and, briefly, how they relate to the Agency's new program focus.

ACCOUNT BY ACCOUNT DISCUSSION

I. USAID DIRECT MANAGEMENT:

CHILD SURVIVAL AND DISEASE PROGRAMS FUND (CSD)
($ thousands)

The Child Survival and Disease Programs Fund cover child survival and maternal health, vulnerable children, HIV/AIDS and other targeted infectious diseases, including malaria and tuberculosis, and basic education.

USAID focuses attention on strengthening in-country systems and capacity to deliver health services, and prevent and monitor health problems.

All programs under the Child Survival and Disease Programs Fund, except for basic education, are budgeted under the pillar for Global Health. Within the Child Survival and Disease Programs Fund, $110 million is targeted for basic education; an additional $12.6 million is targeted for basic education in the Development Assistance account. Twenty five million dollars is targeted in the CSD account to be implemented through the new Global Development Alliance.

• Child survival and maternal health programs are focused on improving infant and child health and survival and reducing deaths and adverse outcomes due to pregnancy and childbirth.
• Programs for vulnerable children address critical needs of children most at risk and needs of children in crisis. This includes displaced children and orphans, blind children, and children affected by HIV/AIDS and other adverse circumstances.
• HIV/AIDS assistance is targeted to expanding primary prevention efforts, improving community and home-based care and increased support for those sick and dying of AIDS, helping AIDS orphans affected by HIV/AIDS, and reducing the risk of mother-to-child transmission. The funding target for HIV/AIDS programs is $329 million from the CSD account, with funding for HIV/AIDS from all USAID-managed accounts totaling $369 million.
• Other infectious disease programs include improving control of tuberculosis, reducing deaths due to malaria; reducing the spread of antimicrobial resistance; and improving surveillance and response capacity.
• The focus of basic education programs is to strengthen pre-primary, primary, and secondary education and teacher training. Efforts are focused primarily in Africa, but also include targeted work in Asia and the Near East and Latin America. In addition to the $110 requested in the CSD Fund, another $12.6 million is requested for basic education in the DA account.

USAID will continue to collaborate with various multilateral organizations such as United Nations Children's Fund (UNICEF), United Nations Program on HIV/AIDS (UNAIDS), and World Health Organization (WHO). In addition, USAID will also continue to form public-private alliances using mechanisms such as the Global Alliance for Vaccines and Immunization (GAVI), the Micronutrient Enrichment Initiative (MEI), the International AIDS Vaccine Initiative (IAVI), and international trust funds. As noted above, $25 million of CD funds will be implemented through the Global Development Alliance to further productive public-private cooperation.

DEVELOPMENT ASSISTANCE (DA)
($ thousands)

Development Assistance programs, together with other accounts, support Agency efforts to address the manifestations and causes of poverty and underdevelopment overseas through the three program pillars noted above and discussed below. These funds include funding to leverage the resources of non-governmental organizations, the private sector, and other donors to achieve a much greater level of impact than is possible with the limited USAID resources alone.

DA funds support programs in Africa, Asia, and Latin America, as well as central programs that are global in nature.

The Administration's FY 2002 request for the Development Assistance (DA) account includes funding programs for all three of the new program pillars. Some of the DA funds ($110 million) will be used for the new Global Development Alliance, the overarching process pillar, which is discussed in the Administrator's statement of this budget justification.

• Programs under the Economic Growth and Agriculture pillar ($818 million) will address improvements in business, trade and investment and will help expand and strengthen private markets, encourage more rapid and enhanced agricultural development for food security, and provide access to economic opportunity for the rural and urban poor. Funding will encourage institutional reforms, develop and transfer technology, especially for small farmers, and support microenterprise lending.
• Environmental programs will reduce the threat of global climate change, conserve biological diversity, provide for sustainable urbanization and pollution control, increase environmentally sound energy services and promote management of natural resources. In addition, $12.6 million will address some basic education programs.
• In the Global Health pillar ($376 million), family planning programs will continue to promote family health and allow couples to achieve their desired family size ($358 million DA and $425 million from all USAID-managed accounts), will improve infant and child health and reduce their mortality rates, and decrease maternal deaths associated with childbirth. These programs are integrated with other programs that also protect human health. Development assistance ($18 million) also funds some other health programs such as victims of war and victims of torture.
• In the Conflict Prevention and Developmental Relief pillar ($132 million), democracy and local governance programs will strengthen the rule of law and respect for human rights, encourage credible and competitive political processes, promote the development of a politically active civil society, and make government institutions more transparent and accountable. A new initiative will integrate the existing democracy programs with new approaches in dealing with conflict prevention, including programs that address the economic causes of conflict.

