Detailed Information on the
Agricultural Export Credit Guarantee Programs Assessment

Program Code 10002020
Program Title Agricultural Export Credit Guarantee Programs
Department Name Department of Agriculture
Agency/Bureau Name Foreign Agricultural Service
Program Type(s) Credit Program
Assessment Year 2004
Assessment Rating Moderately Effective
Assessment Section Scores
Section Score
Program Purpose & Design 80%
Strategic Planning 62%
Program Management 100%
Program Results/Accountability 67%
Program Funding Level
(in millions)
FY2007 $1,334
FY2008 $2,274
FY2009 $2,675

Ongoing Program Improvement Plans

Year Began Improvement Plan Status Comments

Review and modify underlying assumptions of defaults and recoveries.

Action taken, but not completed FAS is working with private contractors to identify policy levers that could be used to reduce default rates further and to adopt program-specific country risk factors.

Improve claims recoveries and reduce defaults.

Action taken, but not completed FAS has instituted risk-based fees; ceased programming to countries in the highest risk categories; and ended GSM-103 and supplier credit guarantee programming. FAS continues to work with OIG and the Department of Justice in pursuit of claims recoveries.

Completed Program Improvement Plans

Year Began Improvement Plan Status Comments

Develop a means of regularly performing independent evaluations to examine program effectiveness.

Completed In FY 2006, USDA's Office of the Inspector General stated in its business plan that it will conduct a review of the Export Credit Guarantee Program. For future years, FAS will work to achieve the objective of contracting using FAS S&E funds with USDA/ERS, OIG or another independent party to conduct an independent review of the program prior to FY 2010.

Provide funding in the Budget to improve claims recoveries.

Completed FY 2006 appropriations act included $775,000 in the administrative expenses account for the ongoing ECGP claims recovery efforts. This funding is also included in the FY 2007 Act and has been requested for FY 2008.

Examine administrative costs in light of changes to the supplier credit guarantee program stemming from the WTO cotton case.

Completed As a result of the Brazilian cotton case, the fee structure has been modified to be risk-based. Administrative costs have been reviewed and the program continues to demonstrate a high degree of program efficiency.

Develop meaningful targets for the efficiency measure.

Completed All USDA credit programs, including the CCC Export Credit Guarantee Program adopted with OMB approval an efficiency measure comparing program administrative costs to the overall guarantees issued and outstanding. On that basis, the program has demonstrated a high degree of efficiency which is reflected in the targets established for the efficiency performance measure.

Improve claims recoveries and reduce defaults.

Completed Excluded non-credit worthy countries from program and limited the length of guarantees. Adopted a risk-based fee structure so that transactions involving higher risk are charged higher program fees. Supplier credit guarantee program was not announced for FY 2006 and to date has not been announced for FY 2007. The agency has contracted for legal services and investigations in overseas markets and continues to work with USDA's OIG & the Dep. of Justice to pursue claims recoveries.

Program Performance Measures

Term Type  
Long-term Outcome

Measure: Export Expansion / Market Development -- measures how much export credit guarantee use declines per year in countries that reach investment grade and how much U.S. agriculural exports increase to those countires.

Explanation:The target values indicate that GSM-102 use declines 10% per year in countries that reach investment grade (ICRAS C- or better) while U.S. agricultural exports expand by 5% per year. The original measurement presumes GSM being part of a transition to totally commercially financed exports against a rather stable backdrop. However, with the dramatic decrease in program activity stemming from abundance of global liquidity starting in 2005 and running through 2007 and the more recent reversal of world financial conditions, with a tremendous increase in demand for GSM-102 , tightening global liquidity, and high prices, including program usage by investment grade countries requires more thought be given to this measure - and perhaps its overall effectiveness in measuring market expansion and development.

Year Target Actual
2002 -10%/5% 6.4/-1.2
2003 -10%/5% -19.8/4.0
2004 -10%/5% -13.0/7.6
2005 -10%/5% -33.5%/2.25%
2006 -10%/5% -47%/13%
2007 -10%/5% -32%/17%
2008 -10%/5%
2009 -10%/5%
2010 -10%/5%
2011 -10%/5%
2012 -10%/5%
Long-term Outcome

Measure: Export outreach

Explanation:This measure should be revised to show percent increase in new program participants as a result of the outreach functions, instead of actual sales volumes. In addition, by replacing "exporters" with "program participants" we could include importers and obligor banks, as we outreach both as well. The baseline of $50 million was established as a starting point, given no previous historical data on outreach. The target was lowered in fiscal 2007 given actual results for fiscal 2005 and 2006. Again, our overall program level began decreasing in fiscal 2005, and decreased further in 2006 and 2007, affecting a number of these measures.

