Foreign Assistance: An Overview of U.S. Aid Agencies and Programs

CRS Report for Congress
Foreign Assistance: An Overview of
U.S. Aid Agencies and Programs
Larry Nowels
Foreign Affairs, Defense, and Trade Division
Summary
The Administration’s $16.1 billion FY2003 foreign assistance request is intended
to serve a wide range of U.S. foreign policy interests, including security, political,
economic, commercial, and humanitarian goals overseas. Congress annually
appropriates foreign aid funds in the Foreign Operations Appropriations, plus overseas
food aid in the Agriculture spending bill. Funds are channeled through about 40
appropriation accounts that are managed by four major Federal agencies, and several
independent organizations. This report provides a short description of each account,
organized by the appropriation bill structure, and spending amounts requested for
FY2003 and enacted for FY2002. It also illustrates the organizational structure of the
executive branch as regards foreign assistance programs and responsibilities.
Export and Investment Assistance
Export-Import Bank: The Export-Import Bank issues loan guarantees and insurance to
commercial banks that make trade credits available to American exporters. The Bank
also extends direct loans to U.S. businesses, especially those the confront subsidized trade
credits offered to foreign exporters by their governments. FY2003 request: $610 million
for administrative and subsidy appropriations. FY2002 appropriation: $800 million for
administrative and subsidy appropriations.
Overseas Private Investment Corporation (OPIC): OPIC offers political risk
insurance, guarantees, and investment financing to encourage U.S. firms to invest in
developing countries. FY2003 request: $64 million in administrative and subsidy
appropriations. FY2002 appropriation: $39 million in administrative appropriations.
Trade and Development Agency (TDA): The TDA finances feasibility studies and other
project-planning services for major development activities in developing countries, to
support economic development and to promote U.S. exports. FY2003 request: $45
million. FY2002 appropriation: $50 million.

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Bilateral Economic Assistance
U.S. Agency for International Development
Development Assistance: The U.S. Agency for International Development (USAID)
makes grants to developing country governments, non-governmental organizations, and
international agencies in support of the Agency’s four “pillar” strategic framework:
economic growth, agriculture, and trade; global health, democracy, conflict and
humanitarian assistance; and the Global Development Alliance. Although the
Administration has asked Congress to appropriate all development aid funding in one
account, during the past several years Congress has separated resources into two
appropriation accounts. The Development Assistance account funds programs
concerning agriculture, private sector development, education, environment, democracy
and governance, among others. FY2003 request: $2.859 billion, composed of $1.366
billion for Development Assistance and $1.494 billion for CSH programs. FY2002
appropriation: $1.178 billion for Development Assistance (see below for CSH).
Child Survival and Health Programs: Appropriations in the CSH account fund USAID
programs focused on combating infectious diseases such as HIV/AIDS, malaria, and
tuberculosis, maternal health, and family planning and reproductive health. The account
further includes U.S. contributions to UNICEF. FY2003 request: $1.494 billion, included
in the Development Assistance account (see above). FY2002 appropriation: $1.434.
International disaster assistance: The USAID Office of Foreign Disaster Assistance
aids nations struck by natural and manmade disasters and emergencies. FY2003 request:¹
$236 million. FY2002 appropriation: $382 million.
Transition Initiatives: USAID’s Office of Transition Initiatives (OTI) supports
programs in transition countries that are moving from war to peace, civil conflict to
national reconciliation, or where political instability has not yet erupted into violence and
where conflict mitigation might prevent the outbreak of such violence. FY2003 request:
$55 million. FY2002 appropriation: $50 million.
Development Credit Program: This account consists of funds for the administrative
costs of several USAID credit programs: Urban and Environmental (private loan
guarantees that finance shelter projects, including water and sanitation, home
improvement, and community facilities); Micro and Small Enterprise Development; and
the former Development Credit Authority. FY2003 request: $8 million. FY2002
appropriation: $8 million.
U.S. Agency for International Development (USAID) operating expenses: This
account funds the operational costs of USAID, the agency that administers most U.S.
bilateral economic assistance activities. FY2003 request: $572 million. FY2002
appropriation: $564 million.¹

¹ This program includes additional funds provided in the FY2002 emergency terrorism
supplemental appropriation (P.L. 107-38).

