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Administrative expenses Grants for private broadcasting

1. 2.

activities

9,922

3,000

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NEED FOR SUPPLEMENTAL APPROPRIATION

Mr. HIGHTOWER. Dr. Gronouski, would you like to make a statement about the need for the $3 million and what it will be used for!

Dr. GRONOUSKI. Yes. Actually last year, about a year ago when I came with about $10 million supplemental, a good share of it was to eliminate, to extinguish, if you will, a carryover over the years of accounts payable that continued to accumulate. I committed myself to the committee last year, as I did to the OMB and everybody else, that if we could once and for all clear up these prior years' liabilities I would not come in for other supplementals, with one exception. I can control the way they operate their finances, but I have no control over the value of the dollar in the international exchange market. I cannot ask these Radios to maintain a tight budget and to give us detailed reports and good planning reports without telling them how much is in their budget. So we have really to assume that if they get x amount of dollars that they have to live with, they can have x amount of dollars to live with.

Last year our budget was prepared on a 2.1075 marks per dollar basis, but we all know what happened to the mark-dollar ratio. There was a very sharp drop, and it is now about 1.85. The amount of money that is in this supplemental request is for one purpose and one purpose only, and that is to compensate for downward fluctuations in foreigncurrency exchange rates.

DOLLAR LOSSES RESULTING FROM DEVALUATION

Mr. HIGHTOWER. How much has actually been lost thus far in the fiscal year as a result of the decline?

Dr. GRONOUSKI. $2.7 million in the first 5 months.
Let me give you the total picture for the year.

Mr. HIGHTOWER. Could you then give us an average estimated exchange rate for the remainder of the fiscal year and the associated dollar loss? It would be an estimate, of course.

Dr. GRONOUSKI. If the exchange rate stays about where it is, and about the best guess you can make is it is going to stay where it is, though it could go up or down, then we are going to lose this year about $7.2 million.

Mr. HIGHTOWER. Then that is going to make you about $2.2 million still deficient at the end of the year.

Dr. GRONOUSKI. That is right, and the only reason that we could live with that not only can but must-is that it is only at the close of each quarter that the Radios can report their actual losses to us. We then make the report to the OMB; which certifies, after thorough examination, that the losses have indeed been incurred.

Mr. HIGHTOWER. Yes.

Dr. GRONOUSKI. It is at this stage that the OMB authorizes payment from the currency devaluation fund. It couldn't be before October 1, say, for losses incurred in April, May and June this year.

Mr. HIGHTOWER. In other words, we can know with a fair certainty now that when you come before this subcommittee next year you are going to be in the red about $2.2 million.

Dr. GRONOUSKI. That is right. Actually, we are asking for $5 million for fiscal year 1980 in currency-reserve funds. We know that, unless something dramatically good happens to the dollar, of that $5 million we will spend in the first quarter about $2.2 million for losses accumulated during the last fiscal year, the last quarter of the prior fiscal year.

Mr. HIGHTOWER. In the budget this last year, we anticipate the deficit to a certain extent because the dollar has already started to decline.

How much at that time did we say?

Dr. GRONOUSKI. Our budget was prepared last year on the ratio of 2.1075 West German marks to the dollar.

Mr. HIGHTOWER. And it turned out to be 1.85.

Dr. GRONOUSKI. In the first 5 months of this year, we bought it at about 1.87. Right now it is 1.86–1.85.

MARKS PURCHASED FROM MONTHLY GRANTS

wrong rate.

Mr. HIGHTOWER. How far in advance do you buy your marks? Dr. GRONOUSKI. I will have to ask Mr. Marchetti.

Mr. MARCHETTI. We receive our grant funds on a monthly basis. Therefore, the most we could do is purchase for that month. We are funded monthly. At the beginning of March, for instance, we will receive the March funds, and we will buy our marks at that time during the month of March. We don't speculate. We don't try to anticipate, because then we would get into serious difficulty if we bought at a

Dr. GRONOUSKI. We don't want to make them the bank. Mr. HIGHTOWER. Is there a predictable fluctuation of the rate day to day within a month?

Mr. MARCHETTI. Very much so.
Mr. HIGHTOWER. Are we buying at the most propitious time?

Mr. MARCHETTI. We certainly are. We try to gear ourselves by sending the money now. The cash goes to Munich immediately, and they watch it on a daily basis. In fact we get the morning and afternoon quotations from the bank. They are ready to give us the best possible rate. They know we are purchasers. We are in business with them. So we constantly get the best rate available by the banks themselves trying to tell us when to purchase.

The same held when we purchased in the United States. We were getting three and four calls a day, and that was through the New York bankers coming down, and we always got the best rate. It might be only a pfennig, of course, but at the end of the year that is sizable on purchases totaling 116 million deutsche marks.

CONCLUSION

Mr. HIGHTOWER. Dr. Gronouski, we are very grateful to you and your staff for your presentation here this morning. It is good to see you again. We are delighted to have you in this position, and we hope that we can be as good to you as our constituents will let us. You understand that we are also reading our mail from home.

Dr. GRONOUSKI. Those Texans love us to broadcast to the Soviet Union and Eastern Europe.

Mr. HIGHTOWER. Thank you very much.
Dr. GRONOUSKI. Thank you, sir.

THURSDAY, MARCH 29, 1979.

INTERNATIONAL COMMUNICATION AGENCY

WITNESSES

JOHN D. REINHARDT, DIRECTOR
ALICE S. ILCHMAN, ASSOCIATE DIRECTOR FOR EDUCATION AND

CULTURAL AFFAIRS
R. PETER STRAUS, ASSOCIATE DIRECTOR FOR BROADCASTING
EVERETT KLEINJANS, PRESIDENT, EAST-WEST CENTER, INC.
STANLEY M. SILVERMAN, AGENCY BUDGET OFFICER, ICA

Mr. SLACK. We have a request of $737,000 for salaries and expenses and a request of $454,000 for salaries and expenses (Special Foreign Currency Program). Both of these requests are due to a decline in the value of the dollar in relation to foreign currencies. We also have a pay supplemental in the amount of $6,038,000.

We shall insert at this point in the record the details of these requests. [The information follows:)

INTERNATIONAL COMMUNICATION AGENCY

Summary of 1979 Exchange Rate Costs or Savings by Element

(in thousands)

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Overseas Missions

East Asia and Pacific
Africa
North Africa, Near East, and South Asia
American Republics
Wist Europe
Soviet Union and East Europe

Total, Overseas Missions

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Broadcasting Service

150

Administrative Support from Other Agencies

Total, Net Exchange Rate Costs Deduct Partial Absorption

Total, Appropriation Requirement

2,989
-2,252

737

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