Year Target Actual
2004 $ 50 M $302 M
2005 $ 50 M $ 6.5 M
2006 $ 50 M $7.9 M
2007 $25 M $14 M
2008 $20 M
2009 $20 M
2010 $20 M
2011 $20 M
2012 $20 M
Annual Outcome

Measure: Risk Diversity--measures the percentage the top three countries (in terms of dollars of credit provided) account for of total credit provided.

Explanation:This measure is fairly challenging; looking back at the historical data, the value of 50% has only been achieved twice. The market opportunities for GSM supported sales shifts slowly. Some countries that have dominated GSM supported sales in the past have been Korea, Russia, Mexico. In some years one market has dominated GSM. Not a good thing from a risk perspective, even if a country is risk rated within given parameters. The purpose of this metric is to promote varied use of the GSM program and outreach in other targeted countries. The outreach effort is coupled with the need to limit over exposure in few markets that could have a detrimental impact on the GSM portfolio. It is not recommended that the metric be altered any, it seems to be monitoring exactly what it was intended to monitor and program officials need to play closer attention to trying to achieve this challenging goal or explain why they have been unable to meet the target set and their efforts.

Year Target Actual
2002 NA 49%
2003 NA 51%
2004 50% 55%
2005 50% 46%
2006 50% 50%
2007 50% 44%
2008 50%
2009 50%
Annual Output

Measure: Limit Total Exposure Guideline

Explanation:Limit the commercial credit exposure guideline for each individual country to no more than $2.75 billion. This objective has been a stated limit in the Country Risk Guideline handbook. However, programming had not challenged the limit until recent programming of EU and Japan for SCGP. The objective serves to reinforce the risk diversity goal.

Year Target Actual
2002 NA NA
2003 NA 34.4
2004 NA 37.8
2005 NTE $2.75 B $2.75 B
2006 NTE $2.75 B $2.75 B
2007 NTE $2.75 B $2.75 B
2008 NTE $2.75 B
2009 NTE $2.75 B
Long-term Outcome

Measure: Long-term Program Sustainability

Explanation:The target value of NTE +/- 1/5 percent is set as indicator to prompt management intervention toward achieving a long-term (i.e., 10-year) breakeven goal of zero, meaning neither a profit or loss in program operation. The goal is derived from the Organization for Economic Cooperation and Development's (OECD) Consensus Arrangement for Capital Goods, The Berne Union and the WTO Agreement on Subsidies and Countervailing Measures. Although the sustainability measure has yet to be adopted for programs applicable to agricultural export credits, it has long been used for other credit programs.

Year Target Actual
2003 NA -.62%
2004 NTE+/-1.5% -.26%
2005 NTE+/-1.5% -.47%
2006 NTE+/-1.5% -.36%
2007 NTE +/-1.5% -.79%
2008 NTE +/-1.5%
2009 NTE +/-1.5%
2010 NTE +/-1.5%
2011 NTE +/-1.5%
2012 NTE +/-1.5%
Annual Efficiency

Measure: Administrative cost per loan -- measures USDA's efficiency of loan making and servicing.

Explanation:Annual program efficiency measure adopted by USDA Interagency group to assess the administrative expenses associated with loanmaking and servicing. Equals the ratio of admin. funding to the outstanding portfolio balance. In FY 2005, a $4 billion writeoff associated with debt forgiveness to Iraq (in accord with a Paris Club agreement) of CCC debt owed occurred. This reduced CCC's outstanding portfolio but in so doing, the calculation for the administrative cost/loan increased to .06%. The FY 2006 target was adjusted to .06% since it appears that this is a more realistic estimate given the method of calculation.

Year Target Actual
2003 NA 0.04%
2004 NA 0.03%
2005 0.04% 0.06%
2006 0.06% 0.10%
2007 0.10% 0.12%
2008 0.12%
2009 0.12%

Questions/Answers (Detailed Assessment)

Section 1 - Program Purpose & Design
Number Question Answer Score

Is the program purpose clear?

