December 11, 2008
MCC Reiterates U.S. Commitment to Fight Poverty; Board Calls on Partners to Recommit to Democratic Principles; Columbia, Indonesia, Zambia now Eligible for Innovative Grants
Liberia and Timor-Leste named eligible for MCCs threshold program; Board suspends assistance to Nicaragua
Washington, D.C. The Millennium Challenge Corporation (MCC) Board of Directors selected Colombia, Indonesia, and Zambia as new countries eligible for large-scale grant funding under the U.S. Governments innovative foreign assistance program to reduce poverty through economic growth. Following todays announcement these countries may begin the process of applying for the five-year MCC compacts. Since its inception in 2004, MCC has approved compacts totaling over $6.3 billion with 18 partner countries.
Congratulations to the newly eligible countries selected to participate in the Millennium Challenge Corporation program, said MCC Chief Executive Officer Ambassador John Danilovich. Your commitment to good governance and dedication to promoting economic freedom and investing in your people has placed you among a select group of countries working diligently to reduce global poverty through sustainable economic solutions.
In addition, Liberia was selected as eligible for MCCs threshold program which provides smaller grants to help reform-minded governments improve their performance on the policy indicators necessary for participation in the compact program.
Over the past several years, Liberias performance has improved significantly on many of the MCC eligibility indicators. The Board took note of the strong evidence of Liberias commitment to reforms that will foster economic growth and poverty reduction, said Ambassador Danilovich.
In making its country selection decisions, the Board considers the policy performance of candidate countries using 17 indicators in three areasRuling Justly, Investing in People, and Encouraging Economic Freedom. These indicators measure countries demonstrated commitment to policies that promote, among other things, political and economic freedom, investments in education and health care, control of corruption, and respect for civil liberties and the rule of law. The Board also takes into consideration the opportunity for MCC to reduce poverty and generate economic growth, and available budgetary resources.
Ambassador Danilovich added, Being eligible for MCC funding does not mean a country will automatically receive a compact. Governments must demonstrate leadership in the broad-based consultative process to develop proposals that address barriers to poverty reduction and economic growth.
The Board noted Jordan, Malawi, Moldova, Philippines, and Senegal will be able to continue the process of developing compacts in fiscal year 2009.
Given sufficient resources allocated by Congress, MCC looks forward to long-term partnerships with these countries as they create their own plans to empower their poorest citizens, said Ambassador Danilovich.
The Board agreed that the Philippines remains eligible for developing a compact proposal, but emphasized that MCC will not sign a compact until the country passes the indicator criteria on corruption. The Board also reiterated the importance of this principle with respect to all its partner countries. The Board called upon the Government of the Philippines to intensify its efforts to fight corruption and will closely monitor the countrys performance, said Ambassador Danilovich.
The Board also voted to suspend assistance for new activities under the $175 million MCC compact in Nicaragua because of actions taken by the Nicaraguan government that are inconsistent with MCCs eligibility criteria. MCC will therefore not approve disbursements for activities not already contracted by MCA-Nicaragua. The political conditions leading up to, during, and following recent elections in Nicaragua were not consistent with MCC requirements that include a commitment to policies that promote political freedom and respect for civil liberties and the rule of law.
The Board called on Nicaragua to develop and implement a comprehensive set of measures to address concerns regarding the governments commitment to democratic principles. The Board will review the response of the Nicaraguan government and determine subsequent actions at its next quarterly Board meeting in March 2009.
The MCC model is based on aid with accountability and good governance. The Board determined that recent actions by the Nicaraguan government were inconsistent with MCCs core principles and therefore had to take this difficult decision, said Ambassador Danilovich. Nicaraguas compact with MCC benefits hundreds of thousands of poor Nicaraguans by providing better roads, property titles, and agricultural business support. For the sake of the poor of the country, we sincerely hope that the Nicaraguan government recommits to the principles of democracy and the rule of law so that MCC can reestablish what has been an effective partnership. It should be remembered that our partnership with Nicaragua is dedicated to both poverty reduction and good government policies.
The MCC Board also decided today not to reselect Bolivia, Ukraine, and Timor-Leste as eligible for MCC compact assistance. The Board did, however, designate Timor-Leste as threshold eligible and invited the country to submit a threshold program proposal. MCC will continue to work with Ukraine as it implements its ongoing threshold program specifically addressing weaknesses in its policy performance. In addition, the Board decided that Yemen is no longer eligible for threshold program assistance.
The Board also reviewed progress made on reform measures initiated by the government of Armenia over recent months. The Board reiterated its concerns about the status of democratic governance in the country and underlined its expectations that the government of Armenia fulfill commitments to implement substantive reforms. The Board noted that it would again review Armenias performance and examine continued collaboration with the country during its March meeting.
Todays meeting is the last for the public members of the Board who are members of the current administration.
It has been an extraordinary opportunity and privilege to serve with the members of the Board, said Ambassador Danilovich. The MCC is strengthened in fulfilling its mission to reduce poverty through economic development by the dedication of worthy public servants from the Department of State, Department of the Treasury, the U.S. Trade Representative, and USAID and also by our four private sector Board members. My fellow colleagues at MCC deserve abundant praise and credit for their great achievement in creating what is now internationally acknowledged as an innovative and successful model of development assistance. Our Deputy CEO, Rodney Bent, will remain at MCC to ensure continuity of our model and country programs during this period of political transition.
The Millennium Challenge Corporation is a unique government agency that includes private and public sector members on its Board. The MCC Board of Directors is composed of the Secretary of State, the Secretary of Treasury, the U.S. Trade Representative, the Administrator of USAID, the CEO of MCC, and four private sector members appointed by the President of the United States with the advice and consent of the U.S. Senate. The Secretary of State is the Chair of the Board and the Secretary of Treasury is the Vice Chair.
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The Millennium Challenge Corporation, a U.S. government agency designed to work with developing countries, is based on the principle that aid is most effective when it reinforces sound political, economic, and social policies that promote poverty reduction through economic growth. For more information about MCC, visit www.mcc.gov.