Press Release

Millennium Challenge Chief Outlines Consequences of Possible Senate Cuts

For Immediate Release

May 22, 2008

Washington, D.C.Millennium Challenge Corporation Chief Executive Officer, Ambassador John Danilovich,  called todays Senate action to cut $525 million from the poverty-fighting agency shortsighted and damaging to U.S. foreign policy interests. If enacted, these cuts will force MCC to postpone at least one compact this year,  causing a subsequent postponement of potential compacts with countries such as the Philippines, Jordan, Moldova, Malawi, and Senegal, said Danilovich. MCC is dedicated to poverty reduction and long-term sustainable economic development.

Senate action to cut MCC funding will scuttle a five-year agreement or compact to fight poverty in Burkina Faso scheduled for signing this summer. The nearly $500 million package would provide sustainable, long-term solutions to Burkinas rural agricultural economy already hard hit by the global food crisis and the completion of classrooms for thousands of 4th-6th grade girls in poor areas. MCC is scheduled to sign a similar five-year agreement with Namibia around the same time.

The notion that MCCs unexpended funding is available is flat wrong.  Signing the Burkina Faso and Namibia compacts will mean that 99 percent of all funds appropriated to MCC will be committed to specific countries and specific projects by the end of this fiscal year, Danilovich added. Reneging on these agreements negotiated in good faith and based on predictable funding - - after countries have made substantial political, economic, and social reforms to qualify for this performance-based program, and have expended substantial amounts of their resources to develop proposals - - will seriously damage MCCs ability to incentivize reform and jeopardize U.S. engagement with developing countries. The proposed Senate cuts have sent shockwaves through the 16 countries, over half of which are in sub-Sahara Africa, that already have MCC compacts.

Sixty years of development experience reinforces MCCs practice of setting aside full funding upfront so that we do not end up with half-built roads or unfinished programs at U.S.  taxpayer expense. To ensure accountability and efficient use of US taxpayers funds, MCC programs are designed to disburse money predictably over a five-year timeframe, he concluded. It is unfortunate that the Senate is actively seeking to prevent MCC from using these best practices to maximize the effectiveness of American assistance abroad.