against these payments totaled $89,305 through June 30, 1966.

Extended risk and housing guarantees

55

Under authority of section 221 (b) (2) of the Foreign Assistance Act of 1961, as amended, the Agency for International Development is authorized to guarantee investors in approved projects up to 75 percent of an investment against losses due to any and all risks except fraud or misconduct of the investor and those for which commercial insurance is available, such as fire and theft. This type of guarantee is mainly designed to attract long-term credits from U.S. institutional lenders to assist in financing private projects of high priority.

In 1964, the National Advisory Council approved a new policy for these guarantees which would permit AID to guarantee the later maturities of loans from certain lending institutions; the early maturities would be for the risk of some other party. Up to and during fiscal year 1966, AID held discussions with various institutional lenders and their legal advisers in order to implement the 1964 policy; an institutional loan guarantee form has been worked out.

The first extended risk guarantee under the institutional loan program was authorized in June 1966. At the end of fiscal year 1966 several additional guarantees under the same program were close to authorization, including two involving fertilizer plants in India and Brazil. On June 30, 1966, total authorizations amounted to $18.1 million.

Except in unusual circumstances, extended risk guarantees will only be authorized for projects which generate the procurement of U.S. goods and services in an amount substantially equal to the amount of the loan being guaranteed.

Section 221(b) (2) of the act also authorizes guarantees on housing investments in countries which have signed agreements instituting the program, up to 100 percent of the principal amount of the loan investment. In fiscal year 1966, one guarantee for $5 million was authorized for a project in Taiwan.

22 U.S.C. § 2181 (b) (2). 56 See table 27, above.

Latin American housing guarantees

Housing guarantees for private U.S. investment in self-liquidating pilot or demonstration housing projects are available under section 224 of the Foreign Assistance Act of 1961, as amended. Total authority under the act at the beginning of the fiscal year for demonstration projects, amounted to $250 million. This program was designed to assist middle income families in Latin America to obtain housing on satisfactory terms.

Through the end of the period under review, AID had approved 34 housing investment guarantee projects in 16 Latin American countries. With a total guarantee authorization of $178.6 million, these projects will ultimately result in the construction of approximately 31,546 housing units. An additional 18 projects involving 11,677 units representing $61.4 million of guarantee commitments are in various stages of processing. Of the total of 34 projects authorized, 16 are under construction, eight of which are partially completed and two additional projects are fully completed. It is expected that the $250 million guarantee authority will support the construction and sale of some 40.000 housing units in 17 Latin American countries.

In addition to the $250 million authority for demonstration housing projects, the Foreign Assistance Act of 1965 authorized AID to guarantee a further $100 million of investments in Latin American housing, including the issuance of guarantees to eligible U.S. investors assuring against loss of loan investments in—(1) credit institutions in Latin America engaged directly or indirectly in the financing of home mortgages, (2) housing projects in Latin America for lower income families, (3) housing projects in Latin America which will promote the development of institutions important to the success of the Alliance for Progress, and (4) housing projects in Latin America for which 25 percent or more of the financing is made available from sources within Latin America and which, to the maximum extent practicable, have a unit cost of not more than $6,500. The Agency announced that applications would be received under these new programs from April 4, 1966, through September 15, 1966. Applications well in excess of the $100 million authority have

38

57 22 U.S.C. § 2184.

58 Text in American Foreign Policy: Current Documents, 1965, pp. 1137-1145.

(a) Section 201(b), which relates to general authority to make loans from the Development Loan Fund, is amended as follows:"1

(1) In the second sentence, strike out the word "and" at the end of clause (5) and strike out the period at the end of the sentence and insert a comma and the following: "(7) the degree to which the recipient country is making progress toward respect for the rule of law, freedom of expression and of the press, and recognition of the importance of individual freedom, initiative, and private enterprise, (8) the degree to which the recipient country is taking steps to improve its climate for private investment, and (9) whether or not the activity to be financed will contribute to the achievement of self-sustaining growth."

(2) At the end thereof add the following new sentence: "Funds made available under this title, except funds made available pursuant to section 205, shall not be used to make loans in more than ten countries in any fiscal year, except that such loans may be made in any additional country after at least thirty days shall have elapsed following the submission by the President to the Committee on Foreign Relations of the Senate and the Speaker of the House of Representatives of a report stating that the making of loans in such additional country during such fiscal year is in the national interest and giving his reasons therefor."

(b) Section 202(a), which relates to authorization for the Development Loan Fund, is amended as follows: "

(1) Strike out "$1,200,000,000" and all that follows down through "succeeding fiscal years" and insert in lieu thereof "$685,000,000 for the fiscal year 1967 and $750,000,000 for each of the fiscal years 1968 and 1969".

(2) In the second proviso, strike out "June 30, 1965, and June 30, 1966" and insert in lieu thereof "June 30, 1967, through June 30, 1969".

(c) Amend section 205, which relates to use of international lending organizations, to read as follows: 63

"SEC. 205. In order to serve the purposes of this title and the policy con

61 22 U.S.C. § 2161. 62 22 U.S.C. § 2162. 63 22 U.S.C. § 2165.

50 80 Stat. 795.

60 22 U.S.C. § 2151.

(1) In the second sentence of subsection (a) strike out "and" at the end of clause (5) and strike out the period at the end of the sentence and insert a comma and the following: "(7) the degree to which the recipient country is making progress toward respect for the rule of law, freedom of expression and of the press, and recognition of the importance of individual freedom, initiative, and private enterprise, and (8) whether or not the activity to be financed will contribute to the achievement of self-sustaining growth."

(2) At the end of subsection (a), add the following new sentence: "The authority of this title shall not be used to furnish assistance to more than forty countries in any fiscal year, except that such assistance may be furnished to any additional country after at least thirty days shall have elapsed following the submission by the President to the Committee on Foreign Relations of the Senate and the Speaker of the House of Representatives of a report stating that the furnishing of assistance to such additional country during such fiscal year is in the national interest and giving his reasons therefor."

(3) At the end of section 211, add the following new subsections:

64 22 U.S.C. § 2369. 05 22 U.S.C. § 2171.

"(e) In any developing countries or areas where food production is not increasing enough to meet the demands of an expanding population, or diets are seriously deficient, a high priority shall be given to efforts to increase agricultural production, particularly the establishment or expansion of adaptive research programs designed to increase acre-yields of the major food crops. Such research programs, to the greatest extent possible, should be based on cooperative undertakings between universities and research institutions in the developing countries and United States universities and research institutions."

(b) Section 212, which relates to authorization, is amended by striking out "1966" and inserting in lieu thereof "1967".

(c) Section 214, which relates to American schools and hospitals abroad, is amended as follows: "

(1) In subsection (b), strike out "to hospitals outside the United States founded or sponsored by United States citizens and serving as centers for medical education and research" and insert in lieu thereof "to institutions referred to in subsection (a) of this section, and to hospital centers for medical education and research outside the United States, founded or sponsored by United States citizens”.

(2) Subsection (c), which relates to authorization, is amended by striking out "1966, $7,000,000" and inserting in lieu thereof "1967, $10,989,000".

(3) At the end of such section add the following new subsection:

"(d) There is authorized to be appropriated to the President for the purposes of section 214(b), in addition to funds otherwise available for

66 22 U.S.C. § 2172. 67 22 U.S.C. § 2212. 68 22 U.S.C. § 2174.