In this Development Assistance request, $28 million will be transferred to the Inter-American Foundation and the African Development Foundation. USAID will manage the remainder of the $1.297 billion in this account.

INTERNATIONAL DISASTER ASSISTANCE (IDA)
($ thousands)

Note: FYs 1999 and 2000 each contain $50 million for transition initiatives, which was subsequently funded under a separate account. Supplementals are included: $188 million in FY 1999 for Hurricane Mitch and Kosovo; $25 million in FY 2000 for Southern Africa floods, and $135 million in 2001 for Southern Africa floods.

International Disaster Assistance (IDA) funds humanitarian programs that provide relief, rehabilitation and reconstruction assistance to victims of natural and man-made disasters. Until FY 2001, this account also funded transition assistance, which now is appropriated separately. This entire account falls under the pillar of conflict prevention and developmental relief and includes $25 million intended for implementation through the new Global Development Alliance.

IDA program objectives are to: (1) meet the critical needs of targeted vulnerable groups in emergency situations; (2) increase adoption of disaster prevention and mitigation measures in countries at risk of natural disasters; and (3) enhance follow-on development prospects in priority, post-conflict countries.

To accomplish these objectives, USAID collaborates with other assistance providers in the international community to coordinate programs and share the burden of relief costs. U.S. private voluntary organizations (PVOs) and non-governmental organizations (NGOs) are critically important partners in these efforts and play an essential role in raising resources, providing assistance, and implementing programs in the field.

International Disaster Assistance is budgeted under several types of programs. Relief funding seeks to meet the critical needs of targeted vulnerable groups in emergency situations, such as floods, epidemics and earthquakes. Funding for mitigation and preparedness (as well as prevention) seeks to assist other countries with planning that reduces both the vulnerability of targeted family plannings and the cost of relief assistance. Worldwide administrative and operations support provides for activities in support of relief operations, including agreements with U.S.-based search-and-rescue teams, purchase and maintenance of communications equipment, stockpile maintenance, field office support, information management, and personnel training.

Demands on resources have increased steadily for a number of years. In FY 2000, USAID responded to 74 disasters, from Afghanistan to Vietnam, including 21 floods, five epidemics, eight cyclones/hurricanes, and three earthquakes.

Complex emergencies, involving civil conflict often complicated by natural disasters, account for an increasing share of the IDA budget. Although these conflicts fluctuate in intensity, their resolution is very difficult and relief assistance may be necessary for long periods. Increasing emphasis is being placed on applying preparedness and mitigation lessons learned to deal with these emergencies.

TRANSITION INITIATIVES
($ in thousands)

The Transition Initiatives (TI) account funds humanitarian programs that provide post-conflict assistance to victims of natural and man-made disasters. Until FY 2001, this type of assistance was funded under the International Disaster Assistance account. All of these funds fall under the new pillar of Conflict Prevention and Developmental Relief.

The FY 2002 request of $50 million will support programs administered by USAID's Office of Transition Initiatives (OTI). The Office addresses the opportunities and challenges facing conflict-prone countries and those making the transition from the initial crisis stage of a complex emergency (frequently addressed by the Office of Foreign Disaster Assistance toward a more stable political and economic situation.

USAID established OTI in 1994 to help local partners advance peaceful, democratic change in conflict-prone countries. OTI works on the ground to provide fast, flexible, short-term assistance targeted at key transition needs. Its ability to assist local partners in addressing the root causes of conflict is key to bridging the gap between emergency relief and long-term development.

OTI's programs support U.S. foreign policy priorities in assisting transition countries, usually during the critical two-year period when they are most vulnerable to renewed conflict or instability. Working closely with local, national, international and non-governmental partners, OTI carries out short-term, high-impact projects designed to increase momentum for peace, reconciliation, and reconstruction. Strategies are tailored to meet the unique needs of each transition country and are initially tested on a small scale and only applied more broadly when it is clear that high impact is being achieved. Changing conditions require new or modified strategies; OTI has developed the experience necessary to quickly develop and implement such new or modified strategies.

In FY 2000 OTI initiated a new program in Zimbabwe, continued programs in 12 countries or provinces (Albania, Colombia, Democratic Republic of Congo, East Timor, Indonesia, Kosovo, Lebanon, Montenegro, Nigeria, Philippines, Sierra Leone, and Serbia), and completed programs in five countries (Angola, Bosnia-Herzegovina, Croatia, Honduras and Rwanda). OTI also provided technical assistance to help USAID missions develop transition strategies in countries where OTI does not have a presence, such as a new program in Peru, which was initiated early in FY 2001.

