Pursuant to a congressional request, GAO provided information on the status of Agency for International Development (AID) funded programs and projects in Panama. GAO found that: (1) as of February 28, 1991, AID obligated $377.5 million of the $420 million appropriated for assistance to Panama; (2) of that amount, AID obligated $351.8 million for cash transfers under economic recovery and private sector reactivation programs and $25.7 million for development projects and operating expenses; (3) of the $77.9 million AID dispersed, the Panamanian government and AID spent only $41.8 million; (4) reasons for the slow disbursement of funds included the Panamanian government's failure to meet grant agreements, weakened demand for private-sector loans, and undeveloped AID programs; (5) despite the slow infusion of U.S. assistance into the Panamanian economy, its economy grew by 3.4 percent during 1990; and (6) almost all economic sectors, except transportation and government services, experienced increases from the previous year's levels, although the economic output of all sectors except agriculture and domestic services remained below that of 1987.

NSIAD-91-168 Aid to Panama: Status of Emergency Assistance to Revitalize the Economy

GAO provided information on economic aid to Panama, focusing on cash grant programs implemented pursuant to the Dire Emergency Supplemental Appropriation Act. GAO found that: (1) the Agency for International Development (AID) has not justified the size and composition of Panama's economic aid package with sufficient documentation; (2) although AID believes that the economic assistance program has been a success, the Panamanian economy began recovery before U.S. economic assistance was introduced; (3) AID could not determine the impact of private- and public-sector programs on the Panamanian economy, standard of living, debt, and unemployment due to unspecified target areas, delays in program implementation, and the lack of implementation guidelines; (4) Panama's economy began to recover once political and economic burdens were removed; (5) Panama's gross domestic product was restored to nearly pre-1987 levels and grew by about 9.3 percent in 1991 despite delays in cash grant program implementation; (6) AID needed to thoroughly analyze targeted countries' economies, set economic reform conditions, and withhold funds until conditions were met before providing assistance; and (7) AID assistance could have been effective if private-sector reactivation funds were disbursed after economic reforms were implemented.