Chapter 2: Compact Development Funding for Initial Engagement

Following selection, countries enter a rigorous compact development process that requires considerable resources. The availability of funding is a critical element in each selected country’s ability to start the process quickly and to sustain a successful engagement with MCC. MCC recognizes that selected countries have limited resources and face a range of limitations, inhibiting their ability to identify, mobilize, and commit financial resources as soon after selection as needed.

By law, MCC has limited authority to extend financial support to selected countries at key steps in the compact development process. This financial support is known as Compact Development Funding and is provided in the form of a grant. MCC may utilize its authority once a country is selected by its Board of Directors to develop a compact to support the country in taking certain discrete actions that are critical to a rapid start-up and a successful initial engagement with MCC. This funding is intended to supplement – not replace – the budget that each selected country provides for compact development.

Purposes of Compact Development Funding for Initial Engagement

MCC provides Compact Development Funding to help with the recruitment, selection, hiring, and retention of the Compact Development Team, and each selected country may use Compact Development Funding to cover costs associated with salaries and related benefits, such as pensions, health coverage, disability pay, holidays and leave. During the first several months of the compact development process, a selected country may use this funding to support its National Coordinator and other staff members needed in the Preliminary Analysis phase (as described in Chapter 1). In later phases, the selected country may apply Compact Development Funding to support additional technical specialists needed for the preparation of detailed Concept Notes and Project Proposals. The selection, appointment, or hiring of staff members, their salaries, and the execution of their employment contracts may be subject to MCC’s approval if funded with MCC’s Compact Development Funding.

In certain cases, Compact Development Funding also may cover fees associated with the use of external consultants on a short-term basis. Such consultants may, for instance, provide support during the development of an Integrated Constraints Analysis, a public outreach and stakeholder engagement approach, or the root cause analysis. In such cases, the procurement process and the consulting contract may be subject to MCC’s approval, as well.

Implementing Compact Development Funding for Initial Engagement

MCC will work with the selected country to finalize and execute a legal agreement for the use of Compact Development Funding for initial engagement quickly, generally within two (2) months following selection. The legal agreement will include a detailed description of the agreed use of funds and a detailed budget. The legal agreement also will clarify limitations, outline requirements, and specify the documentation and approvals process required for the release of any agreed funds.

To facilitate the process of finalizing terms of this agreement and the use of the funds, MCC asks that each selected country clearly identify and authorize a senior official within the relevant government ministry, agency or department as soon as possible. Such an official will generally sit within the ministry, agency or department responsible for finance, international affairs, economic development or planning. In addition, each selected country will need to identify and authorize legal counsel to review, negotiate, and finalize the language and legal terms of this agreement.

MCC will work with each selected country to establish proper accountability, oversight, and control for the use of Compact Development Funding. As a general rule, MCC will cover the payment of salaries and other authorized expenses on a reimbursable basis.

Once a reimbursement basis is established, MCC will work with the selected country to understand the country payment process/system in order to establish clear procedures and internal controls around the reimbursement process. MCC will aim to clearly delineate the roles and responsibilities of the selected country in presenting a control framework that MCC deems reliable.

Country Commitment of Funding

MCC offers Compact Development Funding for initial engagement to ensure that each selected country has access to the financial resources it needs to start up and staff its Compact Development Team. As such, MCC can only make Compact Development Funding for initial engagement available until the selected country’s submission of Concept Notes and Project Proposals. Compact Development Funding is not intended to cover all of a selected country’s costs and is not a substitute for the commitment of significant country resources to the compact development process. Such funding may be subject to additional conditions, at MCC’s discretion.

Selected countries remain responsible for providing their Compact Development Teams with a wide range of services and support (as discussed in Chapter 1). Each selected country should expect to make appropriate office space available to its Compact Development Team, to provision its Compact Development Team with office supplies and office equipment and to support the work of its Compact Development Team with support staff, as may be necessary and customary. Where the Compact Development Team may need access to vehicles or may need to engage in domestic travel, the selected country should also expect to cover the associated costs.