Summary: GAO discussed the political and economic conditions in Central America which have resulted in refugees seeking political asylum in the United States. GAO found that: (1) armed conflicts, economic hardships, human rights violations, and natural disasters have resulted in a significant number of refugees from Nicaragua, El Salvador, and Guatemala; (2) elections in El Salvador, political instability in Guatemala, and the armed conflict and a hurricane in Nicaragua could increase the number of Central American refugees; (3) the Immigration and Naturalization Service (INS) reported that applications for political asylum had increased to over 50,000 in fiscal year 1988; (4) INS estimated that up to 200,000 Nicaraguan refugees were residing in the United States illegally; (5) INS received special directives to encourage Nicaraguan refugees who were denied asylum to reapply to ensure that those with a well-founded fear of persecution would remain in the United States; and (6) INS expedited asylum adjudications, detention, or deportation of unqualified applicants to cope with a potential influx of Central American refugees into the United States. GAO also found that: (1) the Office of the United Nations High Commissioner on Refugees has provided temporary shelter, food, health, and other humanitarian services to about 120,000 Central American refugees; (2) a proposed amendment would have allowed aliens from certain countries to remain and work in the United States temporarily; and (3) the influx of refugees has impacted on local service providers and social service programs.