US FY 1999 Congressional Presentation

Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
STATEMENT OF THE ADMINISTRATOR

I am pleased to submit the U.S. Agency for International Development's (USAID) budget request for FY 1999. It reflects expanding agreement with Congress on the role sustainable development assistance plays in furthering U.S. foreign policy. As Secretary of State Madeleine Albright stated in June 1997, "In the wake of the Cold War, it is not enough for us to say that Communism has failed...we must heed the lessons of the past, [and] take advantage of the opportunity that now exists to bring the world together in an international system based on democracy, open markets, law, and a commitment to peace." The stakes are high. As the Secretary has repeatedly noted, our one percent contribution to international cooperation may well determine fifty percent of the history that is written about our era. USAID, more than ever, is doing its part to help the United States meet the historic challenges and opportunities of the post-Cold War.

After highlighting several of USAID's recent accomplishments, I will focus on key elements of USAID's FY 1999 budget request and how they relate to the agency's overall strategy and approaches.

Recent Accomplishments

I am particularly proud of the direct impact our programs have on people -- from saving lives to helping people improve the quality of their lives by building enduring economic, social and democratic institutions in diverse settings.

USAID emergency relief programs provided food and other assistance to more than 28 million disaster victims in 1996. A number of these humanitarian programs also supported U.S. foreign policy by helping mitigate potentially larger, more complex disasters (e.g., North Korea). Similarly, prior investments to establish local and regional capacities to anticipate disasters resulted in seven African countries being able to avert serious food shortages.

We responded rapidly to support transitions from crises, helping move nations from instability to stability and down the path to sustainable democracy. After the Guatemalan Peace Accords were signed in December 1996, USAID rapidly launched programs to demobilize and reintegrate former combatants into society. As part of an integrated U.S. Government effort, USAID provided assistance to Bosnia's nascent democracy through media support, human rights monitoring and support for democratic institutions, while helping to build free market institutions which will give citizens a stake in the country and help mitigate future conflict. Elsewhere, our programs in Eastern Europe and the former Soviet Union continue to help shape that region's political and economic transition. More than a quarter of the countries in the region have democratic systems nearly equal to those of Western Europe, and an average of 60 percent of the gross domestic product is now being produced by the private sector in Central and Eastern Europe, and 49 percent in the former Soviet Union.

To further democratic transitions, USAID also strengthened the capacity of indigenous groups in countries of significant foreign policy interest (e.g., Kenya, Angola, Bosnia) to participate fully in a democratic society. In addition, in 1996 we supported free and fair elections in 14 countries and the drafting and adoption of new constitutions in three countries.

USAID's economic growth programs expanded opportunities for people worldwide, including Americans. USAID support for regulatory and policy reforms to open markets, increase transparency and accountability in government operations, and increase access to economic opportunity contributed to rapid average annual growth rates in per capita income (ranging from 3.4 to 7 percent) over the 1992-1996 period in ten countries, affecting 1.5 billion people.

In Mongolia, Economic Support Fund-financed technical assistance and training had a substantial impact on bank restructuring actions in 1996. This led to rapid recovery of savings and time deposits in Mongolian banks, which averted a potential collapse of the banking system and contributed to a
sharp drop in the inflation rate. USAID ESF assistance also had a significant impact on the Mongolian government's trade reforms. Mongolia now has one of the most liberal trading regimes in the world, with virtually all customs duties having been eliminated.

Higher incomes translate into greater opportunities for U.S. export growth. Indeed, developing and emerging market countries now account for more than half of America's export growth, and that share is increasing. Where more targeted programs were called for, USAID launched microenterprise activities, often leading the way with new models. Over the last year, more than a million people, two-thirds of them women, benefited from these USAID activities. In turn, these same models are now being successfully applied in U.S. cities and rural areas. We also helped farmers in Latin America choose alternatives to growing drugs, resulting in a 27 percent reduction in acreage devoted to coca in Peru and a five percent reduction in Bolivia.