Capital Investment Fund: A new program for FY2003, this account would support
USAID construction overseas, with an emphasis on improving security and enhance
information technology. FY2003 request: $82 million. FY2002 appropriation: none.
USAID Office of Inspector General: Funding supports salaries and expenses of the
USAID’s IG office in its work to conduct audit and investigative operations. FY2003
request: $33 million. FY2002 appropriation: $32 million.
Other Economic Aid Programs
Economic Support Fund (ESF): Through the security-related ESF program, the United
States provides bilateral economic aid to countries of special importance to U.S. foreign
policy. Funding decisions are made by the State Department; programs are managed by
both USAID and the State Department. Israel and Egypt are the largest ESF recipients.¹
FY2003 request: $2.29 billion. FY2002 appropriation: $2.799 billion.
International Fund for Ireland: This activity supports the Anglo-Irish Accord and
efforts to spur economic and commercial development in Northern Ireland. FY2003
request: $25 million (within the ESF account). FY2002 appropriation: $25 million.
Eastern Europe and the Baltic States: Since 1990 USAID, under the guidance of the
State Department, has channeled most U.S. economic assistance to Eastern Europe
through this regional program. FY2003 request: $495 million. FY2002 appropriation:
$621 million.¹
Newly Independent States of the former Soviet Union: Through this regional program
launched in 1992, USAID, under the guidance of the State Department, extends economic
aid to Russia, Ukraine, Armenia, and other republics of the former Soviet Union. FY2003¹
request: $755 million. FY2002 appropriation: $831 million.
Inter-American Foundation (IAF): The IAF, an independent agency, finances small-
scale enterprise and grassroots self-help activities aimed at helping poor people in Latin
America. FY2003 request: $14 million. FY2002 appropriation: $13 million.
African Development Foundation (ADF): The ADF, an independent agency, finances
small-scale enterprises and grassroots self-help activities aimed at helping poor people
in Africa. FY2003 request: $17 million. FY2002 appropriation: $17 million.
Peace Corps: The Peace Corps sends U.S. volunteers to developing countries to provide
technical aid and to promote mutual understanding on a people-to-people basis. FY2003
request: $317 million. FY2002 appropriation: $279 million.
International Narcotics Control and Law Enforcement: This account funds
international counternarcotics activities. It also supports anti-crime programs, including
trafficking in women and children. FY2003 request: $197 million. FY2002
appropriation: $290 million.¹
Andean Counterdrug Initiative: This account, created in FY2000 as the Plan Colombia
account, supports a multi-year counternarcotics effort in the Andean region, providing

assistance for both interdiction and alternative development. FY2003 request: $731
million. FY2002 appropriation: $625 million.
Migration and Refugee Assistance: This program supports refugee relief activities
worldwide and in some cases, helps resettle refugees (primarily in Israel). FY2003
request: $705 million. FY2002 appropriation: $805 million.¹
Emergency Refugee and Migration Assistance (ERMA) Fund: ERMA holds funds
that can be drawn upon quickly in times of refugee emergencies. Appropriations
replenish resources to this account. FY2003 request: $15 million. FY2002
appropriation: $15 million.
Nonproliferation, Anti-terrorism, Demining, and Related programs: This account
funds a variety of State Department-managed activities aimed at countering weapons
proliferation and terrorism, and to promote demining operations in various developing¹
nations. FY2003 request: $372 million. FY2002 appropriation: $497 million.
Treasury Technical Assistance: Under this program, the United States supports
financial advisors to countries seeking help in implementing economic reforms. Most
recently, it has been used to address terrorist financing activities. FY2003 request: $10¹
million. FY2002 appropriation: $10 million.
Debt Restructuring: The Treasury Department manages this account that provides funds
to reduce, and in some cases forgive, debts owed to the U.S. by poor countries, especially
those in Africa and the small economies in Latin America and the Caribbean. In recent
years, funds have supported the U.S. commitment to the Heavily Indebted Poor Country
(HIPC) Initiative. FY2003 request: none. FY2002 appropriation: $229 million.
Military Assistance Programs
Foreign Military Financing (FMF) Program: FMF credits finance U.S. overseas arms
transfers on a grant basis. Israel and Egypt are the largest recipients of FMF credits.
FY2003 request: $4.107 billion. FY2003 appropriation: $3.695 billion.
International Military Education and Training (IMET): Through IMET, the U.S.
provides grant military training to selected foreign military and civilian personnel.
FY2003 request: $80 million. FY2002 appropriation: $70 million.
Peacekeeping Operations (PKO): This account provides U.S. efforts to promote
international support for voluntary multilateral efforts in conflict resolution. FY2003
request: $108 million. FY2002 appropriation: $355 million.
Multilateral Economic Assistance
World Bank: International Bank for Reconstruction and Development (IBRD):
Often called the World Bank’s “hard loan” window, the IBRD makes loans on near-
market terms to promote economic development primarily in middle-income countries,
based largely on bond sales. (No request pending.)

