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ID-83-45 1 (1983-04-19)

handle is hein.gao/gaobabmxo0001 and id is 1 raw text is: 0 UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 INTERNATIONAL SVSION 121152 B-198960 APRIL 19,1983 The Honorable M. Peter McPherson Administrator, Agency for International Development Subject: AIDES Assistance to Jamaica' (GAO/ID-83-45) Dear Mr. McPherson: We recently completed a review of AID's assistance program to Jamaica. Our observations raise questions about the effec- tiveness of the balance-of-payments assistance the United States provided Jamaica in 1981 and 1982. The information we obtained and our conclusions and recommendations are summarized in this letter. Additional information is in enclosure I. Between 1981 and 1982, AID provided Jamaica with about $188 million in balance-of-payments assistance to stimulate eco- nomic growth. About $153 million of this assistance was in the form of cash transfers. In 1981, Jamaica's economy grew by 2 percent--a dramatic reversal from the negative growth rates experienced during the previous 7 years. However, growth slowed to less than 1 percent in 1982, and little or no growth is pro- jected for 1983. These growth rates are well below Jamaican targets established in early 1981. The primary reasons for the slower than expected growth were the worldwide recession and declining sales of bauxite--Jamaica's main export. In addition, private sector growth has been less than anticipated. AID INFLUENCE ON JAMAICAN POLICIES Balance-of-payments assistance through Economic Support Fund (ESF) and P.L. 480 programs can contribute to development. AID can influence Jamaican economic policies by making assis- tance conditional on implementation of reforms which can encour- age private sector and overall economic growth. AID and Jamaican private sector officials have commented that Jamaican policies have constrained private sector and overall economic growth. We found that AID has generally not achieved substan- tial policy reforms. Mission officials said they had prepared plans to increasingly link assistance to implementation of policy reforms. We believe that following through with AID's plan to link assistance to implementation of policy reforms is important. After performing fieldwork, program officials (472012)