USAID helped protect human health and stabilize the world population. We estimate that the lives of five million children in 33 countries were saved in 1996 through collaboration with the World Health Organization, the United Nations Children's Fund, the World Bank and other bilateral donors. A major step forward in the worldwide eradication of polio resulted from USAID's support for national immunization days in Africa and Asia. We achieved very high coverage rates, reaching some 80 percent of our target populations in Africa -- children under five years of age. Our public-private partnership created "heat-sensitive vaccine vial monitors" that indicate when the oral polio vaccine has become unusable, thus allowing countermeasures to be taken which have resulted in $10 million of savings per year.

Our international family planning programs provided millions of couples the option to use family planning for the first time. In 1996, there were roughly 8 million new users in 36 countries. In countries assisted by USAID, over one-third of all couples are now using family planning. This is of great significance as analyses suggest that family planning programs alone can prevent upwards of a quarter of maternal and child deaths.

There is also progress to report in our efforts to better manage the environment. I have taken aggressive steps to implement the President's commitment to tackle global climate change issues. USAID's $1 billion five-year initiative encourages industrializing and transitioning countries to take the steps that will simultaneously address this critical problem and help their economies grow. These measures will reduce climate change gas sources and preserve and enhance the natural processes which absorb these gases from the atmosphere. For example, a successful USAID program in Egypt supported the introduction of unleaded gasoline, and by January 1998, virtually all the gasoline sold in Egypt was unleaded. As a result, lead levels in Cairo, which had been among the highest in the world, dropped by approximately 80 percent and are now within internationally accepted ranges. At the same time, USAID contributed significantly to conserving the world's biodiversity last year, with more than 14 countries improving conservation on over 21,000 square miles of land.

In addition to these on-the-ground results, USAID led an effort with other bilateral and multilateral donors over the past year to "internationalize" the spirit of the Government Performance and Results Act (GPRA). In May 1996, the major international donors agreed on specific global development goals, measures to evaluate performance, and common approaches to achieving those goals. This new international consensus was captured in the breakthrough "Shaping the 21st Century" agreement prepared under the auspices of the Organization for Economic Cooperation and Development's Development Assistance Committee (DAC); the forum created by donor nations to improve the planning and coordination of development assistance worldwide. Similarly, as part of the New Transatlantic Agenda of the European Union and the United States, USAID is now working closely with the European Commission on more than 60 joint development activities worldwide.

Over the past year, USAID also took cooperation a step further by concentrating on emerging regional fora. We provided support to the Caspian region's oil-gas development initiative, the Global Coalition
for Africa's efforts to strengthen indigenous economic growth and democratic initiatives, and the United States Asia Environmental Partnership which strengthens U.S. and Asia business linkages and promotes the adoption of more efficient technology which contributes to environment friendly economic growth.

Our coordination with the Department of State was enhanced, both at policy and operational levels. Steps were taken to streamline and better align operations ranging from how we manage our physical facilities to how we jointly approach specific U.S. national interests in a country. There is now an explicit linkage between USAID's Strategic Plan and the U.S. Strategic Plan for International Affairs.

At the same time, USAID continues to reform so that assistance is delivered faster and results are achieved more cost-effectively. This past year, we continued our efforts toward operationalizing the computer-based new management system (NMS) and preparing for the year 2000. In addition, two USAID task forces identified ways to streamline procurement processes and to align our work force to projected needs in developing countries and on global issues. The move to the new Ronald Reagan Building and International Trade Center, now complete, places all USAID staff in one location for the first time. This provides us an opportunity to further improve internal teamwork and coordination.

In the process of evaluating the significance of our accomplishments and monitoring our progress, we have identified areas where strategic and management refinements and corrections should be made. The budget request incorporates these findings, as well as our best assumptions on what it will take to implement them.

USAID's Budget Request

A substantial share of USAID's budget honors existing commitments where our monitoring and evaluation systems demonstrate that programs and partners are achieving the results we targeted. The program budget also reflects several changes and a modest increase. We are requesting that funding for USAID-administered programs, other than food aid assistance, rise from the $6.1 billion appropriated in FY 1998 to $6.4 billion in FY 1999. This would be the second year in a row that development assistance would increase after several years of decline. Finally, the Operating Expense budget is proposed to remain essentially constant, reflecting efficiencies introduced in previous years.

