Millennium Challenge Corporation
Curt Tarnoff
Specialist in Foreign Affairs
March 11, 2015
Congressional Research Service
7-5700
www.crs.gov
RL32427
Millennium Challenge Corporation
Summary
The Millennium Challenge Corporation (MCC) provides economic assistance through a
competitive selection process to developing nations that demonstrate positive performance in
three areas: ruling justly, investing in people, and fostering economic freedom.
Established in 2004, the MCC differs in several respects from past and current U.S. aid practices:
• the competitive process that rewards countries for past actions measured by
objective performance indicators;
• its mandate to seek poverty reduction through economic growth, not encumbered
with multiple sector objectives;
• the requirement to solicit program proposals developed solely by qualifying
countries with broad-based civil society involvement;
• the responsibility of recipient countries to implement their own MCC-funded
programs, known as compacts;
• a compact duration limited to five years, with funding committed up front;
• the expectation that compact projects will have measurable impact; and
• an emphasis on public transparency in every aspect of agency operations.
On December 16, 2014, the President signed into law H.R. 83 (P.L. 113-235), the Consolidated
and Continuing Appropriations Act, FY2015, providing the MCC with $899.5 million in FY2015,
$1.3 million more than the FY2014 level.
On February 2, 2015, the Administration issued its FY2016 budget request, proposing $1.25
billion for the MCC, an increase of 39% over the FY2015 appropriation of $899.5 million.
Congress authorized the MCC in P.L. 108-199 (January 23, 2004). Since that time, the MCC has
signed 29 grant agreements, known as compacts, with 25 countries, including with Madagascar
(calendar year 2005), Honduras (2005), Cape Verde (2005), Nicaragua (2005), Georgia (2005),
Benin (2006), Vanuatu (2006), Armenia (2006), Ghana (2006), Mali (2006), El Salvador (2006),
Mozambique (2007), Lesotho (2007), Morocco (2007), Mongolia (2007), Tanzania (2008),
Burkina Faso (2008), Namibia (2008), Senegal (2009), Moldova (2010), Philippines (2010),
Jordan (2010), Malawi (2011), Indonesia (2011), Cape Verde II (2012), Zambia (2012), Georgia
II (2013), El Salvador II (2014), and Ghana II (2014).
MCC issues include the level of funding to support MCC programs, the results of MCC
compacts, sustainability, and corruption concerns.
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Contents
Most Recent Developments ............................................................................................................. 1
Introduction ...................................................................................................................................... 1
MCC Policy and Programs .............................................................................................................. 2
Identification of Candidate Countries ........................................................................................ 2
Compact-Eligible Country Selection Criteria and Methodology .............................................. 4
Selection of Compact-Eligible Countries .................................................................................. 6
Country Selection—FY2015 ..................................................................................................... 9
MCC Compacts ....................................................................................................................... 10
Compact Development ...................................................................................................... 10
Compact Implementation .................................................................................................. 12
Compact Suspension and Termination .............................................................................. 14
Anticipated Compacts in FY2015 and FY2016 ................................................................ 16
Threshold Programs ................................................................................................................. 17
Select Issues ................................................................................................................................... 19
Funding .................................................................................................................................... 19
MCC Appropriations Request and Congressional Action for FY2016 ............................. 20
MCC Appropriations Request and Congressional Action for FY2015 ............................. 20
Regional Integration and Concurrent Compacts...................................................................... 20
Compact Outcomes and Impact ............................................................................................... 21
Ensuring Sustainability ............................................................................................................ 24
Corruption................................................................................................................................ 24
Tables
Table 1. Compact-Eligible Countries: FY2015 ............................................................................. 10
Table 2. MCC Appropriations: FY2004-FY2016 Request ............................................................ 19
Appendixes
Appendix A. MCC Compacts at a Glance ..................................................................................... 27
Appendix B. Compact Descriptions and Status ............................................................................. 29
Appendix C. MCC Candidate Countries FY2015 ......................................................................... 38
Appendix D. MCC Performance Indicators FY2015 .................................................................... 39
Contacts
Author Contact Information........................................................................................................... 39
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Most Recent Developments
On February 2, 2015, the Administration issued its FY2016 budget request, proposing $1.25
billion for the MCC, an increase of 39% ($350.5 million) over the FY2015 appropriation level.
On December 16, 2014, the President signed into law H.R. 83 (P.L. 113-235), the Consolidated
and Continuing Appropriations Act, 2015, providing the MCC with $899.5 million in FY2015,
$1.3 million more than the FY2014 level.
On December 10, 2014, the MCC Board selected Nepal as eligible to develop its first compact,
chose Mongolia and the Philippines to develop second compacts, and reselected the previously
approved countries of Benin, Lesotho, Liberia, Morocco, Niger, and Tanzania. Noting a
downward decline in its corruption score, the Board stated its expectation that Tanzania would
improve that score prior to any compact agreement. The Board also selected Cote d’Ivoire and
Sierra Leone as eligible to develop threshold programs, thereby ending the latter’s previous
eligibility for a compact, and approved a $28 million threshold program for Guatemala. MCC
exploration of possible regional compacts in South Asia was endorsed by the Board.
Introduction
The Millennium Challenge Corporation (MCC), established in 2004, arose out of a widespread
frustration with then-existing foreign aid programs and represented a significant change in the
way the United States delivered economic assistance. The MCC is based on the premise that
economic development succeeds best where it is linked to free market economic and democratic
principles and policies, and where governments are committed to implementing reform measures
in order to achieve such goals. The MCC concept differs in several fundamental respects from
past and current U.S. aid practices:
• a competitive selection process that rewards countries for their commitment to free
market economic and democratic policies as measured by objective performance
indicators;
• the pledge to segregate the funds from U.S. strategic foreign policy objectives that
often strongly influence where U.S. aid is spent;
• a mandate to seek poverty reduction through economic growth, not encumbered
with multiple sector objectives or congressional directives;
• the requirement to solicit program proposals developed solely by qualifying
countries with broad-based civil society involvement;
• the responsibility of recipient countries to implement their own MCC-funded
programs, known as compacts;
• a compact duration limited to five years, with funding committed up front;
• the expectation that compact projects will have measurable impact; and
• an emphasis on public transparency in every aspect of agency operations.
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The original proposal, made by President George W. Bush in a speech on March 14, 2002, also
differed from previous aid efforts in the size of its commitment to reach an annual level of $5
billion within a few years, an aim never even approximately met.
Congress approved the new initiative in January 2004 in the Millennium Challenge Act of 2003
(Division D of P.L. 108-199).1 It established the MCC as an independent government entity
separate from the Departments of State and the Treasury and from the U.S. Agency for
International Development (USAID).2 The MCC headquarters staff level is currently about 263,
with a total of 21 additional U.S. direct hire employees in compact countries.3 In May 2014, Dana
J. Hyde became the new Chief Executive Officer (CEO) of the MCC. A Board of Directors
oversees the MCC and makes the country selections. It is chaired by the Secretary of State and
composed of the Secretary of the Treasury, the USAID Administrator, the U.S. Trade
Representative, the Corporation’s CEO, and four individuals from the private sector appointed by
the President drawn from lists submitted by congressional leaders.4
Since its inception, Congress has closely followed MCC implementation. The 114th Congress will
likely consider MCC funding, a possible reauthorization, and operational issues.
MCC Policy and Programs
Since the MCC was launched, procedures and policies have continued to evolve. Program
implementation moves chronologically through a number of steps: candidate countries are
identified, eligibility criteria are formulated and applied, compact and threshold-eligible countries
are selected, compact programs are developed and proposed, and those approved are funded and
carried out. Elements in this process are discussed below.
Identification of Candidate Countries
The pool of possible candidate countries is limited by the authorizing statute to those falling
under the threshold for the World Bank’s classification for upper-middle income countries. For
1 When first proposed and in its early years, the initiative was known as the Millennium Challenge Account. Today,
both the program and the funding account in the foreign operations budget are more commonly known by the name of
the managing entity, the MCC. For a more in-depth discussion of the original MCC proposal and issues debated by
Congress in 2003, see CRS Report RL31687, The Millennium Challenge Account: Congressional Consideration of a
New Foreign Aid Initiative, by Larry Nowels.
2 The decision to house the initiative in a new organization was one of the most debated issues during early
congressional deliberations. The Bush Administration argued that because the initiative represents a new concept in aid
delivery, it should have a “fresh” organizational structure, unencumbered by bureaucratic authorities and regulations
that would interfere in effective management. Critics, however, contended that if the initiative was placed outside the
formal U.S. government foreign aid structure, it would lead to further fragmentation of policy development and
consistency. Some believed that USAID, the principal U.S. aid agency, should manage the program, while others said
that it should reside in the State Department. At least, some argued, the USAID Administrator should be a member of
the MCC Board, which had not been proposed in the initial Administration request.
3 MCC, Agency Financial Report, Fiscal Year 2014, p. 12.
4 Current private sector board members serving their first term are Susan M. McCue, president of Message Global, and
Morton Halperin, senior advisor for the Open Society Foundations. Serving a second term is Lorne Craner, co-director
of the Transatlantic Renewal Initiative, and Mark Green, president of the International Republican Institute. First terms
run three years and second terms run two years.
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FY2015, this limit is a Gross National Income (GNI) per capita of $4,125. As a result, the pool of
possible candidates is 83 countries for FY2015.5
Apart from the necessity to be under the income ceiling, income level status—in particular, the
division of candidate countries between lower-income and lower-middle income—is important in
both the financing and competitive selection processes and, since FY2012, has been treated
differently in each case. See “Selection of Compact-Eligible Countries” below for competitive
performance selection discussion.
Until FY2012, the pool of possible participants for funding purposes, as defined by Section 606
of the MCC authorization, included low-income countries—those with a Gross National Income
(GNI) per capita below the World Bank’s International Development Association (IDA) eligibility
level of $1,985 (in FY2015)—and lower-middle income countries—defined as those between that
figure and $4,125 (in FY2015), the threshold for the Bank’s classification for upper-middle
income countries.6
However, this division of countries into income groups and the high annual volatility of income
level data created some uncertainties and problems.7 Under the MCC legislative authority, only a
quarter of total MCC compact assistance in any year is available for lower-middle income
country compacts, severely limiting the possibility that such countries can be funded and
therefore discouraging the MCC Board from selecting them. Countries moving from one income
level to another had no predictable path to compact eligibility. Both the Philippines (FY2009) and
Indonesia (FY2009) were first selected when they were low-income countries; a year later they
transitioned to lower-middle income and were subject to the lower-middle income funding cap.
This abrupt shift was viewed by the MCC as extremely disruptive to a smooth-functioning
compact development process. A further concern is the diminishing pool of well-governed
candidates eligible for the larger amount of lower-income funding as more countries have been
transitioning into the lower-middle level.
To address this recurring issue of income category change, the FY2015 State, Foreign Operations
appropriations (Division J) in the Consolidated and Continuing Appropriations Act, 2015 (P.L.
113-235) contains language that, for purposes of funding eligibility, redefines the category of
low-income countries from the previously noted definition of those with per capita incomes
below $1,985 (in FY2015) to one that encompasses the bottom 75 countries in the low- and
lower-middle income level rankings. The remaining countries below the World Bank’s cut-off
ceiling for lower-middle income countries ($4,125 per capita in FY2015) remain defined as
5 A change to upper-income status excludes a country from consideration for new programs, unless the MCC Board
had selected that country as eligible in a previous year (when the country qualified as lower-middle income or below)
and is able to fund the program using that previous year’s funds. In FY2011, Albania, a threshold program country,
moved to upper-middle-income status and, therefore, became ineligible for MCC compact assistance. On the other
hand, Namibia, which gained upper-middle-income status in FY2008 and Jordan in FY2012, were able to continue
their on-going compacts as they were selected and signed compacts prior to the change in status.
6 The MCC draws on World Bank income data published in the July preceding the MCC’s August report identifying
candidates for the following fiscal year. As there is a lag in data collection, the July 2014 World Bank report, for
example, provides 2013 data that is used in the FY2015 MCC candidacy and compact-eligibility process. Note that the
IDA low-income eligibility figure differs from the standard World Bank classification of low income countries.
7 An example of the limitations of determining eligibility based on variable factors like income level is the Philippines.
The Philippines was selected for compact eligibility as a low-income country in FY2008 (and signed a compact based
on that status in 2010), moved from low-income to the lower-middle-income level in FY2010, then returned to low-
income status in FY2011, and again to lower-middle-income status in FY2012 where it has remained since.
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lower-middle in MCC terms. Applied in FY2015, 74 countries are considered for MCC funding
purposes as low-income and 9 countries are considered lower-middle income (versus 55 and 29,
respectively, under the old definition).8
Seeking to further ensure stability and predictability for candidate countries that might be
transitioning in and out of different income levels, the FY2015 appropriations language requires
that countries that move from low-income to lower-middle income or vice versa be treated as
though they are in their former classification for that fiscal year and two succeeding years.9 MCC
believes this legislation provides for a graduated transition for countries rather than the abrupt
change in status that characterized the previous process.
