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The ability of the mission area to achieve the goals of its strategic plan can be impacted by a variety of factors beyond its control. Primary external factors affecting all programs are:
Macroeconomic influences - Changes in the economy, including the global economy, can have a major impact on our financial programs and the ability of our customers to meet their obligations. Rural businesses need to be competitive in the global economy if they are to succeed. A rise in unemployment generally impacts low-income families first. Inflation can impact the disposable income of low-income families and may also adversely impact the ability of small communities and businesses to meet their obligations if their operating expenses are increasing faster than their income. Changes in the cost of money have the greatest impact on the mission area. As interest rates rise or fall, there is a clear impact on the cost of the financing provided by the mission area and the ability of new customers to afford the assistance they need. For instance, high interest rates reduce the ability of our existing direct loan borrowers to graduate to private sector credit. Changing interest rates will impact the subsidy rates of each program. Lower interest rates reduce the subsidy cost of direct loans, and increase the subsidy cost of guaranteed programs. Rural Development can partially ameliorate the impact of adverse economic conditions by increasing its loan servicing activities to minimize delinquencies.
Reductions in funding - Reductions in level of funding provided to the Rural Development agencies will reduce their ability to help rural America and to achieve their goals. Likewise, reductions in funding for Salaries and Expenses will limit the ability of the mission area to provide the staff and other resources needed to deliver the programs or achieve the anticipated level of performance. Reductions in program funding can be partially offset by efforts to increase the leveraging of agency funds with other sources of funds. Reductions in Salaries and Expenses can only be offset by the elimination of lower priority work efforts which may, in the long run, be to the detriment of the Government or its customers.
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