**GAO-04-647**                      Published: Jun 18, 2004. Publicly Released: Jul 06, 2004.                  

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## Highlights

The Agriculture Department's Rural Utilities Service (RUS) makes loans and provides loan guarantees to improve electric service to rural areas. Beyond guaranteeing loans, under a yet-to-be-implemented provision of the 2002 Farm Bill, RUS is also to guarantee the bonds and notes that lenders use to raise funds for making loans for electric and telecommunications services. Fees on these latter guarantees are to be used for funding rural economic development loans and grants. GAO was asked to examine (1) the extent to which RUS' borrowers provide electricity service to nonrural areas and (2) the potential financial risk to taxpayers and amount of loans and grants that the guarantee fees will fund. GAO also identified an alternative for funding rural economic development.

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## Topics

Economic Development

Direct loansElectric utilitiesEligibility criteriaFeesGovernment guaranteed loansRural economic developmentFinancial analysisRisk managementRisk assessmentWarranties