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Development Loan Fund (Liquidation Account) --Continued June 30, 1962, the undisbursed loan agreements amounted to $1,033.1 million. It is estimated that this balance will be decreased to $677.2 million in 1963 and to $252.8 million in 1964. Loan repayments and interest collections are to be credited with the U.S. Treasury and are not available for lending under the liquidation account. Loan repayments and interest earned totaled $51.4 million in 1962 and are scheduled to be $58.1 million in 1963 and $64.6 million in 1964. In 1962, un obligated foreign currencies of $64.4 million (in dollar equivalents) was transferred to the U.S. Treasury. $27.7 million reserved for guarantees and fee collections of $0.1 million were transferred to the Foreign Investment Guarantee Fund.

Assets-Continued
Loans receivable--Continued
Foreign currency loans repay-

able in foreign currencies in

dollar equivalents)-
Interest receivable:

In dollars.
In foreign currencies (in dollar

equivalents).
Other accounts receivable..
Furniture and fixtures, net.

Total assets..

1,847 2,659 3,198

3,517 4,861 8,086 9,666

11,598 2

119 2,019,542 1,955,564 1,929,969 1,903, 146

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Government equity:
Non-interest-bearing capital:
Start of year-

1,400,023 2,000,023 1,907,736 1,880,099 Appropriation..

600,000 Transfer of property out at no cost.

-122 Cash transfer to "Foreign in

vestment guarantee fund"
(75 Stat. 424).

-27,748
Reversion of foreign currency
assets to Treasury-

--64,417 -23,294 -24,300 Repayment of capital invest

ment to Treasury (loan re

payments)--End of year Retained earnings

2,000,023 1,907,736 1.880,099 1,851,025

19,225 47,751 49,870 52,121 Total Government equity.-- 2,019,248 1,955, 487 1,929,969 1,903, 146

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4,343_-4.774

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Analysis of Government Equity (in thousands of dollars)

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Revenue:
Dollars:

Interest on loans..
Fees on guarantees.-

Refund on expenses paid.
Foreign currencies in dollar equivalents):

Interest on loans
Interest on bank deposits..
Increase or decrease (-) in value of foreign

currencies.

Net operating income for the year 1
Non-operating income:

Proceeds from sale of foreign currencies..
Less net book value of assets sold..

Net gain from sales...

Net income for the year. Analysis of retained earnings:

Start of year. Retained earnings transferred to “Foreign in

vestment guarantee fund" (75 Stat. 424)

(guarantee fees) Payment of earnings to Treasury. Reversion of foreign currency earnings to Treasury --

Retained earnings, end of year.

1,306 1,301

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Total Government equity-.- 2,019,248 1,955,487 11,929,969 1,903,146

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1963 estimate

1

Foreign Investment Guarantee Fund

The investment guarantee program encourages and [Investment guarantees: For expenses authorized by section

facilitates participation by U.S. businesses in developing 222(f), $30,000,000, to remain available until expended.] (Foreign the economies of the underdeveloped countries. There Aid and Related Agencies Appropriation Act, 1963.)

are three statutory types of investment guarantees. First, Program and Financing (in thousands of dollars)

there are the specific risk guarantees which insure a U.S.

investor against loss from inconvertibility of the local cur1962

1964

rency, from expropriation or confiscation, or from war, actual

estimate revolution or insurrection. Second, there are the extended

risk guarantees through which up to 75% of an investProgram by activities:

ment may be insured against loss from any causes other Operating costs, funded:

than the investor's own misconduct or normally insurable Specific risk and development loan fund: Expense...

660

risks, such as fire and theft. Third, there is an extended Nonoperating expense.

3

risk guarantee available only for selected self-liquidating

pilot housing projects in Latin America. Total operating costs, funded..

663 Change in selected resources

Guarantees are available for investment in those coun

87,311 -2,270 Adjustment in selected resources (guarantee

tries whose governments have agreed with the Governobligations)

16,026 97,570

ment of the United States to institute the investment

guarantee program, and where there are suitable arrangeTotal obligations (object class 42)... 104.000 95,300

ments to protect the interests of the United States GovFinancing:

ernment in connection with assets or claims acquired as New obligational authority (appropriation).-

30,000

a result of having provided relief under a guarantee.

Substantial progress has been made in reaching these Revenues and other receipts:

agreements with countries that had previously not parRevenue: Fees collected..

2,302 5,000 9,000 Proceeds from sale of assets.

8

ticipated, particularly in Latin America. This program

is now instituted in 47 of the developing countries. Total revenue and other receipts.

