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University Daily Kansan, August 18, 1983
Page 15
GAO says farm agency charged incorrect rates
By United Press International
WASHINGTON - The federal agency that lends money to farmers and rural homeowners has failed to keep pace with changes in interest rates, and the results are both overcharges and undercharges to borrowers, the General Accounting Office said yesterday.
During a 18-month period ending in March 1982, 74,000 borrowers from the Farmers Home Administration were undercharged $103 million in interest, and 20,000 borrowers paid $9 million too much, the congressional investigative agency said. Taxpayers were left paying the $94 million difference.
FHIL funds money to farmers to purchase and to operate farms, makes housing loans to low- and middle-income families in rural areas and lends money to community facilities in rural areas.
FHA failed to adjust its interest rates in tandem with changes in the government's cost of borrowing, on which the rates are supposed to be based. GAO said.
FOR EXAMPLE, on farm-operating loans approved during the 10 months ending in March 1982, some borrowers received what amounted to interest subsidies as high as 1.5 percentage points, while, most effectively paid a premium of 1.25 percentage points.
The problem would be solved, the congressional investigators said, if FHA changed its interest rates every month.
FHA decided not to increase interest rates on farm loans from September through November of 1981 because of depressed conditions in the farm economy. Yet the policy was inconsistent and rates were raised in April and May of the year, and were not reduced when they could have been in July and December.
THE AGRICULTURE Department said, in response to the GAO findings, that the review covered a time of interest rate volatility that exaggerated the impact of lags in PHA rate changes.
"In periods of such instability, fairness dictates that rates be revised more frequently to reflect this volatility," the GAO said.
African rulers call for unity in Chad talks
By United Press International
BRAZZAVILLE. Congo — African leaders yesterday called on the Organization of African Unity to start a new diplomatic drive to resolve Chad's civil war through negotiations.
The call came in a joint declaration issued after a meeting of 10 west and central African leaders that said all foreign forces must be withdrawn from the embattled desert nation.
The only country that expressed reserve was Zaire, which has sent troops and air support to the governors of Chad's president, Hissene Habre.
"We condemn the intervention of all foreign forces in Chad. It is important that all of Chad's neighbors in Africa undertake every measure possible to reach a negotiated settlement," said Diane Cahill, chairwoman of Ethiopia, OAU acting chairman.
President Denis Sassou-Nguesso of Congo, who called for the meeting, carried the Western nations involved in the attack on the Western nation of past defeats in the Third World.
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