In addition to the income ceiling, under the MCC authorization, countries may be candidates only
if they are not statutorily prohibited from receiving U.S. economic assistance. For FY2015, eight
countries are excluded for this reason. Many had been barred in prior years as well.10
In August 2014, the MCC transmitted to Congress its annual notification of candidate countries.11
For funding purposes, the revised version listed 66 low-income countries (from the original pool
of 74, after excluding prohibited countries) and 9 lower-middle-income countries.
Compact-Eligible Country Selection Criteria and Methodology
As noted earlier, the MCC provides assistance to developing nations through a competitive
selection process, judged by country performance in three areas:
• Ruling justly—promoting good governance, fighting corruption, respecting human
rights, and adhering to the rule of law.
• Investing in people—providing adequate health care, education, and other
opportunities promoting an educated and healthy population.
• Economic freedom—fostering enterprise and entrepreneurship and promoting open
markets and sustainable budgets.
Country selection is based largely, but not exclusively, on a nation’s record, measured by
performance indicators related to these three categories, or “baskets.” Indicators may be a
straightforward single measure of a country’s rate of inflation—one reflection of good economic
8 74 in FY2015, instead of 75, because Iraq leapt from low income to upper-middle income, and application of the
legislative provision that holds countries at their income status for three years, leaves a gap of one from the base year of
FY2012.
9 In an early version of this provision, the FY2010 Consolidated Appropriations Act (P.L. 111-117, H.R. 3288,
Division F) allowed those transitioning countries already selected in FY2009 to maintain their candidacy for eligibility
and, if re-selected, draw on the same source of funds as when they were first selected. The compact for Indonesia,
transitioning to lower-middle in FY2010 when it was re-selected, was therefore funded as though in the low-income
group.
10 Various types of aid restrictions apply to these countries for FY2015. For Zimbabwe, legislation bans assistance to
the central government until it implements transparent fiscal policies. For Burma, assistance is prohibited until
measurable progress is made in human rights and democratic governance. Legislation specifically prohibits aid to
Sudan, Syria, and North Korea. Notwithstanding these and other restrictions, each country remains eligible for
humanitarian assistance from the United States.
11 MCC, Report on Countries that are Candidates for Millennium Challenge Account Eligibility for Fiscal Year 2014
and Countries that would be Candidates but for Legal Prohibitions, August 2013.
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policies—or may be a combination of data points forming an index of surveys and expert
opinions on the quality of public service, civil servant competency, a government’s ability to plan
and implement sound policies, which together “measure” government effectiveness. MCC is
constrained somewhat in measuring performance by the public availability of appropriate,
comparable, and consistent data on every country.
The choice of criteria on which to base the eligibility of countries for MCC programs is one of the
most important elements in MCC operations. They are a key statement of MCC development
priorities as they ultimately determine which countries will receive U.S. assistance. Perhaps of
equal significance, raising indicator scores has become a prominent objective of some developing
countries in what former CEO Danilovich called the “MCC effect.”12 Countries seeking eligibility
are said to be moving on their own to enact reforms and take measures to improve performance
scores that would enable them to meet MCC criteria.
Pursuant to reporting requirements set in the MCC legislation, each year the Corporation sends to
Congress an overview of the criteria and methodology that would be used to determine the
eligibility of the candidate countries in that fiscal year.13 The criteria have been altered and
refined, sometimes dramatically, over time. In September 2011, the MCC Board adopted for the
FY2012 process perhaps the most significant changes to its selection methods since the agency
was established. These continue to be applied in FY2014.
For most performance indicators, each country is judged against its peers in its income group,
requiring a score just above the median to pass that indicator. For some indicators there is an
absolute threshold that must be met in order to pass the indicator. The absolute threshold
indicators include an “inflation rate” under 15%, “political rights” requiring a score above 17,
“civil liberties” requiring a score above 25, and, for lower-middle-income countries only, an
“immunization coverage” of above 90%.
Countries are required to pass at least half of the total number of indicators—10 of the 20
indicators (see Appendix D for a complete list of the 20 performance indicators). Of the 10, two
of these are “hard hurdles” that must be passed to qualify—the “control of corruption” indicator
and either one of two democratic rights indicators, the “civil liberties” indicator or the “political
rights” indicator. Requiring passage of a democratic rights indicator may weed out countries that
achieved eligibility only to have their compact programs suspended or terminated when their
governments failed to meet governance performance standards. Finally, to avoid concerns that a
country could achieve compact eligibility with a passing performance in only two of the three
baskets, the Board set the requirement that countries must pass at least one indicator in each
basket.
Periodically, the MCC establishes some indicators and modifies or replaces old ones in an effort
to improve the quality of indicators and identify indicators better reflecting congressional intent.
Beginning with the FY2005 selection process, for example, the MCC lowered the inflation rate
threshold from 20% to 15%, making it somewhat more difficult to pass this test (only 6 of the 63
candidate countries failed this test for FY2004). For FY2006, the MCC replaced a “country credit
rating” with a new indicator on the “cost of starting a business” that it believed had a stronger
12 MCC Public Outreach Meeting, February 15, 2007.
13 Most recently, Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for
Millennium Challenge Account Assistance in Fiscal Year 2014, September 2013.
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correlation with economic growth and was a measurement that might encourage governments to
take action in order to improve their scores. Since the initial use of the indicator “days to start a
business,” MCC candidate countries had introduced many business start-up reforms, the results of
which were reflected in a lowered median for this category. MCC officials hoped that adding an
indicator for the “cost of starting a business” would stimulate additional policy improvements. In
FY2008, the MCC collapsed the “days to start a business” and “cost of starting a business”
indicators into one “business start-up” indicator.
In addition to criteria originally proposed by the Bush Administration, lawmakers in the 2004
MCC authorizing legislation included four other matters on which to evaluate a country’s
performance. These relate to the degree to which a country recognizes the rights of people with
disabilities; respects worker rights; supports a sustainable management of natural resources; and
makes social investments, especially in women and girls. For each of these, the MCC has sought
to use supplemental data and qualitative information to inform its decisions on compact
eligibility. The latter two factors have led to the development of new indicators. In FY2005, an
indicator measuring girls’ primary education completion rates replaced a broader measure used in
FY2004 that did not disaggregate primary education graduation by gender. In FY2008, two
indicators assessing a country’s commitment to policies that promote sustainable management of
natural resources were adopted.
In FY2012, the MCC modified or added new indicators under all three baskets. Under the Ruling
Justly basket, a “freedom of information” indicator, including a measure of efforts to restrict
internet content, replaced the “voice and accountability” indicator. Under Investing in People, a
measure of “natural resource management” was split into two indicators, one focusing on “natural
resource protection” that assesses whether countries are protecting up to 10% of their biomes, and
the other on “child health,” which captures the earlier indicator’s data on access to improved
water, sanitation, and child mortality. The indicator on girls’ education was amended solely for
lower-middle-income countries to weigh the number of female students enrolled in secondary
school, rather than those completing primary school, which remains the indicator for low-income
countries.
Two new indicators were added to the Economic Freedom category of performance measures. An
“access to credit” indicator reflects the importance of credit in stimulating private sector growth.
A “gender in the economy” indicator measures a government’s commitment to promote equal
economic legal rights for both men and women.
Selection of Compact-Eligible Countries
Shortly after release of the performance criteria, the MCC publishes a scorecard, showing where
each candidate country’s performance falls in relation to the other candidate countries in its peer
group and where they stand on the absolute threshold indicators. Sometime later, the MCC Board
meets to select countries eligible to apply for compact assistance.
It is MCC practice that low-income countries “compete” with other low-income countries and
lower-middle income countries with other lower-middle income countries. With regard to the
competitive selection process that determines compact eligibility, the original income level
definitions in the MCC authorization still apply, not those established in FY2012 for funding
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purposes.14 The eight countries excluded from candidacy due to legislative prohibitions on
assistance are included in the pool of competing countries strictly for comparative performance
purposes. In the FY2015 selection process, there are 46 low-income candidate countries and 8
low-income aid-prohibited countries competing with each other, and 29 lower-middle income
countries competing with each other, a total of 75 candidate countries from which compact-
eligible countries may be chosen. (See Appendix C.)
The Board is guided by, but not entirely bound to, the outcome of the performance indicator
review process; board members can apply discretion in their selection. Performance trends,
missing or old data, and recent policy actions might come into play during selection deliberations.
For countries being considered for second compacts, the history and success of implementation of
the first compact is a significant factor.
Because it is MCC practice to judge the performance of countries within their income status
cohort, countries that move from one year to the next from low-income to lower-middle income
status may be affected negatively by being compared to countries longer established at a higher
level of development. Seeking to mitigate the negative consequences of income change, in
September 2009, the MCC Board announced that henceforth, for countries that move from low to
lower-middle income status, it would consider their performance relative to both their old income
group and the newer one for a period of three years. But it only does this as supplemental
information and, to date, has only considered the previous status of those countries it is
considering for reselection.
Just because a country passes the requisite number of qualifying indicators does not mean that it
will be selected for compact eligibility. This can be due to a variety of reasons, not least of which
is the limited funding available to support compacts. The Board is not required to give a reason
for its selections and only occasionally offers one. Most often it appears that a country has passed
the requisite number of qualifying indicators but is not selected because it scores very poorly—
perhaps in the lowest 25th percentile—in one or more of the remaining indicators. For example, in
FY2005, the Philippines passed 13 of the then-16 indicators, but was not made eligible, because it
scored “substantially below” the median on tests for health expenditures and fiscal policy, and
more recent trends indicated the fiscal policy situation was deteriorating further.15 In FY2006,
Bhutan, China, and Vietnam passed enough hurdles but were not chosen based on very low scores
on political rights and civil liberties; Uganda passed 12 of the 16 indicators and did not fall
significantly below the median on the other four, but was not selected for unexplained reasons.
At times, countries have been deemed compact eligible without meeting a sufficient number of
qualifying factors or with weak scores in some qualifying areas. In most such cases, the Board
takes into consideration recent policy changes or positive trend lines. For example, in FY2004,
the program’s first year, several countries (Georgia, Mozambique, and Bolivia) were selected
despite having failed the so-called “pass-fail” corruption indicator. Mozambique, which failed on
corruption and each of the four “investing in people” indicators, was chosen based on
supplemental data that were more current than information available from the primary data
sources. This evidence, the Board felt, demonstrated Mozambique’s commitment to fighting
14 For scorecard performance assessments, low-income is defined as below the World Bank’s IDA eligibility ceiling
and lower-middle income is defined as between the IDA ceiling and below the Bank threshold for upper-middle-
income countries. The MCC’s 75 country low-income definition is for funding availability purposes only.
15 Comments by Paul Applegarth, then MCC CEO, at a State Department Foreign Press Center Briefing, November 9,
2004.
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corruption and improving its performance on health and education. In FY2004, Cape Verde
scored poorly on the “trade policy” indicator, but the Board took into account the country’s
progress towards joining the World Trade Organization and implementing a value added tax to
reduce reliance on import tariffs. Lesotho did not score well on the measurement for “days to start
a business.” The MCC Board, however, took note of Lesotho’s creation of a central office to
facilitate new business formation and saw positive performance on other factors related to
business start-ups. In FY2011, Georgia was invited to submit a proposal for a second compact
despite failure in the “investing in people” basket; supplemental information attributing an
insufficient score in immunization rates to a temporary shortage of one vaccine helped the Board
toward a positive decision.
Even prior to its selection in FY2007, the possible choice of Jordan had come in for severe
criticism from some quarters. Freedom House, the organization whose annual Index of Freedom
is drawn upon for two of the “ruling justly” indicators, had urged the MCC Board to bypass
countries that had low scores on political rights and civil liberties. It argued that countries like
Jordan that fell below 4 out of a possible 7 on its index should be automatically disqualified.
Jordan, however, did well on three of the other indicators in this category. Several development
analysts further argued that Jordan should not be selected, because it is one of the largest
recipients of U.S. aid, has access to private sector capital, and is not a democracy.16 In selecting
Jordan, the MCC Board appears not to have been swayed by these arguments.
The Board has, at times, selected a country and then, in future years, and prior to approval of a
compact, de-selected it if its qualifying scores worsened or other factors interceded. Although the
Gambia was selected in FY2006, its eligibility for MCC assistance was suspended by the MCC
Board in June 2006 because of “a disturbing pattern of deteriorating conditions” in half of the 16
qualifying factors. Among the problems cited in this case were human rights abuses, restrictions
on civil liberties and press freedom, and worsened anti-corruption efforts.17 For the 2008 selection
process, the MCC Board eliminated Sri Lanka because of the resurgent civil strife that would
make a compact problematic. In the FY2009 selection round, the Board decided not to reselect
several countries that had been eligible in previous years—Bolivia, Timor-Leste, and Ukraine. In
FY2008 and FY2009, both Ukraine and Timor-Leste failed the corruption indicator. Timor-Leste,
in addition, failed the “investing in people” basket in those years. Bolivia, however, had passed its
indicator test in every year. A hold put on MCC consideration of Bolivia’s compact proposal in
FY2008 and its exclusion from eligibility in FY2009 appeared likely due to the political tensions
existing between it and the United States rather than its performance in development-related
matters. In the FY2014 selection round, both Benin and Sierra Leone were not reselected for
compact eligibility, because they failed the “control of corruption” indicator.