2,310 5,000 9,000 A portion of the reserves available to discharge obligaUnobligated balance brought forward. 59,087 1,285 38,555 tions of the U.S. under investment guarantees is obligated Recovery of prior year obligations

16,774 97,570 Unobligated balance transferred from "Devel

each time a guarantee is issued. The fractional reserve, opment Loan Fund" (75 Stat. 424) (guar

initially authorized in 1956, has been lowered from 25% antees issued).

27,114

to 12% for specific risk guarantees and from 50% to 25% Unobligated balance carried forward (author

for extended risk guarantees following the suggestions of ization to expend from public debt receipts) -1,285-38,555 -47,555

the Appropriations Committees made during the hearings Financing applied to program..

104.000 95,300

on the Foreign Assistance and Related Agencies Appropri

ations Act, 1963. The 1962 amendments to the act 1 Balances of selected resources are identified on the statement of financial

placed the full faith and credit of the United States Govcondition.

ernment behind these guarantees. In light of this, the Summary of Sources and Application of Funds (in thou sands of dollars)

executive branch will propose substantive legislation this year to eliminate the practice of obligating a portion of the

reserve each time a guarantee is issued. No additional actual estimate estimate appropriations are being requested to increase the size of

the reserves for fiscal year 1964. Program by activities:

As of November 1962, total reserves available for all 1. Specific risk and development loan fund guarantees issued against loss due to

authorized investment guarantees exceeded $265,000,000. risks of:

The reserves are derived from (1) fee collections, (2) pro(a) Inconvertibility

219,614 140,000

ceeds of notes accepted by the Secretary of the Treasury, (b) Expropriation -

72,544 250,000 210,000 (3) transfers of former appropriations to the Development (c) War, revolution, and insurrection 14,500 50,000 120,000 (d) All-risks transferred to foreign in

Loan Fund obligated behind Development Loan Fund vestment guarantee fund from

guarantees, (4) recovery of subrogated assets after paythe development loan fund (75

ment of claims, and (5) fiscal year 1963 appropriations of Stat. 424)

59,996

$30 million. It is contemplated that since guarantees 2. Extended risk guarantees issued.

110,000 180,000 3. Housing, Latin America, guarantees issued.

60,000 90,000

are obligations of the general credit of the United States,

that amount will suffice to handle any claims that might Total guarantees issued..

366,654 610,000 770,000 reasonably be anticipated to mature before a suppleLess amount not obligated under fractional re

mental appropriation could be obtained from the Congress serve basis..

262,654 514,700 770,000

to restore the liquidity of the program. Total obligations.

104,000 95,300

Because of the recent and rapid increase in the use of Obligations (from program and financing)

investment guarantees, the following increases in the au

104,000 95,300 Increase (-) or decrease in gross unpaid obli

thority to issue investment guarantees are requested: gations, net..

-87,314 2,270

(a) Specific risks.--Inconvertibility, expropriation, war, Unpaid obligations transferred from "Develop

revolution and insurrection-$1.2 billion. This will ment Loan Fund” (75 Stat. 424)

748

allow outstanding specific risk guarantees to amount to Adjustment in recovery of prior year obligations -16,774 -97,570

$2.5 billion (the present such authority is $1.3 billion). Gross expenditures.

660

(b) Extended risk.--For general projects, $120 million.

This will allow $300 million in outstanding extended Revenues and other receipts (from program and financing)---

risks guarantees (the present such authority is $180 2,310 5,000 9,000

million). Budget expenditures.

-1.650
-5,000 -9,000

(c) Extended risk.--For Latin American housing projects, $90 million. This will allow $ 150 million in out

1962

1963

1964

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FOREIGN ASSISTANCE-Continued

Position With Respect to Issuing Authority (in thousands of

1962 actual

e

ECONOMIC ASSISTANCE-Continued

Public enterprise funds-Continued

3. Housing, Latin America, guarantee program:

Authorized guarantee issuing authority. 10,000

New authorization..
LOAN AND GUARANTEE PROGRAMS-continued

Proposed new authorization..
Foreign Investment Guarantee Fund_Continued

Total authorized guarantee issuing au-
thority.

10,000

Housing, Latin America, guarantees issued... standing housing guarantees (the present ceiling is $60 million).

Unused guarantee issuing authority.... 10,000 Operating costs and administration.-Several claims have been paid out of reserves. The more substantial of

Analysis of Guarantees Outstanding (in thousands of these was the amount of $650,000 paid pursuant to a Development Loan Fund all-risk guarantee. A lesser Specific risk and Development Loan Fund claim in the amount of $9,922 was paid pursuant to an guarantee program: inconvertibility guarantee for an investment in the Total guarantees issued..