DEVELOPMENT CREDIT PROGRAM
($ in thousands)

Credit promotes broad-based economic growth in developing and transitional economies and is often the best means to leverage private funds for development purposes, so these programs basically fall under the pillar of economic growth and agriculture, although activities benefiting from credit programs can in fact cut across all three program pillars, to include global health and conflict prevention.

For FY 2002, the Administration is requesting transfer authority of up to $25 million from USAID program accounts, including ESF, SEED, and FSA accounts, for the newly consolidated Development Credit Program (DCP). This program consolidates the former Urban and Environmental Credit program, the Micro and Small Enterprise Development programs and the former Development Credit Authority program.

The DCP will allow USAID to use credit as a flexible development tool for a wide range of development purposes and will increase the flow of host-country private sector funds to urban credit and micro and small enterprise development programs.

In addition, $7.5 million is requested for administrative costs for the expanded program. It is envisioned that all future agency credit activities will be carried out under the reforms embodied in DCP regulations and the Federal Credit Reform Act of 1992. This program augments grant assistance by mobilizing private capital in developing countries for sustainable development projects. DCP is not intended for sovereign risk activities.

USAID OPERATING EXPENSES
($ in thousands)

USAID's development, economic, and humanitarian programs play an important role in support of U.S. foreign policy and national security objectives. The Operating Expenses (OE) budget of USAID is critical since it provides funding for salaries and support costs of the staff responsible for managing these programs.

The FY 2002 request for USAID Operating Expenses is $549 million, excluding the Office of Inspector General, which is requested separately. These funds will provide resources needed to maintain current staffing levels associated with USAID's presence in key developing countries, continue to build effective information technology and financial management capabilities, and strengthen staff capabilities with training. The request includes $7.5 million for facility security where USAID is not collocated with embassies.

The State Department's Embassy Security, Construction, and Maintenance request includes a request for $50 million for collocated USAID facilities.

These funds cover the salaries, benefits, and other administrative costs associated with USAID programs worldwide, including those managed by USAID and financed through Development Assistance, the Child Survival and Disease Program Fund, the Economic Support Fund, Assistance for Eastern Europe and the Baltics, Assistance for the Independent States of the Former Soviet Union, and P.L. 480 Title II Food for Peace Programs.

The increase requested is needed to offset reduced funding availabilities from non-appropriated sources - including prior-year recoveries - which totaled $82 million in FY 2001, but which will drop to $63 million in FY 2002. Total operating resources remain constant at $613 million; USAID will absorb the cost of inflation.

USAID OFFICE OF THE INSPECTOR GENERAL
($ in thousands)

The FY 2002 request covers operations, including salaries, expenses, and support costs of the Office of Inspector General's (OIG) personnel.

The goal of the Office of the Inspector General (OIG) is to: (1) assist USAID implement its strategies for sustainable development and provide USAID managers with information and recommendations that improve program and operational performance, and (2) work with USAID to protect and maintain the integrity of the Agency and its programs by investigating allegations of federal criminal violations and serious administrative violations involving programs and personnel.

The FY 2002 budget request of $32 million covers operations, including salaries, expenses, and support costs of the OIG associated with USAID programs and personnel operating in over 80 countries around the world.

II. USAID PROGRAMS CO-MANAGED WITH STATE DEPARTMENT

ECONOMIC SUPPORT FUND
($ in thousands)

The Economic Support Fund (ESF) advances economic and foreign policy interests of the United States. To the extent feasible, the use of ESF conforms to the basic policy directions underlying development assistance. While the overarching focus for these programs is Conflict Prevention, some programs also support the strategic pillars of Economic Growth and Agriculture and Global Health.

The FY 2002 request of $2.3 billion will be used largely to support the Middle East peace process ($1.682 billion), including $720 million for Israel, $655 million for Egypt, $150 million for Jordan, and $75 million for the West Bank and Gaza.

The request for Cyprus is $15 million and $19.6 million is requested for the International Fund for Ireland.

Latin America and the Caribbean would receive $170.5 million, including $54.5 for democratic institution building and economic growth programs in Peru, Ecuador, Bolivia, Venezuela and Panama to augment a new Andean Counterdrug Initiative. Funding for other Latin American programs would include earthquake assistance for El Salvador, Cuban democracy programs, and other regional democracy programs.

