Washington, D.C.—The Millennium Challenge Corporation Board of Directors held its quarterly meeting on December 10, 2014. The Board approved three countries as eligible to develop proposals for a compact, six countries to continue developing compact proposals and two countries to develop Threshold Programs. The Board also approved a Threshold Program with Guatemala.
MCC’s Board selected Nepal to develop a compact for the first time. Nepal has consistently passed the scorecard criteria for the past four years and continues to demonstrate clear progress in institutionalizing democratic processes. Since being chosen for the Threshold Program three years ago, Nepal has made significant progress in increasing peace and stability by completing integration of ex-combatants into the Nepali army in 2012, successfully holding peaceful elections in 2013, and continuing to draft a new constitution in 2014. Compact development likely will build off the development work done to date.
The Board also selected Mongolia and the Philippines to develop new compacts. Both countries graduated from low income country (LICs) to lower-middle income country (LMICs) status during their initial compacts. Through continued policy reforms, each successfully met the higher criteria to pass their eligibility scorecards as LMICs in FY15.
Mongolia successfully completed an MCC compact in September 2013, and while the country’s economy has grown quickly over the past three years, the poverty level remains significant. MCC looks forward to working with the government as it tackles the challenge of translating this growth into more inclusive, poverty-reducing growth.
The Philippines is currently on track to complete its first compact in May 2016. The government has been a strong partner in compact implementation. Selecting the Philippines now allows for a seamless transition from one compact to the next, and recognizes the Philippines’ strong efforts at policy reform, including its efforts to root out corruption.
The Board also reselected Benin, Lesotho, Liberia, Morocco, Niger, and Tanzania to continue developing compacts.
The Board expressed continued concern over corruption in Tanzania. It noted that Tanzania has experienced a significant decline on the key indicator measuring efforts to control corruption and stated its expectation that the Government of Tanzania must take firm, concrete steps to combat corruption before a compact is approved. There was a discussion regarding the Government of Tanzania’s response to the recent case involving Independent Power Tanzania Limited.
The Board selected Sierra Leone as eligible to develop a Threshold Program and, as a result, the country is no longer eligible for compact assistance. Sierra Leone has been committed to improving policy performance and remains a strong partner of MCC, but has not met MCC’s eligibility scorecard criteria for two years in a row; this year, Sierra Leone narrowly missed a passing score on Control of Corruption indicator despite an improved raw score. The Threshold Program will provide a tool for MCC to remain engaged with the Government of Sierra Leone and support it as it continues important reform efforts.
The Board also selected Cote d’Ivoire to develop a Threshold Program. After years of working with MCC and indicator institutions in order to strengthen its scorecard performance, Cote d’Ivoire went from passing five indicators two years ago to passing 10 indicators this year.
The Board approved a $28 million Threshold Program with Guatemala. The program will support the Government of Guatemala’s efforts to assess the revenue impact of proposed tax code changes, develop private sector partnerships and invest in education as it relates to the labor market.
The Board also confirmed its support for MCC’s exploring strategic, regionally oriented partnerships, especially in South Asia because, under the right circumstances, such an approach may present opportunities to take advantage of higher rates of return on investment and larger-scale reductions in poverty.