The Country Selection Process
The MCC Board of Directors selects countries eligible for MCC assistance. Transparency regarding the process and criteria that govern selection of country partners, and that inform the Board’s eventual decisions, is a hallmark of the MCC model.
For a country to be selected as eligible for an MCC assistance program, it must demonstrate a commitment to just and democratic governance, investments in its people, and economic freedom as measured by different policy indicators.
Four-Step Selection Process
- Identify candidate countries.
- Publish selection criteria and methodology for country selection and accept public comment.
- Issue candidate country Scorecards.
- Select countries eligible for MCC program assistance.
Maintaining Compact Eligibility
- Continue its reform process;
- Seek to maintain and improve its overall policy performance on the indicators.
The Millennium Challenge Act does not require MCC to determine a country as eligible annually for countries with Compacts, but Compact eligible countries that have not yet signed a Compact are reselected each fiscal year during the time it takes to develop their Compact.
- Funds from that fiscal year are exhausted
- The Board suspends the country from eligibility
Not Meeting the Criteria
- Graduation from the Low Income competition to the Lower Middle Income competition;
- Introduction of new indicators or new methodologies;
- Improvements in the availability or quality of data;
- Rising income-group medians;
- Slight declines in performance.
None of these factors are likely to be serious enough to warrant a suspension of eligibility. If an eligible country does not meet the criteria in a given year but has not demonstrated a policy reversal or a pattern of actions inconsistent with the eligibility criteria, MCC will ask it to demonstrate efforts toward improvement by developing and implementing a policy improvement plan to address the concern(s) and to demonstrate its commitment to meeting the eligibility criteria.
If a country does demonstrate a significant policy reversal, MCC may issue a warning, suspension, or termination of eligibility and/or assistance. Because of data lags and gaps, this pattern of actions need not be captured in the indicators for MCC to take action. For more information see Suspension.
Graduating from the Low Income to the Lower Middle Income Category
Each year some countries’ per capita income level increases to the point where they are reclassified from the Low Income Category (LIC) to the Lower Middle Income Category (LMIC). Because LMIC median scores tend to be higher, some LIC countries that graduate into the LMIC group may not meet the eligibility criteria initially, even though their performance may not have declined in absolute terms. MCC’s selection methodology gives the Board discretion to consider other factors such as a country’s absolute performance and how a graduating country would have performed in comparison with its previous income group.
Policy Improvement Process for Compact Eligible Countries
- to develop an operational tool to assess, monitor, and improve performance on the eligibility criteria;
- to provide a basis for policy dialogue with MCC about reform efforts; and
- to demonstrate progress towards meeting the eligibility criteria on a regular basis
MCC asks its Compact partners to submit periodic reports that track progress under the plan.
Suspension from Compact Eligibility
Section 605 of the Millennium Challenge Act of 2003 authorizes MCC to provide assistance to eligible entities. To date, MCC has only deemed countries eligible for such assistance.
Even after a country has been selected for compact or threshold eligibility, MCC regularly reviews its partner countries’ policy performance throughout the development and implementation of a compact or threshold program. As part of this review, MCC may engage in a policy dialogue with partner countries, coordinating with our U.S. Government colleagues at the State Department, USAID and U.S. embassies regarding the country’s commitment and adherence to the MCC selection criteria.
According to MCC’s statute, a country may have its eligibility or assistance suspended or terminated if the country has:
- engaged in activities contrary to the national security interests of the United States;
- engaged in a pattern of actions inconsistent with MCA eligibility criteria; or
- failed to adhere to its responsibilities under a MCC program agreement.
For additional information, please see MCC’s Policy on Suspension and Termination.
A note on the MCA eligibility criteria
Given the lag time between when policy decisions are implemented and when such decisions are reflected in the data, a policy reversal or pattern of actions inconsistent with the eligibility criteria need not be reflected in the indicators for a country to be warned, suspended or terminated. At the same time, if a compact-eligible country does not meet the formal criteria in a given year, this does not necessarily indicate a significant policy reversal or pattern of actions inconsistent with the eligibility criteria. For more information on why this is the case, see Not Meeting the Criteria.
Step 1: Identify Candidate Countries
To be a candidate for MCC program assistance, countries must
- Not exceed certain per-capita, annual income levels;
- Not be subject to any number of U.S. or international sanctions.
The World Bank sets the income levels annually in late June or early July. Based on this information, MCC establishes a candidate country report.
Candidate Countries for Fiscal Year 2012
Candidate countries compete within two income categories, which are determined by a country’s per capita gross national income (GNI):
- Low Income: Countries must have a GNI equal to or less than $1,915 per capita.
- Lower Middle Income: Countries must have a GNI between $1,916 and $3,975 per capita.
Step 2: Publish Country Selection Criteria and Methodology
The country selection criteria and methodology are the rules and measures by which the Board of Directors determines a country’s eligibility.
In determining country eligibility, the Board considers:
- A country’s performance on the indicators;
- The opportunity to reduce poverty and generate economic growth within a country.
- Availability of funds.
The MCC CEO submits to Congress a report that describes these criteria and the methodology. By law, this report must be submitted to the appropriate Congressional committees and published in the Federal Register not later than 60 days before the MCC Board selects Compact eligible countries.
Accept Public Comment
Each year MCC solicits and considers public comment regarding the country selection criteria and methodology. Public comments received on the fiscal year 2011 selection criteria and methodology report will be considered as part of the selection review . The public comment period is open until October 30, 2011.
Step 3: Issue Country Scorecards and Scorebook
The Country Scorecard consolidates an individual country’s scores for each of the policy indicators MCC uses to determine eligibility for its assistance programs. Each country identified in the Candidate Country Report has a scorecard.
Individual country scorecards are available by fiscal year in the Country Scorecard section or are published as a Country Scorebook.
Step 4: Select Compact Eligible Countries
The Board of Directors selects countries to be eligible for MCC program assistance.
In determining country eligibility, the Board considers three factors:
- A country’s performance on the indicators;
- The opportunity to reduce poverty and generate economic growth within a country;
- Availability of funds.
The Board’s determination of eligible countries will be based primarily on objective and quantifiable indicators of a country’s commitment to these principles.
In addition, for countries that are candidates for second compact selection, the Board considers each country’s performance implementing its first compact including country progress towards achieving first compact results, the nature of the country partnership with MCC, and the degree to which the country has implemented the compact in accordance with MCC’s core policies and standards.
These countries, if they agree to participate, will be eligible to submit a Compact Proposal to MCC.