Some countries have remained eligible despite failing performances in years following their
selection. For example, Indonesia, selected in FY2009, failed the corruption indicator, half the
indicators, and the investing in people basket in FY2010 and FY2011. It remained compact-
eligible and signed a compact in 2011, because Congress allowed it to be judged and funded as a
lower income country, in which case it passed the selection requirements. In FY2014, the Board
16 Freedom House, “Millennium Challenge Corporation Should Hold Countries to Higher Standards of Democratic
Governance,” November 2, 2006, http://www.freedomhouse.org; Sheila Herrling, Steve Radelet, and Sarah Rose, “Will
Politics Encroach in the MCA FY2007 Selection Round? The Cases of Jordan and Indonesia,” Center for Global
Development, October 30, 2006, http://www.cgdev.org.
17 MCC Press Release, “The Gambia Suspended From Participation in MCC Compact Program,” June 15, 2006.
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continued the eligibility of Liberia and Morocco, although both failed slightly more than half the
20 indicators (11). While compact development could go forward, the Board indicated that it
expected both to pass the scorecard before a compact would be approved. And both do pass in
FY2015.
Except in certain extreme circumstances, described in the “Compact Suspension and
Termination” section below, countries that are already implementing compacts are generally
unaffected by a decline in performance indicators. Nine of the 19 countries implementing
compacts as of January 2011 would not have qualified in FY2011. Georgia and Vanuatu had
failed three years in a row; Armenia, El Salvador, Mali, and Mozambique had failed four years in
a row. Morocco had failed for five years straight.18 In FY2012, this picture changed dramatically;
of 16 active compacts in November 2011, only 2 would fail under the new system, 5 under the
old system. In FY2013, 5 of the 15 active compact countries would fail as would 3 of 10 in
FY2014. In FY2015, only 2 of 11 compacts would fail—Indonesia and Moldova.
In not strictly following the rule of the performance indicators, the MCC has argued that the
indicators themselves are imperfect measures of a country’s policies and performance. The
indicators often suffer from lag time, reflecting when the raw data were derived as much as a year
or more previously. A country’s position vis-à-vis its peers may also fluctuate considerably from
year to year without reflecting any significant change in the country’s policies. Countries
following reasonable policies may fall behind the performance criteria when other countries are
improving faster—thereby raising the bar. A shift in position from the low income to lower-
middle income group can similarly alter a country’s scores as it competes with countries more
likely to achieve better indicators than ones in the lower income group. They may also fail when
new criteria are introduced which countries have not had an opportunity to address and when
institutions measuring performance refine or revise their indicators (as was the case in FY2014).
Country Selection—FY2015
In its FY2015 selection round on December 10, 2014, the MCC Board named Nepal, previously
eligible for a threshold program, as eligible to develop its first compact. It selected Mongolia and
the Philippines to develop second compacts and reselected countries previously approved to
prepare compact proposals—Liberia and Niger for first compacts and Morocco, Tanzania,
Lesotho, and Benin for second compacts. Benin, selected in FY2013 but in a state of “limited
engagement” with MCC in FY2014 because it failed the corruption indicator that year, passed all
performance indicators this year. Sierra Leone, also in “limited engagement” in FY2014, failed
the corruption indicator again this year. Its previous eligibility for a compact has been ended and,
instead, it has now been selected to develop a threshold program. Also selected for threshold
eligibility is Cote d’Ivoire.
At the December meeting, the Board approved a $28 million threshold program for Guatemala
aimed at improving secondary education quality and capacity and improving tax revenue streams
that could presumably be invested in education. In addition, the possibility of establishing
regional compacts, especially in South Asia, was endorsed by the Board. Up until now, MCC
compacts have been exclusively set up on a bilateral basis. MCC is now encouraged to explore
the concept and mechanics of regional partnerships further.
18 For further discussion, see Casey Dunning, Owen McCarthy, and Sarah Jane Staats, Center for Global Development,
Round Eight of the MCA, December 3, 2010.
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Table 1. Compact-Eligible Countries: FY2015
Low-Income Countries
Lower-Middle-Income Countries
Benin II
Mongolia II
Liberia
Morocco II
Lesotho II
Philippines II
Nepal
Niger
Tanzania II
MCC Compacts
MCC compacts are grant agreements, none more than five years in length (as required by the
MCC authorization), proposed and implemented by countries selected by the MCC Board. To
date, the MCC has obligated $9.9 billion to support 29 compacts in 25 countries. Details of each
compact and major developments in their implementation are provided in Appendix B. Currently,
compacts are fully operating in eight countries—Cape Verde II, Indonesia, Jordan, Malawi,
Moldova, Philippines, Senegal, and Zambia—and will enter into force in three more soon—
Georgia II, Ghana II, and El Salvador II.
Projects to date have emphasized infrastructure. As of March 2014, 31% of MCC compact
funding was in the transport sector, mostly roads; 19% was targeted on agriculture; 13% on
health, education, and community services; 12% on water supply and sanitation; 6% on energy;
6% on governance; and 2% on financial services.19 Counting the 29 signed compact countries to
date, 56% of compact funding has gone to sub-Saharan African countries, 9% to North Africa and
the Middle East, 10% to the former Soviet Union, 11% to Latin America, and 14% to Asia and the
Pacific.20
Since its inception, the MCC has designed guidelines and procedures for project development and
implementation that are followed by all MCC compact countries. These are described below.
Compact Development
Once declared as eligible, countries may prepare and negotiate program proposals with the MCC.
The process to develop a compact, from eligibility to signing, is expected to take about 27
months. Only those compact proposals that demonstrate a strong relationship between the
proposal and economic growth and poverty reduction will receive funding. With limited funding
available and six countries eligible, compact development, like the selection process, is
competitive.
While acknowledging that compact proposal contents likely will vary, the MCC expects each to
discuss certain matters, including a country’s strategy for economic growth and poverty
19 And 11% was program administration and monitoring. MCC communication with CRS November 18, 2014.
20 MCC, Congressional Budget Justification, FY2016, p. 37.
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reduction, impediments to the strategy, how MCC aid will overcome the impediments, and the
goals expected to be achieved during implementation of the compact; why the proposed program
is a high priority for economic development and poverty reduction and why it will succeed; the
process through which a public/private dialogue took place in developing the proposal; how the
program will be managed and monitored during implementation and sustained after the compact
expires; the relationship of other donor activities in the priority area; examples of projects, where
appropriate; a multi-year financial plan; and a country’s commitment to future progress on MCC
performance indicators.
Countries designate an entity, usually composed of government and non-government personnel,
to coordinate the formulation of the proposal and act as a point of contact with the MCC. In many
cases, a high level of political commitment to the program—country leadership identifying
themselves closely with the success of the compact—helps propel compact development forward
and continues into implementation.
One of the first steps in the compact development process is the undertaking by the compact-
eligible country, possibly in conjunction with MCC economists or consultants, of an analysis of
the principal constraints to economic growth and poverty reduction. This report seeks to identify
the binding constraints that “are the most severe root causes that deter households and firms from
making investments of their financial resources, time, and effort that would significantly increase
incomes.”21
Underscoring the MCC concept of “country-ownership” and the requirement of broad public
participation in the development of MCC programs embodied in MCC authorization language,
the compact development entity typically launches nationwide discussions regarding the scope
and purpose of the MCC grant, with meetings held at the regional and national level that include
representation of civil society and the business community. In Namibia, the National Planning
Commission charged with developing the compact identified 500 issues as a result of public
discussions held throughout the country on the question “What will unlock economic
development in your region?”, narrowing them down to 77, and then just to several.22 Burkina
Faso’s consultations reportedly included 3,100 people in all 13 regions.23
Public consultation combined with analysis of constraints to growth help focus a country on the
range of sectors and possible activities that might go into a compact proposal. Concept papers are
developed around many of these ideas. During each step in the development process, the MCC
provides feedback to keep the country within MCC parameters.
The eventual results of these public deliberations and concept papers are compact proposals.
These proposals often exceed MCC’s budget capacity, forcing a process of further prioritization
and elimination. Tanzania reportedly suggested a package worth $2 billion; with the elimination
of irrigation and education options, they were able to bring it down to $700 million. Namibia’s
first proposal, at $415 million, was whittled down to $305 million by eliminating irrigated
agriculture and roads projects.
21 MCC, Compact Development Guidance, January 2012, p. 15.
22 Tanzania and Namibia examples in this section are based on author interviews.
23 Rebecca Schutte, Burkina Faso Field Report, Center for Global Development, July 2009.
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Proposals are developed by a country with the guidance of and in consultation with the MCC. To
assist in compact development, the MCC may, under Section 609(g) of its authorizing statute,
provide so-called pre-compact development grants to assist the country’s preparatory activities.
Among other things, these grants may be used for design studies, baseline surveys, technical and
feasibility studies, environmental and social assessments, ongoing consultations, fees for fiscal
and/or procurement agents, and the like. For example, in June 2009, the MCC provided Jordan
with a pre-compact development grant of $13.34 million, not counted as part of the final compact.
It was used for feasibility studies and other assessments for water and wastewater projects.
One feature of compact proposals is the requirement that sustainability issues be addressed. In the
case of road construction, this might mean provisions committing the government to seek to
establish transport road funds, a fuel levy, or some other tax to pay for road maintenance in
future. For example, as a condition of its compact, Honduras increased its annual road
maintenance budget from $37 million to $64 million.24
Once a proposal is submitted, the MCC conducts an initial assessment, then, on the basis of that
assessment, launches a due diligence review that closely examines all aspects of the proposal,
including costs and impacts to see if they are worthy of MCC support. Included in the review is
an economic analysis assessing anticipated economic rates of return for the proposed projects and
estimating the impact on poverty reduction. At the same time, MCC staff work with the country
to refine program elements. Finally, the MCC negotiates a final compact agreement prior to its
approval by the MCC Board. The compact is signed but does not enter into force until
supplemental agreements on disbursements and procurement are reached.25
When the compact enters into force the clock begins to tick on compact implementation and the
total amount of funds proposed for the compact are formally obligated (held by the U.S. Treasury
until disbursed). Because of the difficulties encountered in trying to undertake a complex set of
projects within a set five-year time span, MCC has increasingly sought to front load many
planning activities prior to compact signing or entry-into-force, including feasibility studies and
project design, which in the case of infrastructure can be a lengthy process. Usually, the first year
of operations is consumed by contract design and solicitation for services. In the case of Burkina
Faso, however, one analyst noted that the passage of a full year between signing and entry-into-
force combined with early action on staff and planning allowed an estimated 60% of procurement
to be initiated before entry-into-force.26
Compact Implementation
Typically, by the time of compact signing, the entity that was established as point of contact
during program development segues into the compact management and oversight body, the
“accountable entity” usually known as the MCA. Its board is usually composed of government
and non-government officials, including representatives of civil society. The government
representatives are usually ministers most closely associated with compact project sectors. The
MCA itself may take a variety of forms. In Tanzania, it was a government parastatal established
24 MCC, Policy Reforms Matter, September 9, 2010.
25 Details on each of the negotiated compacts can be found at the MCC website: http://www.mcc.gov.
26 Rebecca Schutte, Center for Global Development, Burkina Faso Field Report, July 2009, p. 1.
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by presidential decree under the Ministry of Finance. In Namibia, it is a separate unit within the
ministry-level government National Planning Commission.
MCA staff will include fiscal and procurement agents, in many cases duties contracted out and in
some cases, where the capacity is available, undertaken in-house. In the case of Namibia, for
example, procurement started as a contracted function, and, when capacity improved, the
contractor was replaced by an MCA-staffed procurement office. The MCA is also responsible for
ensuring that accountability requirements concerning audits, monitoring, and evaluation take
place. Environmental, gender, and other social requirements embedded in the compact agreement
are its responsibility as well. Held to a strict five-year timetable and limited budget, the MCA
faces a daunting challenge for most developing countries. For many countries, the process of
getting the MCA set up, staffed, and operating was very time consuming and difficult, in some
cases causing delays in implementation.