Africa is budgeted for $105.5 million for Conflict Prevention programs in Nigeria, Angola, Ethiopia and Eritrea, and other regional programs, including one with an emphasis on girl's education.

Asia would receive $200 million, including $50 million to support democratic and economic strengthening in Indonesia and $25 million for East Timor's transition to independence. Cambodia, the Philippines, Mongolia, Pakistan, India and China programs will support democracy, justice and anti-corruption. Programs in Bangladesh, Sri Lanka and Nepal will address child labor and violence against women.

State Department programs for Environmental Diplomacy, the Human Rights and Democracy Fund, and Innovative Partnerships to Eliminate Sweatshops will continue. South Pacific Fisheries Treaty commitments are funded at $14 million. A new Policy Initiatives activity will receive $69 million.

ASSISTANCE FOR EASTERN EUROPE AND THE BALTIC STATES (AEEB)
($ in thousands)

This funding supports activities authorized under the Support for East European Democracy (SEED) Act of 1989. SEED is a transitional program designed to aid central and eastern European countries through their 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 during the transition period.

The FY 2002 request is $610 million, including $145 million for the Federal Republic of Yugoslavia for Serbia and Montenegro to support economic reform and promote democracy and civil society. Allocation of $120 million is intended for Kosovo security, democratization, and human rights and rule of law, as well as for building transparent economic and political institutions and a strong private sector. Funding for Bosnia-Herzegovina is $65 million, a decrease from prior years reflecting the substantial progress on commitments made under the Dayton Peace Accords. A funding increase for Macedonia to $45 million will help more rapidly move the benefits of democracy to all citizens and will target decentralization of the government, allowing a broader range of Macedonians to play a direct role in building their society. Economic programs will also promote a strengthened private sector. Estimated transfers for activities managed by other agencies are $164 million.

Broken out by the three program pillars covered by the Global Development Alliance pillar, the $610 million includes an estimated $269 million for Economic Growth and Agriculture, $13.5 million for Global Health, and $327 million for Conflict Prevention and Developmental Relief.

Eight of the 15 original SEED countries have graduated, including Lithuania, Poland, and Slovakia, and are able to advance economic and democratic reforms without further bilateral assistance from the United States. As a result, bilateral assistance to the Northern Tier is discontinued. Regional funding, at reduced levels, continues for Northern Tier countries to help ensure the success of their transitions and to meet limited special or emergency needs.

ASSISTANCE FOR THE INDEPENDENT STATES OF THE FORMER SOVIET UNION
($ in thousands)

These funds support the activities established under the FREEDOM Support Act (FSA). USAID's assistance supports the fundamental U.S. foreign policy goals of consolidating enhanced U.S. security, building a lasting partnership with the individual independent states and providing access to each other's markets, resources and expertise.

The FY 2002 request is $830 million, some of which is for the State Department's Expanded Threat Reduction Assistance Initiative aimed at dealing with reducing crises associated with weapons of mass destruction; this program is not administered by USAID. Estimated transfers to other agencies managing programs are $362 million.

USAID-managed programs will focus on development of market systems and economic policy reform in such areas as banking, fiscal management, and adoption of international accounting standards, as well as assisting entrepreneurs of micro, small and medium enterprises to gain access to financing, training, new technologies and expertise. Many programs assist in democracy building and conflict prevention, which promotes and protects the rights of individuals and minority groups. Resources are also allocated to health priorities, including HIV/AIDS and infectious disease control and mother and child health, especially through community-based, primary health care activities and upgrading the skills of family physicians. Assistance will encompass exchanges of citizens of the Independent States and the United States, institutional partnerships, and support for non-governmental organizations.

Programs will include regional initiatives to facilitate trade and investment outside capital cities as well as support for small and medium-sized businesses through training and greater access to credit. Resources will also be directed at law enforcement cooperation to help fight organized crime and corruption. Humanitarian assistance will help mitigate the negative impact of the financial and economic crisis in this region.

III. AGRICULTURE COMMITTEE

P.L. 480 FOOD FOR PEACE PROGRAMS
($ in thousands)

Although requested by the Department of Agriculture, through the Agriculture Subcommittee, the P.L. 480 program is administered by USAID.

All P.L. 480 programs would fall under the pillar of Conflict Prevention and Developmental Relief.

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.

Title II provides resources to U.S. private voluntary organizations and the World Food Program to help 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 country. Title II also provides the vast majority of U.S. food assistance used to respond to emergencies and disasters around the world. The FY 2002 request is $835 million.