World Bank: International Development Association (IDA): As the World Bank’s
“soft loan” window, IDA lends at concessional rates to low-income countries. FY2003
request: $874.3 million. FY2002 appropriation: $792.4 million.
World Bank: International Finance Corporation (IFC): The IFC makes loans and
equity investments to promote growth of productive private enterprise in developing
nations. (No request pending.)
World Bank: Multilateral Investment Guarantee Agency (MIGA): MIGA
encourages private investment in developing countries by offering insurance against non-
commercial risks such as expropriation. FY2003 request: $3.6 million for paid-in capital,
plus a limitation of $14.8 million on callable capital. FY2002 appropriation: $5 million²
for paid-in capital, plus a limitation of $25 million on callable capital.
Global Environment Facility (GEF): Cosponsored by the UN Development Program,
the UN Environment Program and the IBRD, the GEF makes grants to help developing
countries deal with global environmental problems. FY2003 request: $177.8 million.
FY2002 appropriation: $100.5 million.
Asian Development Bank (ADB): The ADB finances economic development programs
in Asia and the Pacific, with near-market rate loans through its ordinary capital account,
and concessional loans to the regions’ poorest countries through its Asian Development
Fund (ADF) subsidiary. FY2003 request: $147.4 million for the ADF. FY2002
appropriation: $98 million for the ADF.
Inter-American Development Bank (IDB): The IDB promotes economic and social
development in Latin America and the Caribbean with near-market rate loans through its
ordinary capital account and concessional loans to the poorest nations through its Fund
for Special Operations (FSO). Another subsidiary, the Inter-American Investment
Corporation (IIC), makes loans and equity investments to promote the growth of private
enterprise. The IDB also administers the Enterprise for the Americas Multilateral
Investment Fund (MIF), a U.S. trust fund. The MIF provides technical and financial
assistance to help regional countries reform their investment policies in order to attract
foreign investment. FY2003 request: $30.4 million for the IIC and $29.6 million for the
MIF. FY2002 appropriation: $18 million for the IIC.
African Development Bank Group: The AfDB group is comprised of the African
Development Bank (AfDB) and the African Development Fund (AfDF). The AfDB lends
at near-market rates, with special emphasis on agriculture, infrastructure and industrial
development. FY2003 request: $5.1 million paid-in capital, plus a limitation of $79.6
million in callable capital. FY2002 appropriation: $5.1 million paid-in capital, plus a
limitation of $80 million in callable capital. The AfDF lends on concessional terms to

² Paid-in capital represents the amount Congress appropriates and the United States transfers to
MDBs as part of the U.S. contribution to these institutions. Callable capital is a commitment by
the U.S. to transfer additional resources in the event MDB borrowers default on loan repay-ments
or if the MDBs need, as a last resort, funds to repay their creditors. Callable capital does not
require appropriations and the MDBs have never made a call on this guarantee finance. Unless
otherwise noted, all figures represent paid-in capital.

low-income countries in sub-Saharan Africa. FY2003 request: $118.1 million. FY2002
appropriation: $100 million.
European Bank for Reconstruction and Development (EBRD): The EBRD lends at
near-market rates to help East European and former Soviet states adopt market
economies. Private sector and privatizing public sector firms receive substantial amounts
of EBRD lending. FY2003 request: $35.8 million paid-in capital, plus a limitation of
$123.2 million in callable capital. FY2002 appropriation: $35.8 million paid-in capital,
plus a limitation of $27.8 million in callable capital.
North American Development Bank (NADBank): The NADBank is governed by the
Unites States and Mexico as part of the North American Free Trade Agreement. It began
lending in 1996 to finance environmental infrastructure projects along the US/Mexico
border, as well as community adjustment and investment activities in both nations. (No
request pending.)
International Fund for Agricultural Development: IFAD is a multilateral financial
institution helping developing countries increase agricultural productivity and income,
improve nutritional levels, integrate into larger markets. FY2003 request: $15 million.
FY2002 appropriation: $20 million.
International Organizations and Programs: Besides assessed contributions made to
the United Nations and other organizations–payments funded outside the foreign aid
program–the United States voluntarily donates funds to international agencies involved
in a range of development, humanitarian, and scientific activities, including the UN
Development Program, the UN Environment Program, and U.N. Population Fund.
FY2003 request: $190 million (excluding UNICEF). FY2002 appropriation: $208.5
million.
Food Assistance (Agriculture Appropriations)
PL 480 (Food for Peace): Through titles II of PL 480, the United States provides
agricultural products on a grant basis to developing countries for emergency food relief
and continuing development efforts. FY2003 request: $1.185 billion. FY2002¹
appropriation: $930 million.
Table 1. U.S. Agencies Managing Foreign Aid Programs
^Defense^S^tate^USAID^T^reasury^Independent
^{FMF (w/State)}^{ESF (w/USAID)}^Developm^{ent aid}^W^o^{rld Bank Group}^Inter-Am^e^{r Dev Fd}
^IMET^{for. Soviet (w/AID)}^{Child Survival}^Inter-Am^e^{r Dev Bank}^{African Dev Fd}
^{E Europe (w/AID)}^{Credit Program}^s^{African Dev Bank}^{Peace Corps}
^{Narcotics Program}^{Disaster aid}^{Asian Dev Bank}^Export-Im^{port Bk}
^{Andean Initiative}^{ESF (w/State)}^{European Bank}^OPIC
^{Intl Organizations}^{for. Soviet}^{N Am}^{er Dev Bank}^{Trade & Dev Ag}

^{Refugee aid}^(w/State)^IFAD
^Peacekeeping^{E Europe (w/State)}^{Technical assistance}
^NADR^{PL480 food aid}^{Debt restructuring}