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Export Credit Guarantee Programs 



GAO has reported in the past on poor management controls within 

 the Export Credit Guarantee programs. These programs, which 

 include the General Sales Manager programs (GSM) -102/103, are 

 aimed at increasing the willingness of U.S. banks to finance 

 export sales of U.S. agricultural products. Financial 

 institutions in the United States provide financing for 

 individual commodity sales to foreign buyers. Based on 

 legislative requirements, USDA makes a total of over $5 billion 

 in government loan guarantees available each year to foreign 

 buyers of U.S. agricultural commodities. Since the programs 

 began in the 1980s, USDA has paid out about $5.7 billion to banks 

 on loans in default, and we estimate significant future Increases 

 in defaults if high-risk foreign buyers continue to participate. 



Past operations of the Export Credit Guarantee programs have 

 incurred significant losses because USDA has provided a large 

 amount in guarantees to high-risk countries, such as Iraq and the 

 successor states of the former Soviet Union. Guarantees had been 

 extended to such high-risk countries on the basis of market 

 development concerns and foreign policy considerations. Our 

 prior testimonies have detailed the weaknesses and difficulties 

 in managing these programs. FAS has traditionally had a limited 

 role in monitoring these programs despite significant government 

 exposure to large financial losses. 



Market Promotion Program (MPP) 



MPP was created to encourage the export of U.S. agricultural 

 products through funding for consumer-related promotions of high- 

 value generic and brand-name products. FAS turns the government 

 funds over to not-for-profit associations that either run market 

 promotion programs themselves or pass the funds along to prlvate- 

 for-profit companies to spend on their own market promotion 



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