Congressional Budget Justification (CBJ): Congressional Budget Justification, FY 2018 | May 2017

Compact Development and Oversight

Compact Development and Oversight (in millions of $) FY 2016 Enacted FY 2017 Enacted FY 2018 Request
Total Appropriation/Request 901.0 905.0 800.0
Compact Development/Oversight 94.0 93.9 89.2
609(g) Assistance 19.0 22.0 26.6
Due Diligence 75.0 71.9 62.6

For FY 2018, MCC is budgeting $27 million for assistance under section 609(g) of MCC’s authorizing statute. In addition, MCC is budgeting $63 million for due diligence to support programmatic oversight, quality control, and post-completion work, such as data collection and evaluation. A detailed focus on pre-compact planning, program oversight, and post-compact evaluation is critical to the success of MCC program investments and to ensuring that MCC, its partner countries, and the development community are able to take advantage of the learning opportunities inherent in MCC programs.

Specifically, the higher funding level for 609(g) assistance will be used to facilitate the development and implementation of compact programs with existing partner countries, as well as with new partner countries selected in FY 2017: Burkina Faso, Sri Lanka and Tunisia.  Due diligence funding will be used for oversight and monitoring of compacts in implementation, the number of which is anticipated to grow in FY 2017 and 2018, and for monitoring and evaluation activities around the closeout of compact programs in Cabo Verde and Indonesia in FY 2018.  Due diligence funding will also support MCC’s oversight of threshold programs in implementation and the development of threshold programs with new partners selected in FY 2017—Kosovo, Togo, and Timor-Leste.

609(g) Assistance

Assistance provided under section 609(g) of MCC’s authorizing statute represents less than 4 percent of MCC’s overall request. Nonetheless, 609(g) assistance is critical to the success of compact development and allows MCC to fulfill its goal of developing high-quality compacts more quickly. MCC 609(g) assistance grants help its country partners undertake detailed project preparation work on proposed projects. This preparation includes project design studies, feasibility studies, environmental impact assessments, engineering and geotechnical designs, economic baseline surveys, technical assessments of financial management and procurement capabilities, and other specialized analyses that help partner countries fully prepare projects that can be implemented within the fixed five-year timeframe, within budget, and provide substantial returns to MCC’s investment.

Due Diligence

Due diligence funds allow MCC to obtain the information necessary to evaluate, assess, and appraise proposed projects during compact development, to effectively oversee and monitor projects during compact implementation, and to evaluate the results of compact projects after compact close-out.

MCC uses due diligence funds to procure consultants and technical experts who can provide this kind of support.  By allowing MCC to procure such resources as needed, rather than permanently hire full-time technical staff, due diligence funds allow MCC to operate on a lean administrative budget relative to the size and diversity of its investment portfolio.

Due diligence funds support MCC’s independent impact evaluations that use rigorous statistical methods to measure changes in beneficiary income related to MCC activities. In addition to offering valuable lessons on how MCC can improve, impact evaluations provide encouraging news about program successes.

Due diligence funds also support data and technical expertise needed for calculating economic rates of return for compact investments. Through pre-investment economic modeling of expected economic rates of return, MCC chooses which investments are most likely to generate benefits, specifically, increased income for program beneficiaries. Economic modeling done after compact closeout helps to assess the cost effectiveness of the agency’s investments.