MCC Invites Countries to Submit Compacts for 2009

Dec 16th, 2008 3:51 PM UTC
By Beth Adler

Last week the Board of the Millennium Challenge Corporation (MCC) determined which countries will be invited to submit compact or threshold proposals for FY 2009. The MCC is a U.S. government corporation that aims to reduce global poverty in the world’s poorest countries through the promotion of sustainable economic growth. Each year the MCC selects countries to submit proposals for either a compact or a threshold agreement with the MCC. Through the compact agreement, the MCC provides funding and technical assistance for poverty-reduction projects designated by the developing country. Threshold agreements assist countries in strengthening certain indicators to help them become compact-eligible. The board’s decision is based on a set of indicators countries need to meet in order to be compact-eligible that determine the country’s investment in people, economic freedom and commitment to democracy as well as their efforts to fighting corruption. The MCC released a press statement detailing the results of the meeting.

Three countries – Colombia, Indonesia, and Zambia – were invited to submit a compact proposal for large-scale funding for development projects. In addition, Liberia is eligible to submit a proposal for threshold program funding and support. Paraguay was invited to submit a Stage II Threshold proposal to continue to assist the country in achieving the indicators that will make it compact eligible. This is the first time the MCC has proposed a Stage II Threshold Program for countries who do not meet the compact-eligible indicators, but have made excellent progress through the threshold program towards achieving those indicators.

Jordan, Malawi, Moldova, Senegal, and the Philippines, who were invited last year to submit a compact proposal to the MCC, will be able to continue the process of developing compacts for FY 2009. However, the MCC has specifically stated that it will not sign a compact with the Philippines until it passes the indicator criteria on corruption.

The board voted to suspend assistance for new activities in Nicaragua, which has a $175 million MCC compact, due to actions taken by the Nicaraguan government that are inconsistent with the MCC’s eligibility criteria. Nicaragua passed all indicators except for Control of Corruption, for which they met the median score. However, the political conditions leading up to, during, and after the recent elections were not in line with the MCC’s commitment to policies that promote political freedom and civil liberties. The Board will determine subsequent actions regarding Nicaragua at their next meeting, based on the response of the Nicaraguan government.

The MCC announced that several countries are no longer eligible to submit a proposal for a compact program. These countries – Bolivia, Ukraine, and Timor-Leste – were in the process of preparing their compacts, but had not yet signed commitments with the MCC. Ukraine and Timor-Leste fail several indicators including the hard hurdle on Control of Corruption. Bolivia passed all indicators, but have essentially severed ties with the U.S. Timor-Leste was made eligible as a threshold country instead. The MCC will continue to work with Ukraine on implementation of their threshold program. Yemen, who was in the process of submitting a threshold program proposal, is no longer eligible for threshold assistance due to deterioration of policies in the country.

This was the last meeting of the current MCC board. The new board will convene in March of 2009.

-Beth Adler

TAGS: MCC, Policy News