|(in millions of $)||FY 2016 Enacted||FY 2017 Enacted||FY 2018 Request|
|Compact Development/Oversight: 609(g) and Due Diligence||94.0||93.9||89.2|
|Office of the Inspector General||5.0||5.0||4.5|
*Numbers may not add due to rounding.
The Millennium Challenge Corporation (MCC) requests $800 million for FY 2018 for programs in Mongolia, Senegal, Sri Lanka, Togo, and Timor-Leste, as well as to support the development and implementation of programs designed to fight poverty through economic growth in 21 other countries. These countries, which have a combined population of about 118 million people living on less than $1.90 per day, have earned eligibility for MCC‘s time-limited grant investments designed to help people lift themselves out of poverty and create more stable, secure countries with new business opportunities abroad for American firms.
FY 2018 funding will allow MCC and partner country governments to tackle binding constraints to economic growth specifically in Mongolia, Senegal, and Sri Lanka—three compact countries that meet MCC’s rigorous standards for partner eligibility and are located in strategically significant regions of the world. Each of these countries has proven to be a strong partner dedicated to developing results-driven compact programs that meet MCC’s standards for accountability, continued good governance, and broad impact. FY 2018 funds will also support new threshold programs in Togo and Timor-Leste through programs designed to improve policy performance and strengthen institutions to help them become compact-eligible. The compact development process for Burkina Faso, Côte d’Ivoire, Mongolia, Nepal, Philippines, and Tunisia—countries with great potential for economic growth and poverty reduction—is also reliant on FY 2018 funding.
MCC works only with a select group of low and lower-middle income countries that demonstrate a commitment to democratic governance, economic freedom, and rule of law. To date, MCC has signed 33 compacts with 27 different country partners, along with 26 threshold programs, totaling more than $11 billion in investments.
MCC’s business-like approach is based on selectivity, evidence-based decision-making—including transparent economic analyses—country ownership, and accountability, which are widely recognized as key tenets of effective foreign assistance. MCC works closely with the private sector to leverage its expertise and incentivize policy reforms that open up market opportunities. By holding the agency and our partner countries accountable for results and continued good governance, MCC advances American security, values and prosperity.
Investments by MCC have leveraged more than $6 billion in additional investments and commitments from the private sector and other development partners, including more than $850 million by partner countries themselves to support compact and threshold program projects in their countries. This level of commitment from partner countries and the international and domestic private sector helps ensure the sustainability of MCC’s investments over the long term.
Despite the relatively small portion of U.S. federal funding spent on foreign assistance, it remains one of the greatest values for U.S. taxpayers. In today’s global economy, half of all U.S. exports go to developing countries. MCC’s compacts with country partners are often the cornerstone of the U.S. economic relationship, and they benefit the American people by strengthening U.S. national security and increasing opportunities for American businesses.
Evidence shows that the primary driver of poverty reduction is broad-based economic growth, and development programs focused on growth-enhancing policy reforms and investments can play a critical role in sustained poverty reduction. In addition to funding large-scale infrastructure projects, MCC helps partner country governments make critical reforms that create an enabling environment for private sector investment and advance project sustainability.
Reducing global poverty creates a more stable, secure world with more opportunities for prosperity at home and abroad. With cost-effective projects, a lean staff, and an evidence-based approach, MCC is a good investment for the American people.
FY 2018 Goals
Full funding of this request will not only advance good governance and economic growth around the world, but also make lasting improvements in the lives of the poor and strengthen institutions so partner countries can better deliver much-needed services to their people.
This request will give MCC the leverage needed to incentivize policy reforms and the resources required to help partner countries realize their full economic potential. Fully funding the Administration’s request for MCC will provide the agency the resources it needs to:
- Directly support grants to Mongolia, Senegal, and Sri Lanka.
- Mongolia’s compact is expected to focus on a set of specific investment activities to increase bulk water supply and improve water service delivery including groundwater extraction, industrial water reuse, and institutional and regulatory policy strengthening.
- Senegal’s compact will likely focus on energy infrastructure, institutional strengthening, upgrading power transmission and distribution, and improved electricity access in rural areas.
- Sri Lanka is developing a compact expected to focus on transportation bottlenecks and access to land for commercial and industrial uses.
- Connect some of the world’s poorest people to jobs, markets, and opportunities by helping partner governments deliver services like clean water, reliable electricity, roads, land rights, and schools to their people. About 70 percent of MCC’s portfolio is dedicated to large-scale infrastructure in the transportation, agriculture, energy, and water sectors, with nearly two-thirds of the agency’s portfolio invested in Africa.
- Leverage MCC investments to promote sustainable growth led by the private sector. MCC’s compact programs improve the environment for private business and innovation through significant policy, legal, regulatory and institutional reforms. A vibrant private sector introduces new technologies into and develops innovations for local markets, delivers services, and creates vital employment opportunities, all of which improve the lives and well-being of the poor. These reforms make MCC’s partner countries more attractive to foreign investors, including private firms that can partner with public entities through public-private partnerships (PPPs) to more effectively deliver, operate and maintain much-needed services. Though MCC is small in size, its targeted, evidence-based approach and focus on private sector partnerships multiplies its impact.
- Maintain its posture as a data-driven, evidence-based organization. MCC invests heavily in tracking the results of its investments. All MCC-funded projects are evaluated independently, with nearly 40 percent undergoing rigorous impact evaluations led by third-party evaluators.
- Operate with a lean workforce and small overseas footprint while continuing to innovate and improve administrative functions.