As, perhaps, the most important aspect of
compact implementation, MCC procurement
Calendar
processes are a good example of how the
Year
Signed MCC Compacts
MCC is building government capacity at the
2005
Madagascar, Honduras, Cape Verde I,
same time that it provides development project
Nicaragua, Georgia I
assistance and maintains accountability
2006
Benin, Vanuatu, Armenia, Ghana I, Mali,
oversight for the use of U.S. funds. In the
El Salvador I
course of implementing compacts, the MCA
2007
Mozambique, Lesotho, Morocco,
signs hundreds of contracts each year to
Mongolia
procure equipment, construct infrastructure, or
obtain technical expertise. Under MCC rules,
2008
Tanzania, Burkina Faso, Namibia
compact procurement processes are based on
2009
Senegal
World Bank procedures, not U.S. federal
2010
Moldova, the Philippines, Jordan
acquisition requirements or the compact
2011
Malawi, Indonesia
country’s own rules. To counter corruption,
build capacity, and achieve the maximum
2012
Cape Verde II, Zambia
value for the cost of goods and services,
2013
Georgia II
MCC-approved rules feature transparent,
2014
Ghana II, El Salvador II
competitive bidding from all firms, regardless
of national origin. According to the MCC,
companies from 54 countries have won MCC procurement contracts, U.S. firms winning the most
with 15% of the total.27
MCC-supported procurements are fixed-price contracts, putting the burden on the contractor to
get the work done to meet the agreed price. The MCC has a set of standards and guidelines for all
its project contracting. The MCC requires that procurements are preceded by a price
reasonableness analysis to ensure that bids are realistic. An independent evaluation panel is
27 In August 2010, Senator Jim Webb raised the concern that some of these contracts had been won by Chinese
government-owned firms. In a letter to the MCC, he argued that contracts awarded to Sinohydro Corporation for
construction work in Mali and Tanzania supported Chinese foreign policy efforts to expand influence in Africa and
harmed U.S. business. In September 2010, the MCC amended its procurement guidelines to prohibit contracts with
state-owned enterprises (SOEs), except in the case of educational, research, and statistical units of government not
formed for a commercial purpose. Its chief stated reason for making the change is to ensure a level playing field for
competing firms. As of September 2010, $400 million of MCC contracts had gone to SOEs.
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selected for each discrete procurement, with all members requiring MCC approval to ensure that
appropriate technical expertise is represented. The panel’s report is also vetted by the MCC.
Reportedly, several countries have adopted this methodology for their procurements. Cape Verde
is applying it to all public procurements. Honduras said it would maintain the program
management unit to deal with projects funded by other donors and would apply MCC guidelines
for procurement.28
The MCC itself has only a very small staff located in-country, composed chiefly of a Resident
Country Director and a deputy. To assist in oversight of infrastructure projects, which account for
more than half of MCC activities, MCC will often hire an independent engineering consultant.
Close cooperation and guidance is also provided by MCC Washington headquarters expert staff at
all points of implementation, on procedure as well as on sector technical support. MCC has to
sign off on all major steps during implementation, including each disbursement. To reduce the
risk of corruption, funding is transferred periodically and directly to contractors following a
determination that project performance has continued satisfactorily. An appealing feature of MCC
contracts to international contractor firms is that payment is made by the United States Treasury,
not the compact country.
Following completion of a compact, the MCC conducts impact or performance evaluations using
independent evaluators. Results of the evaluations are being made public. To date, however, only
a small fraction of possible evaluations—five farmer training programs—have been released.
As projects are implemented, events may require that changes be made to compact plans.29 In
2007 and 2008, for example, the convergence of a depreciating U.S. dollar and rising costs for the
machines and material necessary for the many infrastructure projects conducted by MCC meant
that MCC projects were faced with having less funding than envisioned to meet the agreed-on
objectives. At the time, at least six projects were scaled-back from original plans or supplemented
by financing from other sources. In 2010, increased costs due to design changes and higher
construction costs led to the reallocation of nearly $40 million for a Ghana transportation project.
A reallocation of project resources was made unnecessary when bids on Tanzania’s rural roads
came in higher than budgeted, because the Tanzanian government committed funds to make up
for the shortfall. The number of boreholes to be drilled under a rural water supply project in
Mozambique was reduced from 600 to 300-400 because the amount allocated for construction
was insufficient. Although the MCC is trying to address potential changes by requiring more
frequent portfolio reviews and early identification of high risk projects, projects planned for a
five-year life span are likely to undergo revision at some point. Changes in country policy
performance, however, are less foreseeable and may carry more serious consequences. These are
discussed below.
Compact Suspension and Termination
Throughout the entire process from candidacy to eligibility through development and
implementation of a threshold program or compact, countries are expected to maintain a level of
28 Marco Bogran, Acting General Director, MCA-Honduras, and Ariane Gauchat, Associate Director, MCC, MCC
Hosts Public Event: Lessons Learned from MCC’s First Compacts, February 22, 2011, pages 9 and 32.
29 For more details, see Office of Audit for the MCC, Review of the Millennium Challenge Corporation’s Compact
Modifications, M-000-12-006-S, July 16, 2012.
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performance on the criteria reasonably close to that which brought them to their MCC threshold
or compact-eligible status. On more than one occasion and for a variety of reasons, MCC
programs have been suspended or terminated.
Section 611(a) of the Millennium Challenge Act of 2003 provides that, after consultation with
MCC’s Board of Directors (Board), the CEO may suspend or terminate assistance in whole or in
part if the CEO determines that (1) the country or other entity receiving MCC aid is engaged in
activities which are contrary to the national security interests of the United States; (2) the country
or entity has engaged in a pattern of actions inconsistent with the criteria used to determine the
eligibility of the country or entity; or (3) the country or entity has failed to adhere to its
responsibilities under its compact. This policy applies to MCC assistance provided through a
compact, for compact development and implementation, and assistance through a threshold
agreement.30 All compacts contain language providing that MCC may terminate the compact if
the government engages in a pattern of action inconsistent with the criteria used to determine the
eligibility of the country for assistance. This is the standard compact language that has been cited
in most, if not all, prior MCC compact terminations.
In addition, all countries at all points of the process are affected by certain strictly applied foreign
assistance restrictions in the Foreign Assistance Act of 1961 and in annual appropriations
legislation. For example, restrictions on aid to countries whose governments are deposed by a
military coup prevent countries from being considered for MCC candidacy, eligibility, or
continued threshold or compact implementation.31
Application of legislative restrictions varies according to circumstances. The MCC has four steps
available to it as responses to any perceived violations of its performance rules. It may warn a
country of its concerns and potential consequences. It may place a program or part of a program
on hold. These actions are both preliminary steps that can be taken by management without
immediate concurrence of the Board. The two further steps, suspension and termination, must be
made by the Board of Directors.
In all cases when some possible violation of MCC standards has been brought to the attention of
the agency, the MCC Department of Policy and Evaluation conducts a review of the evidence and
presents it with a recommendation to the Board. The Board does not uniformly follow the
recommendation made. If a determination is made to hold, suspend, or terminate, it may be
further determined to affect a whole or only part of the compact.
The MCC has suspended or terminated programs in the following cases (see Appendix B for
details):
• Threshold programs have been suspended in Niger (December 2009, reinstated in
June 2011), due to undemocratic actions taken by its leadership contrary to the
MCC’s governance criteria; suspended in Yemen (November 2005, reinstated
February 2007, but never implemented) due to a pattern of deterioration in its
performance criteria; and terminated in Mauritania (2008) due to aid prohibitions
30 “MCC Policy on Suspension and Termination”, available at http://www.mcc.gov/mcc/bm.doc/07-
suspensionandterminationpolicy.pdf.
31 Most recently, §7008 in P.L. 111-117, Division F, the State, Foreign Operations Appropriations, FY2010.
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on governments deposed by a coup. See “Threshold Programs” section below for
details.
• Compact eligibility was suspended in the Gambia (June 2006) because of “a
disturbing pattern of deteriorating conditions” in half of the 16 qualifying factors.
• Portions of compacts have been terminated in Nicaragua (June 2009), because of
the actions of the government inconsistent with the MCC eligibility criteria in the
area of good governance; and in Honduras (September 2009), because of an
undemocratic transfer of power contrary to the Ruling Justly criteria. The compact
in Madagascar was terminated due to a military coup (May 2009). In Armenia
(2008), MCC put a hold on a portion of the compact due to poor performance in a
range of governance indicators, but the Board did not formally vote to suspend.
The Mali compact, put on operational hold in March 2012 after a military coup,
was terminated in August 2012.
• Most recently, in March 2012, the MCC Board suspended the Malawi compact.
This followed the placing of an operational hold on the Malawi compact in July
2011, only a few months after the compact was signed, both steps taken as a result
of a pattern of actions by the Malawi government “inconsistent with the democratic
governance criteria” of the MCC. The Malawi suspension was lifted in June 2012
when democratic behavior significantly improved.
Inasmuch as there have been only 29 compacts and 25 threshold agreements to date, the number
of holds, suspensions, or terminations suggests that the MCC takes seriously its legislative
mandate by moving to address violations of its performance standards. These prior instances of
MCC program suspension and termination indicate that the MCC is most likely to apply Section
611(a) in response to an undemocratic transfer/retention of power, a violation of the Ruling Justly
eligibility criteria. The incidence of suspensions and terminations also suggests a weakness in the
eligibility criteria that the new democratic rights “hard hurdle” for compact eligibility is meant to
address. Despite these efforts by MCC, observers have noted instances in the past in which MCC
has not taken action to restrict eligibility to countries with questionable records on political rights
and civil liberties, for instance Jordan.32 And, as noted above, a number of compact countries
have failed one or more of their qualifying indicators for one or more years in a row during the
period of compact implementation.
Anticipated Compacts in FY2015 and FY2016
The MCC expects that as yet unobligated funds combined with future FY2016 appropriations will
support compacts in several of the existing large pool of nine compact-eligible countries.
According to the MCC, Board consideration is most likely to occur in FY2015 for the following:
• Benin. Benin’s second compact is expected to focus entirely on the power sector
and cost an estimated $300 million.
32 Freedom House, Press Release, “Millennium Challenge Corporation Should Hold Countries to Higher Standards of
Democratic Governance,” November 2, 2006, available at http://www.freedomhouse.org/template.cfm?page=70&
release=435; Sheila Herrling, Steve Radelet, and Sarah Rose, “Will Politics Encroach in the MCA FY2007 Selection
Round? The Cases of Jordan and Indonesia,” Center for Global Development, October 30, 2006, http://www.cgdev.org.
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• Morocco. Morocco’s second compact, estimated at $480 million, is expected to
address two constraints to growth. One is the quality of education, specifically
focusing on improvement of professional training at the technical/vocational and
secondary levels. The other is rural and industrial land reform, including
privatization and regulatory concerns.
• Tanzania. Tanzania’s second compact, estimated at $527 million, will focus on
the power sector. In December 2014, the MCC Board required that concrete steps
be taken by Tanzania to address a faltering anti-corruption performance prior to
approval of any compact.
The MCC expects that Board consideration is most likely to occur in FY2016 for the following:
• Lesotho. The required constraints analysis has been completed for Lesotho’s
second compact, and consultations with government, civil society, and the private
sector on its findings are continuing. A compact would likely be funded at around
$360 million.
• Liberia. The constraints analysis has been completed for Liberia’s first compact,
and studies are being conducted on the power sector. Road infrastructure was
another constraint identified as a potential compact focus. Compact development
activities, however, have been limited in recent months by the Ebola outbreak. A
compact would likely be funded at around $300 million.
• Niger. Niger’s first compact is under development, with a constraints analysis
completed and access to water for agriculture and livestock production,
government regulation of business, and regulatory trade barriers identified as
possible compact targets. A compact would likely be funded at $360 million.
Threshold Programs
In addition to compacts, the MCC has supported “threshold” programs—smaller, more short-term
(two to three years) programs designed to assist promising candidate countries to become
compact-eligible.
Up to 2010, threshold programs addressed shortcomings in a country’s qualifying indicators—
most focusing on corruption concerns, as this pass/fail indicator prevented numerous candidates
from compact eligibility. In 2010, the threshold program underwent an extensive review in part
because some Members of Congress and others had raised questions regarding its efficacy; an
explanatory statement accompanying the FY2009 Omnibus appropriations suggested that an
assessment of the programs be undertaken before more were approved.33 Accordingly, the MCC
did not select any new countries for threshold eligibility for FY2010 and did not request funding
for the program in its FY2011 budget.
33 It was variously argued that two years is insufficient time to alter the indicators; that some countries passed the
indicators before the threshold program could begin; that, by funding reform to improve an indicator, the threshold
program undermined the principle that countries should themselves be responsible for reform and MCC eligibility; and
that programs should focus on better preparing countries to implement compacts rather than on enabling them to
qualify for eligibility.
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The MCC announced a new approach to these programs in September 2010. Now threshold
programs focus less on specific qualifying indicator scores and more on resolving policy
constraints to economic growth that are preventing countries from becoming compact-eligible.
According to the agency, these allow MCC to begin work on reforms in problem sectors that
would likely be among those addressed in compact projects, and they initiate a relationship in
which the MCC can better judge a country’s capacity to implement a possible compact in the
future.
