MUTUAL DEFENSE AND DEVELOPMENT-Con. Public enterprise funds-Continued Revenue, Expense, and Retained Earnings (in thousands of dollars) Revenue... Net income for year.. Development Loans-Revolving Fund-Continued The Foreign Assistance Act of 1961 authorized a 5-year, Expense. $7.2 billion program of development loans to be administered by the new Agency for International Development. This program replaced the Development Loan Fund corporation, which was abolished November 3, 1961. $773.7 million was appropriated for development loans in 1965 and $780.3 million is proposed for 1966. Development loans are repayable in U.S. dollars. Under the provisions of the Foreign Assistance Act of 1964, interest charged on all loans, with the exception of those covered by special provisions relative to the use of the facilities of the International Development Association and those funds already committed to be loaned, will be at an interest rate of not less than 22% per annum. Loan repayments must begin not later than 10 years following the date on which the funds are lent. During the initial 10-year period the rate of interest shall not be lower than 1% per annum. Financial Condition (in thousands of dollars) Assets: Total assets. Government equity: End of year.. Retained earnings. -9,600 74,564 30,000 25,000 1,897,300 2,659,164 3,453,292 4,258,542 1,141 6,502 18,156 40,074 Total Government equity...1,898,441 2,665,666 3,471,448 4,298,616 Analysis of Government Equity (in thousands of dollars) Development loans are made to promote the economic development of less-developed countries and areas, usually to assist in financing long-range development plans and programs. Before a loan is made, the Agency for International Development must take into account (1) whether financing could be obtained in whole or in part from other free world sources on reasonable terms, including private sources within the United States, (2) the economic and technical soundness of the activity to be financed, including the capacity of the recipient country to repay the loan at a reasonable rate of interest, (3) whether the activity gives reasonable promise of contributing to the development of economic resources or to the increase of productive capacities, (4) the consistency of the activity with, and its relationship to, other development activities being undertaken or planned, and its contribution to realistic long-range objectives, (5) the extent to which the recipient country is demonstrating its determination to take effective self-help measures, and (6) possible effects upon the economy of the United States. Development loans are not made unless there is a finding of a reasonable prospect 04-10-4103-0-3-152 of repayment. Additional loan criteria and standards are established by an interagency Development Loan Committee chaired by the Administrator of the Agency for International Development. Undisbursed loan obligations 1. Invested capital and earnings. 897,569 1,171,464 1,280,070 1,391,820 588,466 510,706 468,140 428,391 412,406 983,496 1,723,238 2,478,405 Total Government equity... 1,898,441 2,665,666 3,471,448 4,298,616 Development Loan Fund (Liquidation Account)—Continued The Development Loan Fund was established as a corporation by the Mutual Security Act of 1958 to extend loans, credits, and guarantees to American or foreign individuals, businesses, financial institutions, or foreign governments in order to provide capital for projects and programs contributing to the economic growth of friendly less-developed countries. Under the Foreign Assistance Act of 1961, the Development Loan Fund Corporation was abolished and its functions were transferred, effective November 3, 1961, to the Agency for International Development. As of that date, the Fund had approved 217 loans and allocations and 3 guarantees for development assistance in 50 countries amounting to $2,008.5 million. Of this total, 203 loans and guarantee agreements had been signed totaling $1,887.3 million of which $632.9 million was actually disbursed, leaving $1,254.8 million in undisbursed loan and guarantee agreements still outstanding. In addition, the Fund had $120.8 million unobligated funds outstanding to provide for approved but unsigned loans. Approximately 24% of all loans were repayable in dollars and 76% in foreign currencies. A total of $2 billion was appropriated to the Fund, in addition to which receipts from operations totaling approximately $15.5 million was available including $5.8 million realized from foreign currency receipts sold to the U.S. Treasury for dollars. Subsequent to November 3, 1961, the Fund has remained open for the purpose of liquidating outstanding obligations and approved but unsigned loans. As of June 30, 1964, the undisbursed loan agreements amounted to $391.6 million. It is estimated that this balance will decrease to $236.1 million in 1965 and to $57.8 million in 1966. Loan repayments and interest earned totaled $124.6 million in 1964, and are scheduled to total $150.7 million in 1965 and $178.9 million in 1966. Total Government equity.... 1,932,911 1,778,029 |1,671, 1 The changes in these items are reflected on the program and fina Analysis of Foreign Currency Transactions (in thousands Foreign Investment Guarantee Fund Program and Financing (in thousands of dollars) 1964 actual 1965 1966 estimate estimate 500 extended risk guarantees available for self-liquidating pilot or demonstration housing projects in Latin America to stimulate private home ownership for middle and lowermiddle income families. These projects are of a type similar to those insured by the Federal Housing Administration and suitable for conditions in Latin America. Guarantees are available for investment in those countries whose governments have agreed with the Government of the United States to institute the investment guarantee program, and where there are suitable arrangements to protect the interests of the U.S. Government in 500 connection with assets or claims acquired as a result of having provided relief under a guarantee. Continued progress has been made in reaching these agreements with countries that had previously not participated, particularly in Africa. Guarantees are available in 61 of the developing countries. -9,500 -117,843-199,072-199,072 -74,191-82,352 199,072 199,072 199,072 500 -9,500 -8,161 -9,000 80 -8,241 161 -161 -4,831 74.98 Obligated balance, end of year.. -8,000 -9,000 All guarantees are backed by the full faith and credit of the United States. As of June 30, 1964, total reserves available for all authorized investment guarantees was $273,263 thousand. That amount is expected to suffice to handle any claims that might reasonably be anticipated to mature before a supplemental appropriation could be obtained from the Congress to restore the liquidity of the program. The current status and requested increase in statutory authorizations for specific risk, extended risk, and Latin American housing programs are indicated below. (a) Specific risk.-In order to meet a rising demand for coverage, an increase in authority of $2.5 billion is requested in 1966. The presently authorized level is $2.5 billion. (b) Extended risk.-No increase above the $300 million ceiling presently available will be requested for 1966. (c) Extended risk.-For Latin American housing projects, a 2-year increase in authority of $100 million is requested in 1966 to allow a cumulative total of $350 million in outstanding housing guarantees. (The present -9,500 ceiling is $250 million.) 500 The investment guarantee program encourages and facilitates participation by U.S. businesses in developing the economies of the underdeveloped countries. There are three statutory types of investment guarantees. First, there are the specific risk guarantees which insure a U.S. investor against loss from inconvertibility of the local currency, from expropriation or confiscation, or from war, revolution, or insurrection. Second, there are the extended risk guarantees through which up to 75% of an investment may be insured against loss from any causes other than the investor's own misconduct or normally insurable risks, such as fire and theft. Third, there are Operating costs and administration.-The value of guarantees issued is as follows (in thousands of dollars): |