This budget proposal increases the amount available for countries making transitions towards sustainable development. USAID currently lacks sufficient resources to undertake the additional responsibilities in transition efforts, including supporting demobilization, reintegrating ex-combatants into civilian society, addressing the concerns of displaced and vulnerable populations, and dealing with conflict resolution. Our current plans reflect the findings of world experts we recently assembled to identify the most successful approaches to mitigating conflicts and fostering smooth post-conflict transitions.

As part of our effort to capitalize on emerging regional fora, the budget proposal includes funds to support the initiatives to be endorsed at the Second Summit of the Americas, planned for April 1998, in Santiago, Chile. USAID has taken a leadership role in defining the agenda for the upcoming Summit. The region's 34 presidents will focus on regional challenges, including economic integration, education, democratic institution building, and poverty alleviation through microenterprise activities.

Infectious diseases have been given a new priority the health portion of our request. This supports Congressional interests and complements USAID's long-standing emphasis on child survival and HIV/AIDS programs. Intensive consultations with partners on the most effective strategy for addressing infectious diseases have already occurred and a strategy has been devised.

USAID's emphasis on sub-Saharan Africa has not diminished. The proposed budget increase supports the African Trade and Investment Policy Initiative and constitutes a key element of the Administration's Partnership for Economic Growth and Opportunity in Africa. Although the Development Fund for Africa (DFA) is no longer a separate account, authorities continue to apply.

To further reinforce our overall agency strategy, we have increased our emphasis on agriculture and education. Agriculture is now being pursued in tandem with USAID's economic growth goal by refocusing on the links between agriculture, economic growth and food security. As part of this effort, USAID, at the World Food Summit in November 1996, highlighted the continuing food security issues of the over 800 million chronically undernourished people in the developing world. The proposed substantial budget allocations for food aid are part of this Administration focus. At the same time, USAID is working to improve basic education levels of girls and boys, particularly in the poorer countries of sub-Saharan Africa.

Finally, over the coming year, USAID will be challenged on how we use our performance measures and internal management systems to help allocate resources, control costs and address the priorities of the Administration and the Congress. The toughest challenges may lay in implementing the management assumptions which underpin our operating expenses budget and in matching the structure of resources appropriated with the identified priorities and existing commitments. As we work within the context of the balanced budget agreement, USAID will carefully evaluate those assumptions in light of how effectively our management systems perform.

Looking Ahead

Over the coming year, I will seek to further improve USAID's unique comparative advantage to rapidly and innovatively respond to diverse development and humanitarian needs. First, I anticipate significant on-the-ground results in key areas such as global climate change, agriculture and food security, infectious diseases, education and in helping countries in crisis and transition.

Second, we have already set for ourselves the objective of further streamlining our internal work processes. We aim to further improve our ability to respond rapidly, innovatively and with others on the broad array of development challenges. Doing so will allow USAID to maintain the technical and sectoral breadth and on-the-ground developing country expertise necessary to respond effectively to specific local conditions. For example, responding only to Asia's financial crisis misses the reality that the problem is also one of governance.

Third, USAID's continued excellence as a preeminent bilateral development organization permits the United States to lead by example. This helps create a shared vision on development goals and approaches across the U.S. Government, among donors, within the nongovernmental and business communities, and with the countries in which we work. Our efforts must reinforce one another better. As hosts of the upcoming Tidewater meeting of the development ministers of the major donor nations, we will seek further agreements on concrete steps to advance our collective responsibilities.

Ultimately, U.S. development assistance administered by USAID improves people's lives and helps to strengthen their ability to take greater responsibility for their own development. It constitutes one of America's best tools for building relationships among peoples and institutions that can endure and advance our national interests. I look forward to working with you towards these ends over the coming year.

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