973,849 1,4

Less: Recoveries of prior year guarantee Congo. A subsequent claim is being processed for that

issuing authority (cumulative).

-178,056 same investment, and until the foreign exchange position of the Congo improves, the claim can be anticipated to Total guarantees outstanding

795,793 1,2 continue to recur. It should be pointed out in connection

Extended risk guarantee program: with the inconvertibility claim, that the Congo francs

Total guarantees issued acquired by the U.S. pursuant to the investment guarantee Less: Recoveries of prior year guarantee have been used by the U.S. so that the net loss with respect issuing authority (cumulative) to the payment of $9,922 was $1,823. It is anticipated that claims will increase, because investment guarantees

Total guarantees outstandingsince 1959 have been issued only for investments in the

Housing, Latin America, guarantee program: less developed countries. In 1962 $366.6 million in

Total guarantees issued.. specific risk guarantees were issued. It is estimated that Less: Recoveries of prior year guarantee $440 million and $500 million will be issued in 1963 and issuing authority (cumulative). 1964, respectively. It is estimated that extended risk

Total guarantees outstanding -guarantees will increase from $170 million in 1963 to $270 million in 1964. Administrative expenses to date have Total guarantee program; been paid from funds appropriated for the general admin

Total guarantees issued.

973,849 1,5

Less: Recoveries of prior year guarantee istrative expenses of the economic assistance programs.

issuing authority (cumulative).

-178,056 -1

Grand total guarantees outstanding

795,793 1,3

Position With Respect to Issuing Authority (in thousands of dollars)

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Specific risk and Development Loan Fund

guarantees issued:
Revenue..
Expense!

2,299 -660

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56.

1. Specific risk and Development Loan Fund

guarantee program: Authorized guarantee issuing authority. 11,000,000 1,000,000 1,300,000 New authorization....

300,000 Proposed new authorization..

1.200,000 Total authorized guarantee issuing authority.

1,000,000 1,300,000 2,500,000 Recovery of prior year guarantee issuing authority (cumulative).

178,056 198,556 219,056 Gross guarantee issuing authority. 1,178,056 1,498,556 2,719,056 Specific risk and Development Loan Fund guarantees issued

973,849 1,413,849 1,913,849 Unused guarantee issuing authority.... 204,207 84,707 805,207 2. Extended risk guarantee program:

Authorized guarantee issuing authority. 90,000 90,000 180.000
New authorization ---

90,000 Proposed new authorization..

120,000 Total authorized guarantee issuing authority...

90,000 180.000 300,000 Extended risk guarantees issued.

110,000 290,000 Unused guarantee issuing authority.-- 90,000 70,000 10,000

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1.285 38.55 | 47,555

1 Balances of selected resources are identified on the statement of financial Assets:

condition. Treasury balance..

7,079 36,591 | 71,588 80,588

Summary of Sources and Application of Funds (in thousands of dollars) Liabilities: Undistributed credits.... 3

1962 1963 1964

actual estimate estimate
Government equity:
Non-interest bearing capital:
Start of year.

27,748 57,748
Obligations (from program and financing)

6,300 8,660 Cash transferred from "Development

Increase (-) in gross unpaid obligations.

-952 -222 loan fund (75 Stat. 424).

27,748 Appropriations

30,000
Gross expenditures ---

5,348 8,438 End of year.

27,748 57,748 57,748

Revenues and other receipts (from program
Retained earnings..

7,079 8,840 13,840 22,840
and financing).

5,835 7,980 Increase (-) in accounts receivable, net.

-729 -271 Total Government equity-7,079 36,588 71,588 80,588 Applicable receipts.....

5,106 7,709 Budget expenditures.-

242 729 Analysis of Government Equity and Undrawn Authorizations (in thousands of dollars)

As an addition to established programs in the Agency Undisbursed guaranteed obligations ? 147,064 234,375 232,105 232, 105

for International Development for acquisition and utilizaUnobligated balance

59,087

tion of excess personal property, section 608 of the Foreign Invested capital and earnings.

Assistance Act of 1961 created a revolving fund to provide Subtotal... 206,151 235,660 270,660 279,660

for more effective use by the Agency for International Less undrawn authorizations...

