Former Soviet Union: Creditworthiness of Successor States and U.S. Export Credit Guarantees
GGD-95-60
Published: Feb 24, 1995. Publicly Released: Mar 24, 1995.
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Highlights
Pursuant to a congressional request, GAO reviewed the creditworthiness of the former Soviet Union (FSU) and its successor states in the context of the Department of Agriculture's (USDA) Office of the General Sales Manager (GSM)-102 Export Credit Guarantee Program, focusing on: (1) the countries' general economic and political environment; (2) the relationship between the Soviet debt crisis and Soviet economic reform and creditworthiness; (3) how assessments of creditworthiness and market considerations affect USDA decisions on providing credit guarantees; and (4) the GSM-102 portfolio's exposure to default by FSU and its successor states.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| To reduce future exposure of the GSM-102 portfolio to default, Congress may wish to consider limiting the total amount of credit guarantees that can be issued each year to high-risk countries and the amount that can be provided to any single high-risk country. | Congress did not address this matter in the export title of the 1996 farm bill. | |
| Congress may wish to consider: (1) amending the statutory provision that precludes the Commodity Credit Corporation (CCC) from charging a fee in excess of 1 percent of the amount of the credit guarantee; and (2) requiring CCC to include a risk-based charge as part of its overall fee for GSM credit guarantees. | Congress reviewed this matter as part of its deliberations on the export title of the 1996 farm bill, and decided not to make any changes to the fee. | |
| If Congress concludes that the United States needs to ensure continued U.S. agricultural exports to Russia and other successor states, and if Congress concludes the states are too risky to receive additional GSM-102 credit guarantees, it may wish to consider authorizing additional foreign aid to finance the sale of the food. | Congress reviewed this matter as part of its deliberations on the export title of the 1996 farm bill and decided not to authorize additional food aid to Russia and other successor states to finance the sale of food. |
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Topics
Agricultural productsAgricultural programsEconomic analysisExportingFederal aid to foreign countriesForeign economic development creditGovernment guaranteed loansInternational economic relationsInternational tradeLoan defaults