RURAL ROADS PROGRAM

AUDIT INCLUDED EXAMINATION OF LOAN DISBURSEMENTS, PROJECT DOCUMENTS, AND VISITS TO THREE OF THE PROVINCES PARTICIPATING IN THE PROJECT. LOAN FUNDS WERE CHANNELED THROUGH THE MINISTRY OF LOCAL GOVERNMENT AND COMMUNITY DEVELOPMENT (MLGCD) TO PROVINCIAL ENGINEERING OFFICES (PEO"S) IN 28 PROVINCES UNDER THE RURAL ROADS PROJECT I AND 55 PROVINCES AND 7 CITIES UNDER THE RURAL ROADS PROJECT II. THE FULL $15 MILLION AVAILABLE UNDER RRPI HAS BEEN EXPENDED, WHILE ONLY $113,344 OF THE $7 MILLION PROVIDED UNDER RRPII WAS EXPENDED AS OF 8/10/79. AUDITORS RECOMMEND THAT USAID/P RE-EVALUATE WHETHER THE RRP PURPOSE IS APPROPRIATE ON WHETHER THE PURPOSE SHOULD BE REDEFINED IN ANY FUTURE AID LOANS. PROJECT FILES FOR RRPI WERE NOT PROPERLY MAINTAINED BY THE PROVINCES. ALSO, USAID DID NOT HAVE MANY RECORDS AVAILABLE TO IT, SUCH AS CONTRACTS WITH ARCHITECTURAL AND ENGINEERING FIRMS, ANNUAL PROGRESS REPORTS, AND ESTIMATES USED IN PLANNING THE NUMBER OF ROADS AND BRIDGES TO BUILD. THE MLGCD ESTABLISHED A SPECIAL DEVELOPMENT ACCOUNT TO BE USED BY THE PROVINCES FOR ROAD MAINTENANCES. HOWEVER, PERSONNEL FROM THE PROVINCES AND THE MLGCD ALL STATED THAT THEIR MAIN PROBLEM WAS A LACK OF MAINTENANCE EQUIPMENT. AUDITORS RECOMMEND THAT USAID/P ENCOURAGE THE GOP TO PLACE THE MAINTENANCE FUNDS IN AN INTEREST-BEARING ACCOUNT. USAID SHOULD DETERMINE IF MORE EFFECTIVE USE COULD BE MADE OF THE FUNDS. ALSO, USAID SHOULD INFORM THE GOP OF ITS NON-COMPLIANCE WITH THE LOAN AGREEMENT PROVISION REQUIRING TRAINING OF LOCAL GOVERNMENT PERSONNEL IN ENGINEER AND EQUIPMENT POOL OPERATIONS.