Congress provided in the MCC authorizing legislation that not more than 10% of 2004 MCC
appropriations could be used for such purposes (§616 of P.L. 108-199). Subsequent foreign
operations appropriations made 10% of new MCC appropriations available for threshold
assistance, but, since the FY2012 appropriations, including FY2015, 5% has been made available
for this purpose each year. In its FY2016 budget presentation, the MCC argues for restoration of
the 10% cap to allow for more flexibility and a stronger threshold effort.
The FY2014 appropriations (P.L. 113-76) contained two new provisions, both repeated in
FY2015, specifically affecting threshold program eligibility. One prohibits a threshold program
for countries that have already had a compact program. This provision is viewed by some as an
after-the-fact response to the threshold eligibility granted Honduras for FY2012. Its program was
signed in August 2013. In its FY2016 budget presentation, the MCC opposes this language,
noting that, where a second compact may not be appropriate, such programs may be preferable to
no engagement. The appropriations act also prohibits a new threshold program for any country
not currently a candidate country for MCC support. Tunisia, which had been granted threshold
eligibility in September 2011, had graduated to upper-middle income status by FY2014 and,
therefore, did not qualify as a candidate country then. If it were not for this appropriations
language, Tunisia might have received a threshold program funded with FY2011 appropriations,
the year of its selection.
As of the end of 2014, 25 threshold programs worth a total of over $500 million have been
awarded to 23 countries, two of which received second programs. Funding levels for threshold
programs differ, ranging from $6.7 million for Guyana to $55 million for Indonesia. Currently,
only Honduras is actively receiving threshold assistance. The MCC Board approved a $28 million
program for Guatemala in December 2014. For FY2015, both Sierra Leone and Cote d’Ivoire
were selected for threshold programs.
Of those countries that have completed programs, Indonesia, Moldova, Burkina Faso, Jordan,
Malawi, the Philippines, Tanzania, and Zambia have received compacts, and Liberia is compact-
eligible. The re-launch of Niger’s previously suspended threshold program was ended when it
was made compact eligible for FY2013 as is planning for a Nepal program due to its compact
selection in FY2015.
Threshold countries are subject to the same performance rules as compact countries. Two
countries—Mauritania and Yemen—have had their threshold eligibility terminated prior to
program implementation, the former because of a coup and the latter due to deterioration in
qualifying indicators.34 One country—Niger—had its active threshold program suspended as its
governance performance deteriorated.35
34 Mauritania, made eligible in 2007, saw its eligibility terminated in 2008, prior to development of a threshold program
agreement, due to aid prohibitions on governments deposed by a coup. Yemen, made threshold eligible in 2004, was
(continued...)
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Select Issues
Concerns regarding the MCC have been expressed at various points in time on its level of
funding, its operations, and its ability to ensure project sustainability; aspects of procurement; and
the risk of corruption. These and other issues are discussed below.
Funding
When the MCC was proposed, it was expected that, within a few years, the level of funding
would ramp up to about $5 billion per year. For a variety of reasons, not least of which is the
limitation on available funding for foreign aid, the MCC never achieved anywhere near that level
of funding. In fact, in most years since the MCC was established, its enacted appropriation has
been well below the President’s request.
Table 2. MCC Appropriations: FY2004-FY2016 Request
(in $ billions)
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16req
Request 1.300 2.500 3.000 3.000 3.000 2.225 1.425 1.280 1.125 0.898 0.898 1.000
1.250
Enacted
0.994 1.488 1.752 1.752
1.544 0.875 1.105 0.900 0.898 0.898 0.898 0.899
—
Approp
Post-
0.989 1.480 1.751 1.746 1.484 0.871 1.081 0.898 0.898 0.853 0.898 0.899
—
Rescission
Approp
Notes: P.L. 110-252 rescinded $58 million in FY2008 appropriation. P.L. 111-226 rescinded $50 million from
unobligated amounts; MCC applied it to the 2004-2010 fiscal years. P.L. 112-10 includes an across-the-board
0.2% rescission in FY2011 appropriations. There was no rescission in FY2012. FY2013 level reflects both
rescission and sequester. There was no rescission in FY2014 or FY2015.
In determining the appropriation level, Congress has to weigh the benefits of the MCC program
against all other foreign assistance programs as well as against other non-foreign policy needs. A
(...continued)
suspended by the Board in November 2005, as a result of a consistent “pattern of deterioration” in its policy
performance on selection criteria. Following a series of government reforms, Yemen’s threshold status was reinstated
in February 2007 and a threshold agreement valued at $20.6 million was approved in September 2007. In October
2007, however, the chair and ranking Member of the Senate Foreign Relations Committee noted their concern
regarding the Yemen decision, in particular noting that, while Yemen had made reforms, its performance indicators had
not yet shown improvement. The Members emphasized that, even if the MCC moved forward with the Yemen
threshold program, “such compromises should never extend to the Compact program itself.” In the end, implementation
was postponed on October 27, 2007, pending a review, and its program has never been resumed.
35 In September 2009, the MCC Board warned that Niger appeared to be moving away from its reform agenda,
jeopardizing its $23 million threshold program. Niger’s threshold program was suspended in December 2009 due to
“political events that were inconsistent with the criteria used to determine eligibility for MCC assistance,” when
President Tandja dissolved parliament and dismissed the constitutional court after it ruled that a referendum to extend
his presidential term was illegal. See MCC Congressional Notification, December 17, 2009, available at
http://www.mcc.gov/mcc/bm.doc/cn-121709-niger.pdf. As noted above, in June 2011, following Niger’s return to
democratic rule, MCC announced it would reinstate the Niger program, and, in March 2012, $2 million was approved
to enable completion of education activities under the original agreement. Further work on the program ended when
Niger was made compact eligible in December 2012.
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consequence of diminished appropriations is that the agency may provide fewer compacts each
year to fewer countries than originally anticipated. An additional impact may be that, if few
compacts are offered annually, the incentive for countries to reform on their own in order to meet
eligibility requirements—the so-called MCC effect—could be lost.
MCC Appropriations Request and Congressional Action for FY2016
On February 2, 2015, the Administration issued its FY2016 budget request, proposing $1.25
billion for the MCC, an increase of 39% ($350.5 million) over the FY2015 appropriation level.
MCC Appropriations Request and Congressional Action for FY2015
On March 4, 2014, the Administration issued its FY2015 State, Foreign Operations budget
request. It would provide $1 billion for the MCC, an 11% ($102 million) increase over the
FY2014 appropriation. On June 27, 2014, the House Appropriations Committee reported H.R.
5013, the FY2015 State, Foreign Operations appropriations, providing $898.2 million for the
MCC, $101.8 million less than the Administration request and the same amount appropriated in
FY2014. On June 19, 2014, the Senate Appropriations Committee reported S. 2499, the FY2015
State, Foreign Operations appropriations, providing $901 million for the MCC, $99 million less
than the Administration request and $2.8 million more than the amount appropriated in FY2014.
On December 16, 2014, the President signed into law H.R. 83 (P.L. 113-235), the Consolidated
and Continuing Appropriations Act, 2015, providing the MCC with $899.5 million in FY2015,
$1.3 million more than the FY2014 level.
Opportunity, Growth and Security Initiative FY2015 Proposal
Associated with, but not included in, its FY2015 budget, the Administration proposed a $56
billion Opportunity, Growth and Security Initiative (OGSI) to support additional funding for
domestic and international programs to be paid for through spending cuts and closure of tax
loopholes identified in the Initiative. As part of this initiative, the Administration proposed $350
million in additional funds for MCC activities in pending compacts. Of this amount, $50 million
would supplement the road and power components of the Liberia compact, $125 million would
support additional elements of the power sector in the Ghana II compact, $125 million would
assist access to electric power in rural areas under the Tanzania II compact, and $50 million
would support due diligence activities for new compacts. OGSI funding was not included in
FY2015 budget request figures.
Neither House nor Senate nor final versions of the FY2015 State, Foreign Operations
appropriations bills addressed the OGSI request.
Regional Integration and Concurrent Compacts
At its December 2014 meeting, the MCC Board stated its support for possible efforts by the
agency to consider developing regionally oriented partnerships, especially in South Asia. As a
result, in its FY2016 budget presentation, the MCC proposed that Congress adopt legislation
authorizing concurrent compacts—more than one in a country at the same time—justified as
overcoming a major barrier to regional programs.
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On a number of occasions in the past, the MCC has sought concurrent compact authority in order
to give the MCC flexibility to do smaller, staggered projects, instead of wrapping them all in one
compact. The argument then was that different projects follow different timelines—a power plant
takes longer to plan than does a school. In a single compact, the launch of one has to wait for the
other. Assisting regional integration is a new rationale for concurrent authority.
Because compacts are bilaterally based and awarded to countries only rarely, the opportunity to
initiate compacts at the same time in two contiguous countries is unlikely to arise. The most
probable scenario would be one in which a compact already exists in one country and another,
contiguous country is subsequently awarded a compact. At that point, it might be possible to then
add another project to the first compact country while simultaneously developing a compact with
a regional element in the second. To add another project to an existing compact, concurrent
compacts must be permitted.
Such a possibility exists in South Asia, where Nepal is currently developing its first compact. Its
close relationship with India—which currently passes the performance indicators, but has not
been offered compact eligibility—opens the door to exploring power- or transport sector-themed
compacts whose economic impact might be strengthened by having a regional element. Similarly,
there are regional possibilities that might be explored with Benin and Niger in West Africa and
with Malawi, Zambia, and Tanzania in East Africa, which are all currently compact-eligible and
at different stages of compact implementation or development.
Regional compacts, MCC argues, could provide higher rates of return on MCC investments,
benefitting from economies of scale and supporting trade between nations. But, in making
regional compacts operational, the MCC reports that it would still have to find potential
investments to be cost beneficial, countries would still have to want such investments to be made
(and not just because MCC wanted to do them), and the investments would still have to address
economic constraints to growth as do all other compacts.
A few further challenges remain. Development of regional compacts would still depend on the
right timing and coincidence of contiguous countries. There are limited funds in MCC’s budget
for multiple compact activities and countries. And the existence of a regional compact might raise
the possibility that a misbehaving country’s suspension or termination would also force
suspension or termination of a compact benefitting the partner country with an unblemished
policy performance record.
A bill supporting regional compacts, specifically in Africa, and containing the concurrent compact
authorization language was introduced in the 113th Congress as H.R. 4877 (Representative Bass).
Compact Outcomes and Impact
The MCC places considerable weight on demonstrating results. During project development, it
predicts a set of outcomes that help determine which projects will be funded. During
implementation, it gathers data to establish baselines and monitor performance. And, at project
completion, it supports independent evaluations of achievements. It promises to release these
findings to the public, regardless of the results, with the intention of improving the agency’s
performance in meeting its purpose of reducing poverty through economic growth.
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In the MCC’s first years of existence, however, some observers complained about the lack of
measurable results.36 One reason for the seeming absence of results was the slow speed of
compact implementation. A second was that the first compact programs only ended in late 2010,
and it was reasonable to expect that it would be some time after project closures before a serious
analysis of actual impacts could be undertaken. Nonetheless, as the delay continued, a degree of
impatience was not unfounded. Finally, two years after the initial compacts ended, the first
evaluations were released in October 2012, focusing on five farmer training projects. About 120
other independent impact evaluations are promised over the next few years.37 As of December
2014, four evaluations of threshold programs—representing about one-sixth of the completed
programs—have been posted on the MCC website.38 Eight compact project evaluations have also
been published on the site, but, as each of the 18 completed compacts encompasses multiple sub-
projects, it is hard to say what proportion of the total universe of projects have been examined to
date.
In fact, the agency argues that it has been producing results of varying kinds since it was
launched. First is the impact made by the MCC process itself. Under the so-called “MCC effect,”
countries are said to be establishing reforms in an effort to qualify under the 20 performance
indicators. Yemen has been cited in this regard because, following its suspension from the
threshold program in 2005, it approved a number of reforms to address indicators where its
performance had lapsed (and subsequently was reinstated and then later suspended for different
reasons). Niger passed the Natural Resources Protection indicator in FY2013 as a consequence of
establishing a large new protected area. House and Senate-approved resolutions in 2007 (H.Res.
294 and S.Res. 103) noted the role the MCC played in encouraging Lesotho to adopt legislation
improving the rights of married women. It can also be argued that the establishment of local
compact implementation mechanisms—the MCAs—has served a capacity building function and
influenced some governments’ procurement policies.
Second, assistance program inputs—financing, technical expertise, construction, etc.—produce
outputs. The MCC notes that its programs have trained 210,851 farmers, built 830 educational
facilities, completed 1,712 kilometers of roads, and constructed 11,756 sanitation systems.
Third, some of these outputs have led to medium-term outcomes, such as an increase by 20,000 in
the number of new registered businesses in Albania as a result of administrative reforms made in
business licensing under its threshold program. An independent analysis of the Burkina Faso
threshold program found that construction of 132 primary schools led to increased enrollment for
both boys and girls by about 20% and for girls over boys by 5%.39 Among the outcomes of its
Port of Cotonou modernization project under the Benin compact, according to MCC, are annual
36 For example, the Senate Appropriations Committee report (S.Rept. 110-425) on its version of the FY2009
State/Foreign Operations appropriations explained a proposed cut to the MCC by noting the small compact
disbursement rate (4% of total compact funding at the time) and the lack of tangible results to date as factors. The
committee stated its intention to support future compacts “if current country compacts are shown to be cost effective
and achieving results.”
