This report tracks foreign aid funding levels to Latin America and the Caribbean over the last three years. The annual State Department, Foreign Operations, and Related Programs Appropriations bills are the vehicles by which Congress funds foreign assistance programs. Congress will likely continue to take interest in a number of related issues, including the level of aid, the effectiveness of counternarcotics assistance, and how best to address the spread of HIV/AIDS, and address poverty in the region. This report will be updated as country specific aid levels for FY2008 become available. Historical Trends

Trends in U.S. foreign assistance to Latin America generally reflect the trends and rationales for U.S. foreign aid programs globally. U.S. assistance has not returned to levels attained during the Alliance for Progress in the 1960s. When including an additional $550 million in counternarcotics funds for Mexico and Central America requested as part of the supplemental budget, the FY2008 request is $2.1 billion, an increase from the previous year. U.S. assistance to Mexico may increase significantly in the near-term if Congress approves a new counternarcotics initiative (the Merida Initiative). The Administration's FY2008 regular budget request cuts aid to Mexico by 30% from FY2007 funding levels. Panama is not slated to receive DA assistance. Three Central American nations—Honduras, Nicaragua, and El Salvador—also receive economic assistance through the Millennium Challenge Corporation (MCC), totaling $851 million. Including two regional funds (Latin America and Caribbean Regional, and Western Hemisphere Regional), and the portion of the Migration and Refugee account allocated for Latin America, funding in FY2007 amounted to $110 million, and a requested $88 million for FY2008. Each category represents common development challenges around which aid programs are to be designed, and linked to strategic objectives. The response to the AIDS epidemic in the Caribbean and Central America has involved a mix of support by governments in the region, bilateral donors (such as the United States, Canada, and European nations), regional and multilateral organizations, and nongovernmental organizations (NGOs). Because of the inclusion of Guyana and Haiti as focus countries in the President's Emergency Plan for AIDS Relief (PEPFAR), funded largely through the Global HIV/AIDS Initiative (GHAI) account, U.S. assistance to the region for HIV/AIDS increased to $47 million in FY2004, $83 million in FY2005, $93 million in FY2006, and an estimated $118 million in FY2007. Mexico would receive $27.8 million in the regular FY2008 budget. Child Survival and Health
CSH funds focus on combating infectious disease and promoting child and maternal health, family planning, and reproductive health. Development Assistance
DA funds aim to achieve measurable improvements in key areas to foster sustainable economic growth: trade and investment, agriculture, education, environment, health, and democracy. ESF assistance in the Andean region, Mexico, and Central America is used to pursue justice sector reform, facilitate implementation of free trade agreements, improve local governance, fight corruption, and promote respect for human rights. Foreign Military Financing
FMF provides grants to foreign nations to purchase U.S. defense equipment, services, and training.
Trends in U.S. assistance to the Latin America and Caribbean region generally reflect the trends and rationales for U.S. foreign aid programs globally. Aid to the region increased during the 1960s with the Alliance for Progress, and during the 1980s with aid to Central America. Since 2000, aid levels have increased, especially in the Andean region, as the focus has shifted from Cold War issues to counternarcotics and security assistance. Current aid levels to Latin America and the Caribbean comprise about 5.8% of the worldwide FY2007 aid budget, including both bilateral and multilateral assistance. Amounts requested for the regular FY2008 budget would increase this ratio to 6.1%, and to 7.2% if Congress approves supplemental funds for a new counternarcotics initiative in Mexico and Central America. Three countries—Honduras, Nicaragua, and El Salvador—have signed compacts for Millennium Challenge Account (MCA) funds worth a combined $851 million. Aid levels to the region could increase further as more countries become eligible for MCA. Both Haiti and Guyana are focus countries for the President's Emergency Plan for AIDS Relief (PEPFAR).
For the FY2008 regular budget, the Administration has requested $1.57 billion in assistance to Latin America and the Caribbean, the largest portion of which would be allocated to the Andean region, or $823.8 million. Mexico and Central America are slated to receive $220.4 million in regular funds, plus $550 million in supplemental counternarcotics funds. The Caribbean would receive $365.5 million. Brazil and the Southern Cone of South America are to receive an estimated $18.5 million.
Aid programs are designed to achieve a variety of goals, from poverty reduction to economic growth. Child Survival and Health (CSH) funds focus on combating infectious diseases and promoting child and maternal health. Development Assistance (DA) promotes sustainable economic growth in key areas such as trade, agriculture, education, the environment, and democracy. The Economic Support Fund (ESF) assists countries of strategic importance to the United States, and funds programs relating to justice sector reforms, local governance, anti-corruption, and respect for human rights. Counternarcotics programs seek to assist countries to reduce drug production, interdict trafficking, and promote alternative crop development. Military assistance provides grants to nations for the purchase of U.S. defense equipment, services, and training.
The annual State Department, Foreign Operations, and Related Programs Appropriations bills are the vehicles by which Congress provides funding for foreign assistance programs. Congress will likely continue to take interest in a number of related issues, including the level of aid, the effectiveness of counternarcotics assistance, and how best to address the spread of HIV/AIDS, and address poverty in the region. This report will be updated as country level funding figures for FY2008 become available.