Explanation: This assessment covers several USDA export credit guarantee programs including the GSA-102, GSM-103, Supplier Credit Gurantee Program, and the Facilities Guarantee Program. The programs were grouped together because they have very similar objectives and the same management. The programs encourage exports to buyers in countries where credit is necessary to maintain or increase U.S. sales, but where financing may not be available without Commodity Credit Corporation (CCC) guarantees (obligors are too risky for the private sector, but are marginally creditworthy).

Evidence: Section 202 of the Agricultural Trade Act of 1978, as amended. The programs purpose is found in the statute and at 7 CFR 1493.2 .

YES 20%

Does the program address a specific and existing problem, interest or need?

Explanation: Our commodity programs support production and the credit guarantees are designed to make exports of commodities available to higher risk markets. The programs mitigate the risk of non-payment by high-risk obligors, especially at times of financial crisis. The key markets that have received credit guarantees in the past ten years show a lack of financial liquidity and trade credit deficits. Program use rises and falls in response to credit needs. These programs make commerical credit available at a reduced cost to higher risk markets.

Evidence: In FY1992 (USSR breakup) and FY1998 (Asian Financial Crisis), the program provided record amounts of guarantees totalling $5.6 billion and $4 billion, respectively. Large part of assistance provided over the past ten years has been granted to Mexico and S. Korea, markets where commerical credit is available. Evidence: Commitment reports; FAS credit guarantee program analysis. Insurability Of Export Credit Risks- Univ. of Groningen, Netherlands

YES 20%

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: There is minimal overlap with the U.S. Export Import Bank (Exim) and the mechanism is different. Annual CCC GSM-102 transactions are on the order of $3 billion, equivalent to about $3.1 billion in commodity value. In FY2002, Exim helped finance the export of $150 million in agricultural commodities, supplies, and equipment, compared to $117 million in 2001.

Evidence: Exim data on the export of agricultural commodities, livestock, and foodstuff; USDA/FAS export guarantee registrations, commitment reports, evidence of exports reports.

YES 20%

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The design of programs is based upon commercial export practices and trade finance mechanisms that have long been used by exporters. The CCC programs depend upon risk-sharing with U.S. banks and exporters which forces due diligence by the guaranteed party. CCC's guarantee is also contingent upon export performance, price reviews and submitted claim documents that are found to be in good order by CCC. Overall, the program design structure lowers program admininstration costs and increases program integrity in comparision to similar programs. Export credit guarantees are very minimally trade distorting, which has concerned some international organizations.

Evidence: The program's efficiency has increased since the late 1990s, as a result of the introduction of the popular Supplier Credit Guarantee Program (SCGP). Previously, operations staff processed about 4,000 GSM-102 applications per year. Currently, fewer staff are processing up to 6,000 GSM-102 and SCGP applications, according to the GSM data mart. Other data sources: ECGD the Economic Rationale for Public Provision of Export Credit Insurance; Stephens; TPCC report; OECD Study on EC and STEs;

NO 0%

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The program is primarily targeted to countries not considered to be investment grade. Therefore, credit resources are not generally offered without a means of risk mitigation. These developing markets, lack sufficient financial liquidity to import all of their food, feed and fiber needs. Program benefits are shared between U.S. exporters and bankers and foreign importers and bankers. To work effectively, all parties must derive some benefit or they will not use the program. Other sources of commercial credit may be available to the markets targeted, but are not sufficient to meet needs. The purposes of the programs are to expand US exports, meet competition and develop markets. The provision of credit guarantees effectively meets these objectives. Evidence shows program use declines when countries reach investment grade (ICRAS C- or better). Market development is shown when countries continue to buy from U.S. suppliers as program use declines.

Evidence: The program's efficiency has increased since the late 1990s, as a result of the introduction of the popular Supplier Credit Guarantee Program (SCGP). Previously, operations staff processed about 4,000 GSM-102 applications per year. Currently, fewer staff are processing up to 6,000 GSM-102 and SCGP applications, according to the GSM data mart. Other data sources: MOI/MART Files; ECGD the Economic Rationale for Public Provision of Export Credit Insurance; Stephens; TPCC report; FAS 2002 GSM Review.ppt. IMF Trade Finance in Fianancial Crisis: Assessment of Key Issues, 12/04; FAS GSM to Exports powerpoint.; Portfolio Analysis, Contingent Liability by Country Risk Grade powerpoint

YES 20%
Section 1 - Program Purpose & Design Score 80%
Section 2 - Strategic Planning
Number Question Answer Score

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The purposes of the programs are to expand US exports, meet competition and develop markets. The GSM-102/103 programs are primarily targeted to non-investment grade countries (ICRAS grades D to E-). The long-term measure is to evaluate countries that reach investment grade (C-), determine that program use declines, while US exports continue to expand showing that the program facilitated market development. A second long-term performance measure is a ten-year net default rate (including fees paid and minus admin costs) NTE +/-1.5% of the value of registrations. This measure reconciles the program's dual goals of market development and risk management.

