(1) by inserting "The Director of the International Communication Agency (hereinafter referred to as the Director)" in lieu of "The President" in subsection (a) and by inserting "Director" in lieu of "President" wherever else it appears therein; (2) in subsection (c) by striking out "the fiscal year 1977, $25,000,000 and", and by inserting "and for the fiscal year 1979, ," immediately after "1978, $25,000,000;" $ (3) in subsection (d) by striking out "1977 and 1978, $7,000,000" and by inserting in lieu thereof "1978 and 1979 $ (4) by striking out subsection (e); and (5) by redesignating subsection "(f)" as "(e)”. Purpose Subsection (b) (1) amends FAA section 214, which is left unrepealed by the bill. Section 214 is the American Schools and Hospitals Abroad (ASHA) program. This amendment would place ASHA under the authority of the Director of the International Communication Agency and would authorize funds for fiscal year 1979. It also deletes subsection (e), and outdated reporting requirement. Background The International Communication Agency, which has other international educational responsibilities, is a more appropriate organizational place for the ASHA program than the administration. However, for fiscal year 1979, funds will be authorized for ASHA under this bill. Thereafter, funds for ASHA should be requested and considered with the authorization request for other ICA programs. PROVISIONS OF THE FOREIGN ASSISTANCE ACT OF 1961 AS AMENDED ("FAA”) OMITTED FROM THE INTERNATIONAL DEVELOPMENT COOPERATION ACT OF 1978 (THE "BILL") AND REASONS THEREFOR This lists provisions of the FAA omitted from the bill, and gives the reasons therefor. This listing covers omitted sections and subsections. This does not list sections the substance of which has been transposed from the FAA to the bill, but within which omissions or revisions may have occurred. Text SECTION 108 SEC. 108. APPLICATION OF EXISTING PROVISION.-Assistance under this chapter shall be furnished in accordance with the provisions of titles I, II, or X of chapter 2 of this part, and nothing in this chapter shall be construed to make inapplicable the restrictions, criteria, authorities, or other provisions of this or any other act in accordance with which assistance furnished under this chapter would otherwise have been provided. Purpose This section requires that assistance furnished under the functional accounts of the FAA (chapter 1 of part I) must be furnished in accordance also with the provisions of law applicable to the former development grant and development loan categories of assistance (or the authority for population assistance), as the case may be. Background Section 108 was added in 1973, when the functional accounts, sections 103-107, were added to the FAA. Conclusion The new bill requires no such provision as FAA section 108 since the authorizations for assistance, and restrictions which affect them, are presented in an integrated fashion. Text SECTION 111 SEC. 111. DEVELOPMENT AND USE OF COOPERATIVES.-In order to strengthen the participation of the rural and urban poor in their country's development, high priority shall be given to increasing the use of funds made available under this Act for technical and capital assistance in the development and use of cooperatives in the less developed countries which will enable and encourage greater numbers of the poor to help themselves toward a better life. Not less than $10,000,000 of the funds made available under this Act for the fiscal year 1978 may be used for technical assistance to carry out the purposes of this section. Purpose This provision requires that high priority be given to increasing the use of funds made available under the FAA for technical and capital assistance in the development and use of cooperatives in developing nations. It also earmarks $10 million of the funds available under the FAA in fiscal year 1978 solely for technical assistance to cooperatives. Background Section 111 was originally enacted in 1973 to give increased emphasis to the use of cooperatives in development. The policy statement was strengthened in 1975 and $20 million was earmarked for support of cooperatives in fiscal year 1976 and fiscal year 1977. The section was amended again by section 107(a) of the International Development and Food Assistance Act of 1977 to encourage the provision of capital as well as technical assistance to cooperatives and to provide for the use of not less than $10 million in fiscal year 1978 only for technical assistance to carry out the purposes of the sections. Section 601(a) of the bill contains a congressional finding that the participation of the rural and urban poor in development can be effectively assisted and accelerated through an increase in activities planned and carried out by private voluntary organizations and cooperatives. Section 601(b) restates to policy of FAA section 111 of giving high priority to programs of technical and capital assistance for development of cooperatives in developing countries. Conclusion FAA section 111 is substantially included in the new section 601 and accordingly is no longer needed. Text SECTION 201 SEC. 201. GENERAL AUTHORITY.-(a) The President shall establish a fund to be known as the "Development Loan Fund" to be used by the President to make loans pursuant to the authority contained in this title. (b) The President is authorized to make loans payable as to principal and interest in United States dollars on such terms and conditions as he may determine, in order to promote the economic development of less developed friendly countries and areas, with emphasis upon assisting long-range plans and programs designed to develop economic resources and increase productive capacities. In so doing, the President shall 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 in furtherance of the purposes of this title, (4) the consistency of the activity with, and its relationship to, other development activities being undertaken or planned, and its contribution to realizable long-range objectives, (5) the extent to which the recipient country is showing a responsiveness to the vital economic, political, and social concerns of its people, and demonstrating a clear determination to take effective self-help measures, (6) the possible effects upon the United States economy, with special reference to areas of substantial labor surplus, of the loan involved, (7) the degree to which the recipient country is making progress toward respect for the rule of law, freedom of expression and of the press, and recognition of the importance of individual freedom, initiative, and private enterprise, (8) the degree to which the recipient country is taking steps to improve its climate for private investment, and (9) whether or not the activity to be financed will contribute to the achievement of self-sustaining growth. Loans shall be made under this title only upon a finding of reasonable prospects of repayment. Funds made available under this title, except funds made available