[Federal Register Volume 63, Number 17 (Tuesday, January 27, 1998)]
[Notices]
[Pages 3932-3933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1826]


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OFFICE OF MANAGEMENT AND BUDGET


Discount Rates for Cost-Effectiveness Analysis of Federal 
Programs

AGENCY: Office of Management and Budget.

ACTION: Revisions to Appendix C of OMB Circular A-94.

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SUMMARY: The Office of Management and Budget revised Circular A-94 in

[[Page 3933]]

1992. The revised Circular specified certain discount rates to be 
updated annually when the interest rate and inflation assumptions used 
to prepare the budget of the United States Government were changed. 
These discount rates are found in Appendix C of the revised Circular. 
The updated discount rates are shown below. The discount rates in 
Appendix C are to be used for cost-effectiveness analysis, including 
lease-purchase analysis, as specified in the revised Circular. They do 
not apply to regulatory analysis.

DATES: The revised discount rates are effective immediately and will be 
in effect through January 1999.

FOR FURTHER INFORMATION CONTACT: Robert B. Anderson, Office of Economic 
Policy, Office of Management and Budget, (202) 395-3381.
Joseph J. Minarik,
Associate Director for Economic Policy, Office of Management and 
Budget.

[OMB Circular No. A-94, Revised, October 29, 1992]

Appendix C

(Revised January 1998)

Discount Rates for Cost-Effectiveness, Lease Purchase, and Related 
Analyses

    Effective Dates. This appendix is updated annually around the 
time of the President's budget submission to Congress. This version 
of the appendix is valid through the end of January, 1999. Copies of 
the updated appendix and the Circular can be obtained from the OMB 
Publications Office (202-395-7332) or in an electronic form through 
the OMB home page on the world-wide WEB, http://www.whitehouse.gov/
WH/EOP/omb. Updates of this appendix are also available upon request 
from OMB's Office of Economic Policy (202-395-3381), as is a table 
of past years' rates.
    Nominal Discount Rates. Nominal interest rates based on the 
economic assumptions from the budget are presented below. These 
nominal rates are to be used for discounting nominal flows, which 
are often encountered in lease-purchase analysis.

Nominal Interest Rates on Treasury Notes and Bonds of Specified 
Maturities (in Percent)

3-Year.............................................................  5.6
5-Year.............................................................  5.7
7-Year.............................................................  5.8
10-Year............................................................  5.9
30-Year............................................................  6.1
                                                                        

    Real Discount Rates. Real interest rates based on the economic 
assumptions from the budget are presented below. These real rates 
are to be used for discounting real (constant-dollar) flows, as is 
often required in cost-effectiveness analysis.

Real Interest Rates on Treasury Notes and Bonds of Specified 
Maturities (in Percent)

3-year.............................................................  3.4
5-year.............................................................  3.5
7-year.............................................................  3.5
10-year............................................................  3.6
30-year............................................................  3.8
                                                                        

    Analyses of programs with terms different from those presented 
above may use a linear interpolation. For example, a four-year project 
can be evaluated with a rate equal to the average of the three-year and 
five-year rates. Programs with durations longer than 30 years may use 
the 30-year interest rate.

[FR Doc. 98-1826 Filed 1-26-98; 8:45 am]
BILLING CODE 3110-01-P