37 MCC CEO Daniel Yohannes, MCC Quarterly Town Hall Meeting, September 14, 2012, based on transcript.
38 At http://data.mcc.gov/evaluations/index.php/catalog.
39 MCC Public Board Meeting, June 11, 2009. Mathematica Policy Research, Inc., Impact Evaluation of Burkina
Faso’s BRIGHT Program, March 2009.
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savings of $2.1 million in dredging and maintenance costs and a decrease in average customs
clearance time.40
The fourth and perhaps most important measure of MCC activity is the long-term impact
compacts can have on poverty reduction through increased incomes among poor people, the
legislative mandate of the agency. Independent post-compact impact evaluations are meant to
explore the relationship between an MCC investment and such an outcome, if any, so as to
provide lessons for future compacts. As noted, the first such impact evaluations were published in
October 2012. Examining farmer training programs conducted in five compact countries, the
evaluations affirmed that the average of individual outputs anticipated for a country, such as the
number of farmers trained and hectares under production with MCC support, met or exceeded
their targets in all five cases (although for two countries a number of indicators had no targets).
While the evaluations found increases in farm income in three countries—no measurements could
be undertaken in a fourth country—in no case was it able to identify increases in household
incomes. This finding may be due to a household reallocating other income sources to farming or
because household income is too difficult to measure. In any case, MCC is looking for alternative
methods for measuring household income for application to future compacts.
Some concerns have been raised by GAO regarding the possible outputs and impacts of MCC
compacts. A 2007 GAO report highlighted a concern that, in the case of Vanuatu, projected
impacts had been overstated. The GAO noted that the MCC estimated a rise from 2005 per capita
income in Vanuatu of about 15% ($200) by 2015 when the data suggest it would rise by 4.6%.
Although the MCC states that the compact would benefit 65,000 poor, rural inhabitants, the data,
according to the GAO, do not establish the extent of benefit to the rural poor. Further, the MCC
projections assume continued maintenance of projects following completion, whereas the
experience of previous donors is that such maintenance has been poor.41 The MCC response was
that, although there may be varying views on the degree of benefit, both agencies agree that the
underlying data show that the compact would help Vanuatu address poverty reduction.42
A September 2012 GAO report called into question the quality of data used to determine
beneficiary numbers in seven transportation projects, pointing to mistakes made in formulas used,
a failure to apply a methodology to all compacts, and a failure to update numbers in public
documents.43 A June 2012 GAO report questioned the quality of work done on a road
construction project in Georgia and noted an array of problems that have kept part of a port
constructed by MCC in Benin from full operability.44 Sustainability concerns were raised for both
projects (see below for discussion).
40 MCC, Fact Sheet: MCC’s Continuum of Results, May 23, 2012.
41 Government Accountability Office, Millennium Challenge Corporation: Vanuatu Compact Overstates Projected
Program Impact, July 2007, GAO-07-909.
42 Testimony of Rodney Bent before the House Committee on Foreign Affairs, Subcommittee on Asia, the Pacific, and
the Global Environment, July 26, 2007.
43 GAO, Millennium Challenge Corporation: Results of Transportation Infrastructure Projects in Seven Countries, 12-
631, September 2012.
44 GAO, Millennium Challenge Corporation: Georgia and Benin Transportation Infrastructure Projects Varied in
Quality and May Not Be Sustainable, 12-630, June 2012.
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Ensuring Sustainability
An important factor in assessing the success of development assistance programs, one strongly
emphasized by the MCC, is the extent to which assistance efforts are sustainable after donor
support ends. This question is of particular significance in the case of the MCC as most of its
assistance is in the form of infrastructure, which developing countries, historically, have had
difficulty maintaining due to lack of funds for physical upkeep or lack of trained technical
personnel for regular maintenance.
The MCC often conditions compact aid on country adoption of policy reforms that enhance
sustainability. In Tanzania, for example, the government electric power services were required to
reform their tariff schedules in order to fully recover their costs, and, in those countries with road
projects, provisions have been included to ensure establishment or improvement of a road fund to
pay for upkeep.
GAO reports on completed compacts, however, have questioned the effectiveness of MCC
sustainability efforts in the cases it examined. In Cape Verde, the road fund reportedly met only
half of maintenance requirements, and water fees, established to fund infrastructure maintenance
for the watershed and agricultural support project, were not being collected in one of the three
watersheds. In Honduras, a required increase in the national road maintenance budget was
believed to be insufficient to meet needs and was intended to address all roads, not just those
funded by the MCC. Further, farm-to-market roads provided under the Honduras compact were
the responsibility of municipalities that, reportedly, lacked equipment, expertise, and funds for
road maintenance.45 GAO noted that, while the MCC included conditions precedent in its
compact with Georgia requiring the government to maintain a level of funding for road
maintenance, the government “shows limited ability to keep the road operational and well
maintained.” It has also questioned the ability of Benin’s port authority to operate key
components.46
Corruption
In 2014, appropriators in both House and Senate Committee reports on their versions of the
FY2015 State, Foreign Operations appropriations (H.Rept. 113-499 and S.Rept. 113-195),
expressed continued concern regarding corruption in MCC compact countries. In 2013, each
committee had addressed the issue and the statement of conferees on the final FY2014
Consolidated Appropriations (P.L. 113-76) voiced concern over the utility of the “control of
corruption” indicator as a reflection of adherence to rule of law, including enforcement of private
sector contracts. It directed the MCC to improve its eligibility criteria in this area. This follows
suggestions from Congress in previous years that the MCC should take the issue of corruption
45 Government Accountability Office, Millennium Challenge Corporation: Compacts in Cape Verde and Honduras
Achieved Reduced Targets, GAO-11-728, July 2011.
46 GAO, Millennium Challenge Corporation: Georgia and Benin Transportation Infrastructure Projects Varied in
Quality and May Not be Sustainable, 12-630, June 2012, p. 33 and p. 47. Sustainability concerns have also been raised
in 2012 MCC Office of the Inspector General reports regarding a fruit tree productivity project in Morocco and a
Senegalese road project. See Office of the Inspector General, USAID, Management Challenges Identified by the
Inspector General, November 26, 2013, in MCC, Agency Financial Report, FY2013. The USAID Inspector General
also acts in that capacity for the MCC.
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more into account in judging compact country behavior.47 In response to the FY2014 statement of
conferees, the MCC Board noted its commitment to improving measures of corruption at its
March 2014 meeting.
With developing countries themselves implementing MCC-funded programs, corruption is a
major concern of the MCC, in the selection process, in threshold programs, and in compact
implementation. Aiming to safeguard U.S. aid dollars, MCC programs are designed to prevent
corrupt contracting. Among other things, MCC requires a transparent and competitive process and
mandates separation of technical and financial elements of a bid. The MCC reviews each decision
made by the procurement entity and must register approval for many of them, and it provides
funds directly to contractors rather than through the government implementing entity. MCC
argues that, in following this process, recipient governments learn how to do procurement in a
corruption-free way.
The degree to which a country controls corruption is one of the performance indicators that help
determine whether a country should be eligible for compact funding. In fact, it is a “pass-fail”
indicator. Passing the indicator, however, does not mean there is little or no corruption—an
unrealistic expectation for most developing countries. It only demonstrates that a country’s
performance is above the median relative to other countries at the same economic level. Further,
as suggested in the discussion of country selection, the MCC board does not depend on indicator
scores alone to determine the selection process. These scores change from year to year, depending
on fresh data and the relative scores of competing countries. Taking this into account, the MCC
board uses discretion by looking at a number of factors, including the many underlying data
sources that make up indicators, as well as recent steps taken by the government in question to
address corruption (or, in some cases, recent increased allegations of corruption). Accordingly, a
country can be selected that technically falls near or below the median if mitigating factors occur.
Alternatively, countries that pass the corruption indicator may be the subject of intense debate
over incidences of alleged corruption. Because of data lags, countries passing the indicator may
fail a year or two later, once a compact is in place. This can be true of all the indicators,
particularly when a country “graduates” into a higher income category, thereby changing the
medians. The MCC attempts to address this concern by looking for a pattern of behavior on the
part of the government in order to judge the severity of any proposed corrective action. In the
FY2014 compact eligibility selection process, two countries that had been selected in FY2013—
Benin and Sierra Leone—were dropped from compact consideration due to their failing grades on
the “control of corruption” indicator. In its December 2014 meeting, the MCC Board issued a
47 During hearings in 2010 with the MCC CEO, the House State, Foreign Operations Appropriations Subcommittee
chair and ranking Member raised concerns regarding the absence of termination guidelines based on a pattern of
corruption. (Hearing with Daniel Yohannes, MCC CEO, April 14, 2010). In 2009 and 2010, several Members of
Congress noted their concern regarding provision of MCC funding to corrupt countries. (“For Senegal: U.S. Aid, 164-
ft. Statue,” The Washington Times, August 16, 2010.) Specifically, they each referred to the case of Senegal, whose
leader installed a monument to the country’s independence estimated to cost between $24 million and $70 million. The
$540 million compact with Senegal was signed in September 2009. Despite corruption reports, Senegal scored in the
74th percentile of the FY2011 Control of Corruption indicator formulated by the World Bank. The MCC said it had
looked at but found no pattern of corrupt behavior since signing the Senegal compact that would justify suspending or
closing the compact program. It notified the Senegalese government that any decline in policy performance, regardless
of indicator scores, could jeopardize the compact.
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warning to Tanzania that, although reselected for a second compact, such a compact would not be
approved unless its declining corruption score was reversed with “firm concrete steps.”48
48 MCC, MCC Statement on Board of Directors’ Discussion of Tanzania at the December 2014 Meeting, December 10,
2014.
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Appendix A. MCC Compacts at a Glance
Compact
Compact
Size
Entry Into
Compact
Country
Signed
(millions)
Force
Completion Compact
Focus
Armenia Mar.
27,
2006
$236
Sept. 29, 2006
September
Agriculture/irrigation
5 years
2011
Rural roads
Benin
Feb. 22, 2006
$307
Oct. 6, 2006
October
Land and property
5 years
2011
Financial services
Judicial improvement
Port rehab
Burkina Faso
July 14, 2008
$481
July 31, 2009
July 2014
Rural land governance
5 years
Agriculture
Roads
Education
Cape Verde I
July 4, 2005
$110
Oct. 17, 2005
October
Agriculture
5 years
2010
Transport/roads
Private sector
Cape Verde II
Feb. 10, 2012
$66.2
Nov. 30, 2012
Water and sanitation
5 years
Land management
El Salvador I
Nov. 29, 2006
$461
Sept. 20, 2007
September
Education
5 years
2012
Transport/roads
Small business/farm
development
El Salvador II
Sept. 30, 2014
$277
—
Investment Climate Reform
5 years
Education
Logistical infrastructure: Road
and border crossing
Georgia I
Sept. 12, 2005
$295
April 7, 2006
April 2011
Infrastructure/gas
5 years
Transport/roads
Agriculture/business
Georgia II
July 26, 2013
$140
—
Education: Infrastructure and
5 years
training
Education: Workforce
development
Education: Sci and tech higher
ed
Ghana August
1,
2006
$547
Feb. 16, 2007
February
Agriculture
5 years
2012
Transport
Rural development
Ghana II
August 5, 2014
$498
—
Electric
power
5 years
Honduras
June 13, 2005
$215
Sept. 29, 2005
September
Agriculture
5 years
2010
Transport/roads
Indonesia
Nov. 18, 2011
$600
April 2, 2013
Energy and resource
5 years
management
Health and nutrition
Public procurement
Jordan
Oct. 25, 2010
$275.1
Dec. 13, 2011
Clean water and sanitation
5 years
Lesotho
July 23, 2007
$362.6
Sept. 17, 2008
September
Water sector
5 years
2013
Health sector
Private sector
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Compact
Compact
Size
Entry Into
Compact
Country
Signed
(millions)
Force
Completion Compact
Focus
Madagascar
April 18, 2005
$110
July 27, 2005
May 2009
Land titling/agriculture
(terminated May
4 years
Financial sector
2009)
Malawi
April 7, 2011
$350.7
Sept. 20, 2013
Electric power
5 years
Mali (terminated
Nov. 13, 2006
$460.8
Sept. 17, 2007
August 2012
Irrigation
August 2012)
5 years
Transport/airport
Industrial park
Moldova Jan.