pursuant to section 205, shall not be used to make loans in more than twenty countries in any fiscal years. (c) The authority of section 610 may not be used to decrease the funds available under this title, nor may the authority of section 614(a) be used to waive the requirements of this title. (d) Funds made available for this title shall not be loaned or reloaned at rates of interest excessive or unreasonable for the borrower and in no event shall such funds (except funds loaned under section 205 and funds which prior to the date of enactment of the Foreign Assistance Act of 1968 were authorized or committed to be loaned upon terms which do not meet the minimum terms set forth herein) be loaned at a rate of interest of less than 3 per centum per annum commencing not later than ten years following the date on which the funds are initially made available under the loan, during which ten-year period the rate of interests shall not be lower than 2 per centum per annum, nor higher than the applicable legal rate of interest of the country in which the loan is made. (e) In carrying out this title, the President shall not allocate, reserve, earmark, commit, or otherwise set aside, funds aggregating in excess of $100,000 for use in any country under this title unless (1) an application for such funds has been received for use in such country together with sufficient information and assurances to indicate reasonably that the funds will be used in an economically and technically sound manner, or (2) the President determines with respect to each such allocation, reservation, earmarking, commitment, or set-aside that it is in the national interest to use such funds pursuant to multilateral plans. (f) No assistance shall be furnished under this title for a project unless the President determines that such project will promote the economic development of the requesting country, taking into account the current human and material resource requirements of that country and the relationship between the ultimate objectives of the project and the overall economic development of the country, and that such project specifically provides for appropriate participation by private enterprise. Purpose Section 201 requires the President to establish a development loan fund (DLF) through which development assistance loans are to be made. Section 201 contains six subsections, the first of which authorizes loans. Subsection (b) requires DLF loans to be repaid in U.S. dollars and authorizes the President to make DLF loans to promote economic development of less-developed friendly countries and areas, provides 9 criteria to be taken into account in making loans, requires a finding of reasonable prospects of repayment before the loan is made, and limits the number of borrowers to twenty in any fiscal year (not applicable to Alliance for Progress loans or loans to regional programs). Subsection (c) provides that DLF funds may not be decreased by use of section 610 nor may requirements be waived by use of section 614(a). Subsection (d) prohibits the loaning or reloaning of DLF funds at rates of interest excessive or unreasonable for the borrower. A minimum interest rate of 2 percent per year for the first 10 years of the loan and 3 percent thereafter, and a maximum rate pegged at the maximum legal rate in the borrowing country, are established by 'subsection (d). The minimum rates are intended to maximize the dollars returned to the United States (for balance-of-payments reasons) and to reduce the disparity between the costs of U.S. borrowing and the receipt of interest on U.S. loans, while not making the loans so costly that the contribution of the DLF financial assistance to the development of the host country is reduced. Subsection (e) prohibits the earmarking of DLF funds for projects unless advance notice and description of the use is given or the President determines it in the national interest to use such funds pursuant to multilateral plans. Subsection (f) prohibits DLF assistance unless the President determines the project will promote the economic development of the borrowing country and only after account is taken of the relationship of the project to the country's resources and overall economic development and providing for appropriate participation by private enterprise in the project. Background A predecessor DLF was established by section 6 of the MSA of 1957. The current section 201 was enacted as part of the FAA of 1961. All but one of the criteria (No. 8) in subsection (b) originated in the Senate Committee on Foreign Relations. The 20-country limitation originated in the committee of conference, as did the limitation on reloaning within the recipient country. The 2-percent minimum interest rate also came out of the committee of conference. Subsequently, section 102 of the FAA of 1962 added subsection (e) and other amendments of a technical nature have been made. The bill does not include an authorization for the DLF, but provides general authority for the Administrator to make loans "payable on such terms and conditions as he may determine, in order to promote the economic development of developing countries with emphasis upon long-range plans and programs." The minimum and maximum loan terms remain the same as in the FAA. The bill carries over five of the nine lending criteria nearly verbatim in section 765 (c). The ninth criteria in the present FAA is broadened (No. 5 in section 765 (c) of the bill) to include mention of an equitable distribution of benefits. The following do not appear in section 765 (c) but appear in the bill in another form: Criteria (3) (whether activity gives promise of contributing to the development of economic resources or to increase in productive capacities); criteria (5) (extent borrower showing responsiveness to economic, political, social concern, and willingness to take self-help measures); criteria (7) (degree of progress toward rule of law, free expression, recognition of individual freedom, private enterprise, which is included in section 767); and criteria (8) (degree to which borrower improving climate for private investment). It should be noted that section 201 was not interpreted to apply to countries in the Alliance for Progress or to required programs which had the effect of expanding the number of countries eligible to receive loan funds beyond the 20-country limitation. Conclusion The major provisions of section 201 are carried forward into the bill. Five of the nine lending criteria which appear in the FAA are incorporated in the bill, and the remaining criteria appear either in the general policy or in the prohibitions sections of the bill. Therefore, section 201 is no longer necessary. Text SECTION 202 SEC. 202. AUTHORIZATION.-(a) There is hereby authorized to be appropriated to the President for the purposes of this title $685,000,000 for the fiscal year 1967, $450,000,000 for the fiscal year 1968, $350,000,000 for the fiscal year 1969, $350,000,000 for the fiscal year 1970, 23-347-78- -12 |