Summary: Some countries have earned and kept millions of dollars in interest on cash grants from the United States, despite guidelines for managing foreign aid grants that call for retaining funds in the U.S. Treasury as long as possible to minimize federal borrowing costs or returning the interest earnings to the Treasury to offset these costs. GAO's review of assistance to 22 countries revealed that nearly $230 million in interest had been earned by recipient governments on about $6.6 billion in cash grants between October 1988 and May 1992. Israel, the single largest recipient, receives its cash grants within 30 days of appropriation and has earned about $163 million in interest on $3.6 billion in grants. Poland, another special case, earned about $31 million on a $200 million U.S. contribution to a currency stabilization fund. Options for improving the Agency for International Development's (AID) cash management practices without detracting from foreign assistance objectives include (1) direct payment by AID for official debts and for reimbursements for imports and (2) retaining the current practice of depositing funds into separate accounts but with the interest accruing to the United States.