22,
2010
$262
Sept. 1, 2010
Agriculture
5 years
Roads
Mongolia
Oct. 22, 2007
$285
Sept. 17, 2008
September
Transport/rail
5 years
2013
Property ights
Voc ed
Health
Morocco August
31,
2007
$697.5
Sept. 15, 2008
September
Agriculture/fisheries
5 years
2013
Artisan crafts
Financial serv/enterprise
support
Mozambique
July 13, 2007
$506.9
Sept. 22, 2008
September
Water and sanitation
5 years
2013
Transport
Land tenure/agri
Namibia
July 28, 2008
$305
Sept. 16, 2009
September
Education
5 years
2014
Tourism
Agriculture
Nicaragua
July 14, 2005
$175
May 26, 2006
May 2011
Land titling/agriculture
5 years
Transport roads
Philippines
Sept. 23, 2010
$434
May 25, 2011
Revenue reform
5 years
Community dev
Road rehab
Senegal
Sept. 16, 2009
$540
Sept. 23, 2010
Roads
5 years
Irrigation
Tanzania
Feb. 17, 2008
$698
Sept. 15, 2008
September
Transport/roads, airport
5 years
2013
Energy
Water
Vanuatu
March 2, 2006
$66
April 28, 2006
April 2011
Transport rehab
5 years
Public works dept.
Zambia
May 10, 2012
$354.8
Nov. 15, 2013
Water supply and sanitation
5 years
Source: MCC.
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Appendix B. Compact Descriptions and Status
Descriptions and key developments in the 29 signed compacts undertaken by the MCC since
2004 are provided below in alphabetical order. Compact funding totals include administrative and
monitoring costs.
Armenia
The five-year, $236 million compact, completed in September 2011, concentrated on the
agricultural sector, investing in the rehabilitation of rural roads ($67 million) and improving
irrigation ($146 million). When launched, the program anticipated that it would benefit about
750,000 people, 75% of Armenia’s rural population, by improving 943 kilometers of rural roads
and increasing the amount of land under irrigation by 40%.
Misgivings were raised both prior to and during implementation of the Armenia compact. In
September 2005, during compact development, the MCC expressed concerns with Armenian
officials regarding slippage on two of the governance indicators and matters raised by
international groups concerning political rights and freedoms in the country. Moreover, the MCC
Board delayed final approval of the compact following the November 27, 2005, constitutional
referendum, after allegations of fraud, mismanagement, limited access by the press, and abuse of
individuals were raised. In signing the compact on March 27, 2006, the MCC issued a cautionary
note, signaling that Armenia must maintain its commitment to the performance indicators or risk
suspension or termination of the compact. On March 11, 2008, the MCC issued a warning that
assistance might be suspended or terminated in response to the government’s actions, including
the imposition of a state of emergency and restrictions on press freedoms.49 In the autumn of
2008, the Armenian government used $17 million of its own funds to begin a road segment when
there was some question of whether the MCC would continue its support. In December 2008,
then-MCC CEO Danilovich noted that Armenia had since moved forward on a number of reforms
addressing MCC concerns and he expected MCC support to resume in the spring of 2009.50
However, on March 11, 2009, the MCC Board of Directors declined to lift the funding hold for
the rural roads component of the Armenia compact until an interim review session could be held
prior to its normal June 2009 meeting in order to assess the status of democratic governance in
Armenia. On June 10, 2009, the MCC Board allowed the hold to continue on financial support for
the roads project. One board member noted that the hold on funding was, in effect, a termination,
as the work, if reapproved, could not be completed within the compact lifespan.51
Benin
The five-year, $307 million compact, completed in October 2011, focused on four sectors—land
rights, reducing the time and cost of obtaining property title; financial services, helping micro,
small, and medium-sized businesses; justice reform, assisting the judicial system’s capacity to
resolve business and investment claims; and market access, improving the Port of Cotonou. When
49 See letters of John Danilovich to Armenia President Robert Kocharyan on December 16, 2005 and March 11, 2008
on MCC website.
50 MCC, Public Outreach Meeting Transcript, December 12, 2008, p. 12.
51 Lorne Craner at Public Outreach Meeting, June 11, 2009.
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launched, the compact’s goal was to benefit 5 million people, bringing 250,000 of the population
out of poverty by 2015.
Burkina Faso
The five-year, $480.9 million compact, completed in July 2014, had four elements. A rural land
governance project ($59.9 million) focused on improving legal and institutional approaches to
rural land issues, including registration and land use management. An agriculture project ($141.9
million) targeted water management and irrigation, diversified agriculture, and access to rural
finance in specific regions of the country. A roads project ($194.1 million) sought to improve
rural roads. The education effort ($28.8 million) built on the country’s MCC threshold program
and constructed additional classrooms and provided daily meals to children. The education
project was administered by USAID.
Cape Verde I
The five-year, $110 million compact, completed in October 2010, focused largely on improving
the country’s investment climate, transportation networks, and agriculture productivity. The
program’s goal was to increase the annual income in Cape Verde by at least $10 million.
The compact evolved around three projects. In support of private sector development, $2.1
million and additional participation with the International Finance Corporation was used to
remove constraints to private sector investment by creating a commercial credit information
bureau and to stimulate other reforms. The MCC invested $83.2 million primarily for port
construction to help link the nine inhabited islands and roads and bridges to improve
transportation links to social services, employment opportunities, and local markets. By investing
$11.4 million to increase the collection and distribution of rainfall water and strengthen
agribusiness services, including access to credit, the project hoped to increase agricultural
production and double the household income of farmers.
Cape Verde is the first compact country to be made eligible for a second compact.
Cape Verde II
Cape Verde’s $66.2 million second compact will address two issues impeding economic growth.
A water and sanitation project ($41 million) aims to reform the regulatory regime and utility
structure and provide capital infrastructure improvements. A land management project ($17
million) is expected to induce legal reforms and the clarification of property rights. Meeting an
MCC requirement for second compacts, the government of Cape Verde will contribute an
additional 15% of total costs toward project implementation.
El Salvador I
The five-year, $461 million compact, completed in September 2012, addressed economic growth
and poverty reduction concerns in El Salvador’s northern region, where more than half the
population lives below the poverty line. Education as well as water and sanitation, and electricity
supply ($95.1 million); support for poor farmers and small and medium-sized business ($87.5
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million); and transportation, including roads ($233.6 million), were the chief elements of
program.
El Salvador II
The $277 million five-year second compact with El Salvador consists of three projects. One will
address constraints in the investment climate by developing an independent institution seeking
regulatory improvement and will build the capacity of government to partner with the private
sector in public service delivery ($42.4 million). A second project will focus on development of
human capital, reforming education policy to increase school hours and strengthen the
curriculum, and would also address skills needed by the labor market ($100.7 million). The third
project will meet identified infrastructure needs—expansion of an important roadway and border
crossing improvements related to commerce ($109.6 million). El Salvador will contribute $88
million to project implementation.
Georgia I
The $395 million, five-year agreement with Georgia ended in April 2011. It focused on reducing
poverty and promoting economic growth in areas outside of the capital, where over half the
population lives in poverty. The compact was divided into two projects. The first and the largest
component ($311.7 million) concentrated on infrastructure rehabilitation, including roads, the
north-south gas pipeline, water supply networks, and solid waste facilities. The Enterprise
Development Project ($47.5 million) financed an investment fund aimed at providing risk capital
and technical assistance to small and medium-sized businesses, and support farmers and
agribusinesses that produce commodities for the domestic market.
The program expected to reduce the incidence of poverty by 12% in the Samtskhi-Javakheti
region; provide direct benefits to 500,000 people and indirectly benefit over 25% of Georgia’s
population; reduce the travel time by 43% to Tbilisi, the capital, from regional areas, thereby
cutting transportation costs for farmers, businesses, and individuals needing health and other
social services; and lower the risk of a major gas pipeline accident and improve the reliability of
heat and electricity to over 1 million Georgians.
The original compact agreement totaled $295 million, but, on September 4, 2008, the Bush
Administration proposed a $1 billion aid initiative for Georgia, of which one component was
adding $100 million to the existing compact. An amendment to the compact was signed on
November 20, 2008, making the total $395 million. Complementing or completing projects begun
in the original compact, it was directed at road projects, water and sanitation facilities, and a
natural gas storage facility.
Georgia II
The five-year $140 million second compact would address education concerns in three ways. One
project seeks to improve the quality education through infrastructure improvements and training
of educators ($76.5 million). A second project will focus on meeting labor market needs through
skills development ($16 million). A third project will modernize the teaching of science,
technology, and math ($30 million).
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Ghana
The five-year, $547 million compact, which ended in February 2012, focused on agriculture and
rural development. Poverty rates in the three targeted geographic areas were above 40%. The
agriculture component ($241 million) provided training for farmer-based organizations, improved
irrigation, greater access to credit, and rehabilitated local roads. The transport component ($143
million) sought to reduce transport costs to farmers by improving key roads, such as the one
between the capital and the airport, and an important ferry service. Rural development programs
($101 million) constructed and rehabilitated education, water, and electric facilities, among other
activities.
Ghana II
The five-year, $498 million compact addresses electric power problems through investments in
power generation and distribution and reforms in power sector policy. Of the total, $190 million
is conditional on the government making agreed-upon reforms. The introduction of private sector
participation is a significant requirement of the project. The Government of Ghana is expected to
contribute at least 7.5% of total MCC funding toward compact implementation.
Honduras
The five-year, $205 million (originally $215 million) compact with Honduras, completed in
September 2010, focused on two objectives—rural development and transportation. The rural
development project, representing $68.3 million of the compact, assisted small and medium-size
farmers to enhance their business skills and to transition from the production of basic grains to
more high-value horticultural crops, such as cucumbers, peppers, and tomatoes. The project
provided farmers with the appropriate infrastructure and necessary training for producing and
marketing these different crops. More than 7,000 farmers were trained, of which 6,029
significantly increased production of horticulture crops. About 422 kilometers of rural roads were
also upgraded, helping farmers transport their goods to markets at a lower cost. The original
objective was 1,500 kilometers, but increased construction costs limited that figure.
The transportation project, totaling $119.2 million of the compact, sought to improve the CA-5
major highway linking Honduran Atlantic and Pacific ports and major production centers in
Honduras, El Salvador, and Nicaragua. Almost 50 kilometers of the CA-5 were completed of 107
originally planned and 45 of 68 kilometers in secondary roads before an undemocratic change in
government contrary to MCC’s Ruling Justly criteria—the removal of President Zelaya from
office by a coalition of civilian and military institutions—led to the September 9, 2009, MCC
termination of these two planned activities in the transportation sector. The termination affected
about $10 million in funding, including $4 million for the CA-5 road project. Already
contractually obligated programs were continued.52
Honduras has not been selected as eligible for a second compact due to concerns over
governance.
52 See MCC Congressional Notification, September 17, 2009, at http://www.mcc.gov/mcc/bm.doc/cn-091709-
honduras.pdf.
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Indonesia
The five-year, $600 million compact has three projects. A Green Prosperity project ($332.5
million) will provide technical expertise and funding for renewable energy and natural resource
management efforts that aim to raise household incomes. A community-based health and nutrition
project ($131.5 million) is aimed at reducing stunting, from which more than one-third of
Indonesia’s children suffer. A public procurement reform project ($50 million) seeks to
implement practices that will counter fraud, waste, and abuse that results in the loss of billions of
dollars annually.
Jordan
The five-year, $275.1 million compact is solely aimed at the water sector. In the governorate of
Zarqa, it will reduce water loss by rehabilitating the water supply and distribution network from
reservoir to household ($102.5 million) and will improve the sewage system by replacing or
rehabilitating sewage lines ($58.22 million). In a partnership with the private sector, the compact
will also expand a wastewater treatment plant originally built by USAID ($93.03 million).
Lesotho
The five-year, $362.6 million compact, completed in September 2013, had three elements. A
water sector project ($164 million) focused on both industrial, supporting garment and textile
operations, and domestic needs. It also supported a national watershed management and wetlands
conservation plan. A health project ($122.4 million) sought to strengthen the health care
infrastructure, including renovation of up to 150 health centers, improved management of up to
14 hospital out-patient departments, construction and equipping of a central laboratory, and
improved housing for medical staff and training for nurses. A private sector development project
($36.1 million) addressed a wide range of legal and administrative obstacles to increased private
sector activity, including development of land policy and administration authority,
implementation of a new payments and settlement system, and improvement of case management
of commercial courts.
Lesotho has been selected as eligible for a second compact.
Madagascar
The Madagascar compact, MCC’s first signed agreement, started out as a four-year, $110 million
program, was extended to five years because of start-up delays, and then terminated prematurely
because of a coup. The project had three objectives: (1) to increase land titling and land security
($36 million), (2) to expand the financial sector and increase competition ($36 million), and (3) to
improve agricultural production technologies and market capacity in rural areas ($17 million).
After restoring 149,000 land rights documents, digitizing another 128,000, formalizing land rights
for 12,800 families, constructing two new bank branches, and providing agriculture technical
assistance to 34,450 farmers and 290 small businesses and farmers associations, the compact
ended in May 2009, with little more than a year remaining in the compact’s five-year span and
$88 million of the $110 million project committed.
