Federal Register: January 12, 2007 (Volume 72, Number 8)
DOCID: fr12ja07-108 FR Doc E7-308
OFFICE OF MANAGEMENT AND BUDGET
Management and Budget Office
DOCUMENT ACTION: Revisions to Appendix C of OMB Circular A-94.
Discount Rates for Cost-Effectiveness Analysis of Federal Programs
DATES: The revised discount rates are effective immediately and will be in effect through December 2007.
The Office of Management and Budget revised Circular A-94 in 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 costeffectiveness analysis, including leasepurchase analysis, as specified in the revised Circular. They do not apply to regulatory analysis.
Federal programs; cost-effectiveness analysis; discount rates (Circular A-94),
FOR FURTHER INFORMATION CONTACT
Robert B. Anderson, Office of Economic Policy, Office of Management and Budget, (202) 3953381.
James D. Foster,
Associate Director for Economic Policy, Office of Management and Budget.
Appendix CDiscount Rates for CostEffectiveness, Lease Purchase, and Related Analyses (OMB Circular No. A94)
Revised December 2006.
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 for calendar year 2007. A copy of the updated appendix can be obtained in electronic form through the OMB home page at http://www.whitehouse.gov/[fxsp0]omb/circulars/a094/[fxsp0]a94 [fxsp0]appxc.html, the text of the main body of the Circular is found at http://. http://www.whitehouse.gov/omb/[fxsp0]circulars/a094/DISCHIST2007.pdf. Updates of the appendix are also available upon request from OMB's Office of Economic Policy (2023953381).
Nominal Discount Rates. A forecast of nominal or market interest rates for 2007 based on the economic assumptions for the 2008 Budget are presented below. These nominal rates are to be used for discounting nominal flows, which are often encountered in leasepurchase analysis. Nominal Interest Rates on Treasury Notes and Bonds of Specified Maturities [In percent] 3Year 5Year 7Year 10Year 20Year 30Year 4.9 4.9 4.9 5.0 5.1 5.1
Real Discount Rates. A forecast of real interest rates from which
the inflation premium has been removed and based on the economic
assumptions from the 2008 Budget is presented below. These real rates
are to be used for discounting constantdollar flows, as is often required in costeffectiveness analysis.
Real Interest Rates on Treasury Notes and Bonds of Specified Maturities [In percent] 3Year 5Year 7Year 10Year 20Year 30Year 2.5 2.6 2.7 2.8 3.0 3.0
Analyses of programs with terms different from those presented
above may use a linear interpolation. For example, a fouryear project
can be evaluated with a rate equal to the average of the threeyear and fiveyear rates. Programs with durations longer
than 30 years may use the 30year interest rate.
[FR Doc. E7308 Filed 11107; 8:45 am]
BILLING CODE 311001P