Evidence: FAS GSM to Exports powerpoint for key target countries show that as countries reach investment grade program use declines while exports expand. FAS internal analysis memo on Mexico and use of the export credit gurantee programs. FAS portfolio analysis shows that between FY1994 and FY2003, the CCC commercial credit guarantee net default rate was 0.62%, compared to a net default rate of 0.93% for the period FY1993-2002, i.e., approximately breaking even in line with ECA expected performance (OECD Capital Good Report, Berne Union Data, IMF book on ECAs, WTO illustrative subsidies.)

YES 12%

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Targets for the program's long-term performance measure for export expansion/market development are being developed. Further analysis of countries that have reached investment grade in the program's history is necessary to ascertain acceptable targets. The long-term measure for program sustainability is in line with the break-even long-term goal for Export Credit Agencies (ECAs). FAS has created a performance target range for default rates of +/- 1.5% of registration value.

Evidence: FAS GSM to Exports powerpoint for key target countries show that as countries reach investment grade program use declines while exports expand. FAS internal analysis memo on Mexico and use of the export credit gurantee programs. FAS portfolio analysis, FAS decision memo, 4/12/04 department-wide meeting with OMB, Berne Union, OECD capital goods arrangement, WTO A&A , Appendix 1., Malcolm Stephens: Changes to ECAs. IMF publication.

NO 0%

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The program has three annual performance measures (APMs). One is related to market development and the rest to risk management. 1. Build program awareness with at least 150 exporters per year, of which XX% participate in the program, generating $ XX million in additional sales (target values under study, TBD by January 2005); 2. Insure annual registrations in the top three countries do not exceed 50% of total registrations; 3. Limit the commercial credit exposure guideline for each individual country to no more than $2.75 billion. FAS is participating in an interagency efficiency measure working group to refine its program performance measures.

Evidence: In FY2003-2004, 4 outreach activities were organized reaching 300 exporters. In FY2000-2004, limits on exposure guidelines were not observed for China and a number of OECD countries. These limits will be observed in the FY2005-2010 strategic plan. Data sources: CCC exposure report (monthly), FAS Risk Assessment Handbook, Geographic and Commodity Analysis (quarterly), Portfolio analysis (annual).

YES 12%

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The FAS annual performance measure (APM) 1 represents a 90% increase over FY2003 outreach conference attendance. APM 2 represents a 55% improvement over the highest exposure concentration observed in the past (90% in three countries). APM 3 is an effective constraint primarily for OECD countries and China, which have large economies.

Evidence: FAS outreach data; FAS portfolio analysis; FAS Risk Assessment Handbook.

YES 12%

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Exporters provide all the information required in the guarantee application, as well as evidence of export. Banks report payment delays within ten days of the due date and, if needed, file a payment claim within six months of the default, per GSM regulations. Exporters and bankers diligently promote the program to importers and foreign banks, thus maintaining portfolio diversity. U.S. exporters and banks continually assess foreign bank risk and since they are at risk, collaborate with FAS on risk management and in pursuing recoveries.

Evidence: Export guarantee registrations, evidence of exports reports, rescheduling/recovery records.

YES 12%

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The GAO, OIG, one academic institution and two international organizations have conducted evaluations on the programs. Some of these evaluations have resulted in program improvements. FAS also quarterly conducts internal evaluations on activity by program, by country or region and commodity, but these are not independent evaluations. However, the programs and the agency do not conduct regular independent evaluations of the program.

Evidence: OECD Study on EC and STEs; WTO Panel Review, Brazil Cotton; WTO review in the Ag Negotiations, OIG 1990 audit, GAO/NSIAD-91-180 Loan Guarantees; GAO/GGD-94-24, NAC Critical Views; North Dakota State U., Dept. of Ag Economics, Report No. 377, July 1977.; FAS GSM Quarterly Reviews.