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Malawi
The five-year, $350.7 million Malawi compact, signed in April 2011, focuses on just one sector—
electric power. The program aims to reduce power outages, reduce costs to business and homes,
and improve the economic environment. One element will upgrade and modernize generation and
distribution capacity ($283 million); another will reform electric power supply institutions in the
country ($25.7 million). In July 2011, the compact, which had not yet entered into force, was put
on operational hold in response to concerns raised by several anti-democratic actions taken by the
government, including suppression of the media and prevention of peaceful protests. In March
2012, the compact was suspended in view of the continuing pattern of actions “inconsistent” with
good governance. On June 26, 2012, the MCC reinstated its compact with Malawi. A change in
the country’s leadership and subsequent steps to restore democratic society led the Board to
change its position.
Mali
The compact was due for completion in September 2012. However, on March 22, 2012, the MCC
announced it was halting its operations in Mali, following a military coup. The compact was
formally terminated in August 2012.
The five-year, $461 million compact emphasized an increase in agricultural production and
expansion of trade. About half the funds ($234.6 million) supported a major irrigation project,
including modernization of infrastructure and improvements in land tenure. Improvements in the
airport ($89.6 million) targeted both passenger and freight operations. Due to rising construction
costs and changes in currency valuations, $94.6 million in funds originally intended for
construction of an industrial park at the airport were reallocated to the airport project. The early
termination left some components uncompleted, including the airport terminal building and half
of a 80 km road.
Moldova
The five-year, $262 million compact addresses agriculture and roads. On the agriculture side,
$101.77 million will be provided to repair large irrigation systems supporting high-value fruits
and vegetables, to support the legal transfer for these systems to water user organizations, and to
facilitate financing facilities for farmers and entrepreneurs. USAID will provide technical
assistance to improve market access for high-value agriculture. The compact will also provide
$132.84 million to repair a major bridge and highway leading toward Ukraine, facilitating
commercial traffic between the two countries.
Mongolia
Mongolia’s compact was completed in September 2013. The most significant part of the original
five-year, $285 million compact was intended to stimulate economic growth by refurbishing the
rail system, including infrastructure and management ($188.38 million). However, in April 2009,
the government of Mongolia informed the MCC that it would not be able to implement the $188
million rail component of its compact, because Russian members of the joint Mongolian-Russian
rail company would not allow an audit of the company.
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The MCC decided to use $52 million of this amount to expand the three other original projects in
the compact. These included support for improvements in the property registration and titling
system ($23.06 million) and the vocational education system ($25.51 million), and an attempt to
reform the health system to better address non-communicable diseases and injuries, which were
rapidly increasing in the country ($17.03 million). In December 2009, the MCC Board approved
a further restructuring of the compact, utilizing remaining funding from the terminated rail
component of the compact to target $47.2 million at energy and environmental projects and $79.7
million at rehabilitating a road and bridge.
Morocco
The five-year, $697.5 million compact, completed in September 2013, had multiple components,
all aimed at increasing private sector growth. These included efforts to increase fruit tree
productivity ($300.9 million), modernize the small-scale fisheries industry ($116.2 million), and
support artisan crafts ($111.9 million). In addition, the compact funded financial services to
micro-enterprises ($46.2 million) and provided business training and technical assistance aimed at
young, unemployed graduates ($33.9 million).
Morocco has been selected as eligible for a second compact.
Mozambique
Completed in September 2013, the five-year, $506.9 million compact, like most other compacts,
targeted specific districts, in this case the less prosperous north of the country. The compact had
four components. Water and sanitation services were improved ($203.6 million); a major road
rehabilitated ($176.3 million); land tenure services made more efficient ($39.1 million); and steps
taken to protect existing coconut trees, improve coconut productivity, and support diversification
to other cash crops ($17.4 million). The long-term objective was to reduce the projected poverty
rate by more than 7%.
Namibia
The five-year, $304.5 million compact, completed in September 2014, focused on education,
tourism, and agriculture. The education project ($145 million) aimed to improve school
infrastructure and training, vocational and skills training, and textbook acquisition. The tourism
project ($67 million) targeted management and infrastructure in Etosha National Park, the
premier wildlife park in Namibia, and building ecotourism capacity in the country. The
agriculture project ($47 million) focused on land management, livestock support, and production
of indigenous natural products.
Nicaragua
The five-year, $175 million compact with Nicaragua, ended in May 2011, focused on promoting
economic growth primarily in the northwestern region of the country, where potential
opportunities exist due to the area’s fertile land and nearby markets in Honduras and El Salvador.
The compact had three components: (1) to strengthen property registration ($26.5 million); (2) to
upgrade primary and secondary roads between Managua and Leon and to provide technical
assistance to the Ministry of Transportation ($92.8 million); and (3) to promote higher-profit
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agriculture activities, especially for poor farmers, and to improve water supply in support of
higher-value sustainable agriculture.
On June 10, 2009, the MCC Board voted to terminate assistance for activities not yet contracted
under the Nicaragua compact. These activities had been suspended since the end of 2008 because
of the actions of the Nicaraguan government inconsistent with the MCC eligibility criteria,
specifically in the area of good governance. Nicaragua first received a warning, then projects
were put on hold, and then activities not yet contracted were suspended in December 2008 as the
credibility of Nicaragua’s municipal elections was seriously questioned. In June 2009, due to
government actions that “limited the activity of political opposition, civil society, media elections
and observers” prior to the municipal elections,53 and were judged by MCC to be a pattern of
action “inconsistent with the criteria used by MCC to determine eligibility for assistance,”54
compact funding was partially terminated. The termination affected activities not yet contracted, a
property regularization project and a major road, together amounting to about $62 million.
Philippines
The five-year, $434 million compact has three components. Computerization of the revenue
collection process is expected to raise tax revenues and reduce tax evasion, while improving the
impartiality of tax administration ($54.4 million). Support for small-scale, community
development projects, designed and implemented by rural communities, is intended to strengthen
local governance and participation in development activities ($120 million). Rehabilitation of 222
kilometers of road linking two provinces is meant to reduce transport costs and increase incomes
($214.4 million).
Senegal
The five-year, $540 million compact targets two infrastructure needs—roads and irrigation, both
largely intended to support the agricultural sector in Senegal. The road rehabilitation project
($324 million) seeks to improve two key roads, one connecting major towns and neighboring
countries to the capital and the other connecting the agricultural area of the Casamance to the rest
of Senegal. The irrigation project ($170 million) will develop up to 10,500 hectares of land and
prevent abandonment of 26,000 hectares. It will also address land tenure issues.
Tanzania
The five-year, $698 million compact, completed in September 2013, focused on three key
economic infrastructure issues. A transport sector project ($373 million) improved major trunk
roads, select rural roads, and general road maintenance capabilities, and upgraded an airport. An
energy sector project ($206 million) laid an electric transmission cable from the mainland to
Zanzibar and rehabilitated the existing distribution system to unserved areas. A water sector
project ($66 million) expanded a clean water treatment facility serving the capital, reduced water
loss in the capital region, and improved the water supply in Morogoro, a growing city.
53 MCC Press Release, “MCC Urges Nicaraguan Government to Respect Democracy,” available at
http://www.mcc.gov/mcc/countries/nicaragua/ni-documents/release-112508-nicaragua.shtml.
54 From Nicaragua country page of MCC website, available at http://www.mcc.gov/mcc/countries/nicaragua/
index.shtml.
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Tanzania has been selected as eligible for a second compact.
Vanuatu
The $65.7 million, five-year compact, completed in April 2011, targeted improvements broadly in
multiple types of infrastructure, including roads, wharfs, an airstrip, and warehouses. The
objective was to increase the average per capita income by 15%, by helping rural agricultural
producers and providers of tourism-related goods and services. The compact further aimed to help
strengthen Vanuatu’s Public Works Department in order to enhance capacity to maintain the
country’s entire transport network.
Zambia
The $354.8 million, five-year compact focuses entirely on the water and sanitation sector in the
Lusaka area. Most of the funds ($284 million) will be used to rehabilitate and improve
infrastructure; other funds will go for strengthening management and policy controlling the water
sector.
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Appendix C. MCC Candidate Countries FY2015
(Divided into World Bank Income Categories, as Defined by MCC Authorization)
South Asia—Lower-
Latin America—Low
Africa—Low Income
Middle Income
Income
Benin (FC): Second Compact
Sao Tome & Principe
Bhutan *
Haiti
Eligible FY12&13&15 (not FY14).
Burkina Faso (FC)
Senegal (C)
Sri Lanka *
Nicaragua
Burundi
Sierra Leone: Threshold Eligible
FY15
Cameroon Somalia
East Asia/Pacific—Low
Income
Central African Republic
South Sudan
Laos
Latin America—Lower-
Middle Income
Chad
Tanzania (FC): 2nd Compact Eligible Solomon Islands
El Salvador(CII)
FY13&14&15
Comoros Togo
Vietnam
Guatemala* (TC)
Cote D’Ivoire: Threshold Eligible
Uganda Guyana
FY15
Democratic Republic of Congo
Zambia (C)
East Asia/Pacific—Lower-
Honduras (FC) & (TC) *
Middle Income
Djibouti Indonesia
(C) *
Paraguay
Ethiopia
Africa—Lower-Middle Income
Kiribati *
Gambia Cape
Verde
(CII) Micronesia
*
Ghana (CII)
Nigeria*
Mongolia (FC) * Second
Compact Eligible FY15
Guinea
Republic of Congo*
Papua New Guinea*
Europe—Low Income
Guinea-Bissau Swaziland*
Philippines
(C) * Second
None
Compact Eligible FY15
Kenya Samoa
Lesotho (FC): Second Compact
South Asia—Lower Income
Timor-Leste *
Europe—Lower-Middle
Eligible FY14&15
Income
Liberia: Compact eligible
Afghanistan
Vanuatu (FC) *
Armenia (FC)
FY13&14&15
Madagascar (FC)
Bangladesh
Mid-East—Low Income
Georgia (CII) *
Malawi (C) India
Yemen
Kosovo
Mali (FC)
Kyrgyz Rep
Moldova (C) *
Mauritania
Nepal: Compact Eligible FY15
Mid-East—Lower-Middle
Income Ukraine
Mozambique (FC) Pakistan
Egypt *
Niger: Compact eligible
Tajikistan Morocco (FC): 2nd Compact
FY13&14&15
Eligible FY13&14&15
Rwanda Uzbekistan
Notes: Under MCC Authorization Rules (§606 of P.L. 108-199), Low Income = GNI per capita below World
Bank International Development Association (IDA) eligibility level of $1,985 and below; Lower-Middle Income =
GNI per capita income above $1,985 and below $4,125, the World Bank threshold for upper-middle income
countries. Excluded from this table are countries prohibited from receiving U.S. economic assistance.
(C) = Current Compact Country; (CII) = Second Compact Country; (FC) = Former Compact Country; (TC)
= Current Threshold Country.
* Countries denoted by asterisk are considered Low Income for MCC funding purposes only under P.L. 113-76,
defined as bottom 75 countries in income level.
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Appendix D. MCC Performance Indicators FY2015
Ruling Justly
Investing in People
Economic Freedom
Control of Corruption
Public Primary Education Expenditure
Inflation
Source: World Bank/Brookings
as % of GDP
Source: IMF World Economic
World Governance Indicators
Sources: UNESCO and National
Outlook
(WGI)
governments
Freedom of Information
Girls’ Primary Education Completion
Fiscal Policy
Source: Freedom House/Open
Rate (For Lower Income Countries)
Source: IMF World Economic
Net Initiative/FRINGE
Source: UNESCO
Outlook and Country Reports
or
Girls’ Secondary Education Enrollment
Rate (For Lower-Middle Income
Countries)
Source: UNESCO
Government Effectiveness
Public Health Expenditure as % of GDP
Trade Policy
Source: World Bank/Brookings
Source: World Health Organization (WHO)
Source: The Heritage Foundation
WGI
Rule of Law
Immunization Rates: DPT and Measles
Regulatory Quality
Source: World Bank/Brookings
Source: World Health Organization (WHO)
Source: World Bank/Brookings
WGI
and U.N. Children’s Fund (UNICEF)
WGI
Civil Liberties
Child Health
Business Start-Up: Days and
Source: Freedom House
Sources: Columbia Center for Int’l Earth
Cost of Starting a Business
Science Info Network (CIESIN) and Yale
Source: International Finance
Center for Env. Law and Policy (YCLEP)
Corporation
Political Rights
Natural Resource Protection
Land Rights and Access
Source: Freedom House
Sources: Columbia Center for Int’l Earth
Source: Int’l Fund for Agricultural
Science Info Network (CIESIN) and Yale
Development (IFAD) and Int’l
Center for Env. Law and Policy (YCLEP)
Finance Corporation
Access to Credit
Source: International Finance
Corporation
Gender in the Economy
Source: Int’l Finance Corporation
Author Contact Information
Curt Tarnoff
Specialist in Foreign Affairs
ctarnoff@crs.loc.gov, 7-7656
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