199,072 199,072 199,072 199,072

Development of U.S. Government-owned domestic and

foreign excess property in foreign assistance programs by Total Government equity--- 7,079 36,588 71,588 80,588 authorizing such property to be acquired and renovated in

advance of specifically known requirements for country Guarantees outstanding net of those expired, reduced or ter minated are as programs. This includes many types of excess property, follows: Actual 1961, $482,381 thousand; actual 1962. $795.793 thousand; estimate 1963, $1,385,293 thousand; estimate 1964, $2,134,793 thousand.

such as tractors, construction and roadbuilding equipment, machinery, and machine tools, the general needs for which can be anticipated with a high degree of certainty. Costs

include accessorial charges only, i.e., transportation, Intragovernmental funds:

renovation, storage, packing, crating and handling, paid

initially from a revolving fund established for the purpose ADVANCE ACQUISITION OF PROPERTY-REVOLVING FUND in 1962 and subsequently charged to the recipient governProgram and Financing (in thousands of dollars)

ment or program. Proceeds from these charges are deposited to the credit of the revolving fund. The law

limits the value of domestic excess property which may be actual estimate estimate held at any one time to $15 million in total original

acquisition value. There is no legal limit with respect to Program by activities:

the value of foreign excess property which may be held Operating costs, funded (at accessorial costs):

at any one time. No addition to the revolving fund is 1. Disaster relief equipment.

201 186 2. Other excess equipment.

5,634 7,794 proposed.

Seven domestic marshalling sites have been established, Total operating costs, funded.

5,835 7,980 primary sites being located at Schenectady, N.Y.; MemChange in selected resources -

465 680

phis, Tenn.; and Stockton, Calif. Four foreign marshalling Total obligations (object class 25).

6.300 8,660 sites are being established, two of which are to be located

in Europe and two in the Far East.

1962

1963

1964

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Inventory at end of year:

Analysis of Government Equity (in thousands of dollars) Acquisition value...

2,600 6,000 Cost to revolving fund.

186 406 Foreign program:

Unobligated balance...

5,000 4,535 3,855 Value of equipment:

Invested capital...

465 1,145 Acquisitions.

26,700 38,400 Dispositions.

19,800 28,400
Total Government equity---

5,000 5,000 5.000 Net acquisitions...

6,900 10,000

1 Changes in selected resources are reflected on the program and financing

schedule. Gross obligations..

3,300 4,760 Revenue...

3,021 4,300

OFFICE OF INSPECTOR GENERAL, FOREIGN ASSISTANCE, STATE Net obligations..

279 460

Program and Financing (in thousands of dollars) Inventory at end of year:

1962

1963 1964 Acquisition value. 6,900 16,900

actual estimate estimate Cost to revolving fund.

279 739 Total program: Value of equipment:

Program by activities: 48,400 66,600

739

Inspections (obligations) Acquisitions..

825 890 Dispositions.

38,900 53,200

Financing:
Net acquisitions.

9,500
13,400

Advances and reimbursements from other
accounts.--

739 825 890 Gross obligations.

6,300 8,660 Revenue...-

5,835 7,980

Under authorities specified in section 624(d) of the Net obligations.

465 680

Foreign Assistance Act of 1961, as amended (75 Stat. Inventory at end of year:

424), the Inspector General, Foreign Assistance, has broad Acquisition value..

9,500 22,900 responsibilities relating to the review of the effectiveness Cost to revolving fund.

465

1,145 of U.S. foreign assistance activities, including economic End of year Treasury balance.

4,758 4,029

and military assistance programs, and Peace Corps and

overseas Public Law 480 activities. The expenses of the Revenue, Expense, and Retained Earnings (in thousands of dollars) Office are funded in this account through expenditure

1963

transfers from various Foreign Assistance and Peace Corps

1964 actual estimate estimate appropriations. Requirements from the various appro

priations are as follows (in thousands of dollars): Disaster relief equipment: Revenue: Proceeds from sale of fixed assets

1962 actual 1963 estimate 1964 estimate (at accessorial costs)-

201

186
Development loans

169

210) Expense: Accessorial costs on fixed assets 1.

201
186 Supporting Assistance.

190

155 Development grants...

150

100 Net operating income or loss (-), dis

Military assistance...

230
200

890 aster relief equipment.--.

Alliance for Progress-grants.

35 Alliance for Progress-loans.

100 Other excess equipment:

Peace Corps.

25) Revenue: Proceeds from sale of fixed assets (at accessorial costs)

5,634 7,794

Object Classification (in thousands of dollars) Expense: Accessorial costs on fixed assets 1 5,634 7,794

1962 Net operating income or loss (-), other

actual estimate estimate excess property-

11. Personnel compensation: Net income for the year..

Permanent positions.-

474 521 567 Positions other than permanent..

24

44 Other personnel compensation..

40 1 Administrative expenses for advance acquisition of property are to be financed

4 by the regular appropriation for administrative expenses of the Agency for International Development.

Total personnel compensation.

538 565 615

1962

1963

1964

44

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