Interim audit report on the USAID/Panama emergency restoration of small businesses project no. 525-0301

invasion. The audit covers the period 2/22/90-5/31/90 and is based on personal observation and a review of a non- Federal audit conducted by Price Waterhouse. The entire life of the project extends from 2/22/90 to 7/21/90. The Foundation for Economic and Social Development (FUNDES), the implementing agency, did not disburse any loans to project beneficiaries until 4/30/90 -- almost halfway through the project. Although the first loans were approved in late 3/90, FUNDES did not send approval notification letters to the banks until a month later. Moreover, a high percentage of the notification letters contained errors which, compounded by poor telephonic communications between the banks and FUNDES, caused delays in loan processing. By the end of 4/90, 165 loan applications had been received by FUNDES, of which only 43 applications totaling $818,934 were approved. At the end of 4/90, only two of these loans totaling $40,452 had been disbursed. Although project activities began to improve by the end of 5/90, with approval of $2.5 million in loans, only $849,470 (or 18%) of the total available funds of $4.8 million had reached project beneficiaries by 5/31/90. While not making a formal recommendation, the audit suggests that USAID/P determine whether it should (1) extend the PACD in order to ensure complete disbursement of project funds, or (2) deobligate unused funds at the current PACD for use in other areas.