DEVELOPMENT LOANS-REVOLVING FUND Development loans: For expenses authorized by section 202(a), [$435,000,000] $765,000,000, together with such amounts as are authorized to be made available for expenses under section 203, all such amounts to remain available until expended: Provided, That this appropriation shall be available without regard to the provisions of section 205 of the Foreign Assistance Act of 1961, as amended, and the President, after consideration of the extent of additional participation by other countries, may make available, on such terms and conditions as he determines, not to exceed 10 per centum of this appropriation to the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, or the Asian Development Bank for use pursuant to the laws governing United States participation in such institutions, if any, and the governing statutes thereof, and without regard to section 201 or any other requirements of the Foreign Assistance Act of 1961, as amended]. (Foreign Assistance and Related Agencies Appropriation Act, 1968.) Program and Financing (in thousands of dollars) Capital outlay, funded: 04-10-4103-0-3-152 Program by activities: 1. Loans to less developed countries.. 2. Interest capitalized............ This program replaced the Development Loan Fund corporation, which was abolished November 3, 1961. A total of $500 million was appropriated for development loans in 1967, $435 million in 1968, and $765 million is proposed for 1969. Development loans are repayable in U.S. dollars. 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 2% per annum. Loan repayments must begin not later than 10 years following the date on which the funds are lent. During the initial 10year period the rate of interest shall not be lower than 2% per annum. 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 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 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. Additional loan criteria and standards are established by an interagency Development Loan Committee chaired by the 658, 183 630,560 690,434 -23,081 -30,360 -40,434 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. Subsequent to that date, the Fund has remained open for the purpose of liquidating outstanding obligations. As of June 30, 1967, the undisbursed loan agreements amounted to $108 million. It is estimated that this balance will decrease to $56.3 million in 1968 and to $8.5 million in 1969. Loan repayments and interest earned totaled $158.8 million in 1967 and are scheduled to total $149.6 million in 1968 and $151.5 million in 1969. Revenue, Expense, and Retained Earnings (in thousands of dollars) 1 Balance of selected resources are identified on the statement of financial condition. Effective 1967, accounting for this fund was changed from cash to cost accrual. Adjustment is necessary to reflect that $3,674 thousand in fees received in 1966 are applicable to the 1967 period. The remaining balance of $1,040 thousand is a regular adjustment to fee income overstated in the prior year. Guarantee programs encourage and facilitate private U.S. investments abroad which further the economic progress of developing countries. Guarantees are available only for new investments. Three investment guarantee programs are authorized: 1. Specific political risk guarantees against (a) inconvertibility of foreign currency, (b) loss by expropriation or confiscation, and (c) loss due to war, revolution, or insurrection; 2. Extended risk guarantees which cover up to 75% of both political and business risks; and 3. Extended risk guarantees covering up to 100% of losses on certain housing projects and investments in credit unions. Except for Latin America housing guarantees, guarantees are available only for investment in countries whose governments have agreed with 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 connection with assets or claims acquired as a result of having provided relief under a guarantee. Agreements have been signed with 80 developing countries. As of June 30, 1967, this program had total unused reserves of $297,043,569. Included in this total was $199,071,521 in borrowing authority to expend from public debt receipts. The borrowing authority provision was rescinded by action of the 90th Congress. As a result, the reserves to be continued available from 1967 have been reduced to $97,972,048. Since all guarantees are backed by the full faith and credit of the United States, this revised 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. Specific risk. As of June 30, 1967, the ceiling on guarantee issuing authority was $7 billion; an increase to $8 billion was authorized in the Foreign Assistance Act of 1967 for 1968; a further increase to $9 billion is requested for 1969. Extended risk.-As of June 30, 1967, the ceiling was $375 million; this was increased to $475 million in the Foreign Assistance Act of 1967; a further increase of $235 million to $710 million is requested for 1969. Latin American housing.-As of June 30, 1967, the ceiling was $450 million; in the Foreign Assistance Act of 1967 this was increased to $500 million which is considered adequate to meet any demands through 1969. The value of gross contracts issued under the three programs is as follows (in thousands of dollars): |