NO 0%

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Though the program strives to maintain a level of activity that supports portfolio diversity in line with the APMs for limiting exposure concentration, analysis has not demonstrated the extent of the program expanding exports. Development of the export development long-term measure based on evidence that programs decline when a country reaches investment grade while US exports expand. Program levels are based on prior year activity and market potential. Programming to the highest risk countries is limited by statute and risk assessment procedures.

Evidence: Annual budget submissions; GSM quartely reviews; MOI/MART indicators; Country Risk Guidelines; ERS staff work product.

NO 0%

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: In the past three years, FAS started tracking risk allocation and program performance on a quarterly basis and developed annual and long-term performance measures.

Evidence: FAS portfolio analysis; quarterly program review.

YES 12%
Section 2 - Strategic Planning Score 62%
Section 3 - Program Management
Number Question Answer Score

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: FAS continously collects program activity data from partners and analyzes export registration figures quarterly toward meeting performance measures. Quarterly results are discussed and strategies amended for outreach portfolio, program allocations and potential country program changes. FSA collects repayment figures daily and exposure, rescheduling, arrears, and claims figures monthly. These data allow FAS to improve program focus and manage portfolio risk.

Evidence: Bank in-use report (contains bank limits and exposure by bank and country); Commitment report (lists weekly guarantee registrations); CCC monthly exposure report includes data on contingent liability, rescheduled amounts, claims outstanding, and principal and interest arrears; the claims report lists claims paid and recoveries; the annual portfolio analysis tracks risk allocation and annual loss rates; and the commercial export credit report quarterly analyzes program usage by country and commodity.

YES 11%

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: FAS evaluates program managers annually. Exporters promptly inform senior managers of disruption in registrations and claims processing. FAS contacts exporters when they are late in filing evidence of exports reports. When fraud and abuse were uncovered in the past, USDA contacted those responsible and recovered significant amounts.

Evidence: Annual performance appraisals are being modified to reflect performance results, letters to exporters, price reviews, Inspector General reports.

YES 11%

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: FSA monitors the timeliness of all payments. The GSM system tracks all information from the time application is submitted, required fees are paid, and liability incurred. Notice of default is issued within 10 days of the due date of a payment and reversal accounting entries are made automatically in the system.

Evidence: CCC financial audit, OIG reports/audits, compliance review reports.

YES 11%

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: FAS tracks registrations and evidence of exports daily. As of January 31, 2004, USDA had invested $6 million on an Internet-based system that can handle a larger number of registrations faster, reduce human error, and better monitor financial data. FAS is working with OMB and other USDA agencies to develop specific efficiency measures.

Evidence: Previously, operations staff processed about 4,000 credit guarantee applications per year. Currently, fewer staff are processing up to 6,000 credit guarantee applications, a 50% increase in transactions and an estimated 70% increase in labor productivity. The first meeting of the efficiency measures working group took place at USDA on 4/12/04.

YES 11%

Does the program collaborate and coordinate effectively with related programs?

Explanation: USDA plays a crucial role in ICRAS and in the Paris Club of official creditors. USDA frequently coordinates with Exim Bank staff on programming and financial management issues and routinely coordinates with State, Treasury, and Exim on country grade issues . FAS is a member of the Trade Policy Coordinating Committee (TPCC), chaired by USDOC.

Evidence: ICRAS country papers, TPCC reports, data for Paris Club meetings.

YES 11%

Does the program use strong financial management practices?

Explanation: USDA tracks Export Guarantee principal balance, claims, and rescheduling of loans. When a foreign bank defaults on a payment, the CCC shuts down the program in that country to examine whether the problem is limited to just one bank, or whether it is systemic. If the problem is determined not to be systemic, the program reopens excluding the defaulting bank. Financial management is taking measures to improve claims recoveries.

Evidence: Exposure reports, claims reports, CCC financial audits, OIG reports/audits, compliance review reports, notices of default.

YES 11%

Has the program taken meaningful steps to address its management deficiencies?

Explanation: In the early 1990s, USDA installed systems to increase transparency of decision making, improve risk monitoring, and reduce fraudulent claims. FAS has created a country risk group that analyzes the economies of the countries programmed. FSA has created a bank risk group to analyze foreign bank risk and approve bank participation. FAS also created a Reconciliation Committee that reconciles risk with market opportunity. FAS Compliance Review Staff review the export credit guarantee programs annually.

Evidence: OIG 1990 audit, FAS risk assessment handbook, country risk analyses, market development/risk reconciliation committee, annual compliance review, CCC annual financial audits.

YES 11%

Is the program managed on an ongoing basis to assure credit quality remains sound, collections and disbursements are timely, and reporting requirements are fulfilled?

Explanation: The status of external debt to the CCC is summarized by country via a monthly exposure report mentioned in 3.6. On a monthly basis, agency cash activity is received showing net transactions. USDA uses this infomation to prepare the statement of accountability submitted to Treasury. USDA manages country risk by setting exposure guidelines, suspending the program when defaults occur, and abstaining from new country allocations when arrearages exceed $250,000.

Evidence: Risk Assessment analyses, Country exposure reports, overexposure flags in data base, cross check with OFAC data base.

YES 11%

Do the program's credit models adequately provide reliable, consistent, accurate and transparent estimates of costs and the risk to the Government?

Explanation: The credit models used to calculate the subsidy for the guaranteed credits were revised in FY2001 and FY2003 and currently provides reliable estimates. The USDA model change was applicable for the 2001 reestimates, 2002 actuals, and both agency model changes for 2003 and 2004 budget formulation. Subsidy rates have been fairly consistent both across the years 1992 to 2002 and between formulation and reeestimated rates for guaranteed loans within the same category.

Evidence: In the most recent reestimate, the change in subsidy rates between formulation and reestimated rates ranged from a low of 0.09 percentage points (operating unsubsidized, 2002) to a high of 5.04 percentage points (operating, subsidized in 2001). Given the low subsidy rates, these differences are not that significant. Evidence: CCC Financial Audit 2001, 2002.

YES 11%
Section 3 - Program Management Score 100%
Section 4 - Program Results/Accountability
Number Question Answer Score

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Data to support the long-term export expansion goal is presently being collected and analyzed. Prelimary evidence for Mexico and Korea suggest positive gains when program declined due to investment risk grade. For the program sustainability goal, the program has been within target since 1992.

Evidence: FAS analysis memo on the cause of program decline in Mexico. FAS GSM to exports ppt.; Portfolio analysis files.


Does the program (including program partners) achieve its annual performance goals?

Explanation: The program exceeded the outreach APM target of 150 exporters by 50% in 2003, data is presntly being gathered to determine participation rates and sales values generated, exposure concentration was within the APM 2 range, and APM 3 was met for all countries.

Evidence: Outreach activities report, country risk assessments, quarterly program activity analysis, portfolio analysis.


Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Previously, operations staff processed about 4,000 credit guarantee applications per year. Currently, fewer staff are processing up to 6,000 credit guarantee applications, a 50% increase in transactions and an estimated 70% increase in labor productivity. The first meeting of the efficiency measures working group took place at USDA on 4/12/04.

Evidence: Guarantee registrations data; FTE data. FAS is working with OMB on additional efficiency measures.

YES 20%

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: USDA's loss rate is lower than Exim Bank's and comparable to other countries' ECAs. In FY2002 and 2003 the program's loss rate, net of fees and administrative expenses, was 0.93% and 0.62%, respectively. (Subject to favorable change due to recent Argentina rescheduling)

Evidence: FAS portfolio analysis, Exim Bank portfolio analysis, Stephens: The Changing Role of ECAs.

YES 20%

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: There have been a number of recent reviews of USDA's export credit guarantee programs. Most recently, the OECD compared export credit programs offered by a number of countries. There have also been a number of academic analysis and GAO conducted reviews of USDA's export credit programs. A number of the independent reviews of these programs show the programs' success in facilitating ag commodity exports to risky countries. Different views exist as to cost and appropriateness. GAO's criticism of high long-term costs proved invalid, largely due to changes made in response to the Credit Reform Act. Some economists suggest the program's total impact on ag exports is limited, other studies show that the programs greatest value is during financial crisis. The program does not favor any bank, but CoBank is the largest user due to its charter to serve Ag cooperatives.

Evidence: WTO Panel Review; IMF Study: Trade Finance in Financial Crisis: Assessment of Key Issues, 12/04; CoBank Annual Report 2003; OECD Report on Agricultural Export Credits, ERS (Scully) response; GAO/NSIAD-91-180 Loan Guarantees; GAO/GGD-94-24, NAC Critical Views; North Dakota State U., Dept. of Ag Economics, Report No. 377, ERS Staff Work;

Section 4 - Program Results/Accountability Score 67%

Last updated: 09062008.2004SPR