Daily Rules, Proposed Rules, and Notices of the Federal Government
The Act authorizes the provision of Millennium Challenge Account (MCA) assistance to countries that enter into compacts with the United States to support policies and programs that advance the prospects of such countries achieving lasting economic growth and poverty reduction. The Act requires the Millennium Challenge Corporation (MCC) to take a number of steps in determining the countries that, based on their demonstrated commitment to just and democratic governance, economic freedom and investing in their people, and the opportunity to reduce poverty and generate economic growth in the country, will be eligible for MCA assistance during fiscal year 2009 (FY09). These steps include the submission of reports to the congressional committees specified in the Act and the publication of notices in the
1. The countries that are "candidate countries" for MCA assistance during FY09 based on their per-capita income levels and their eligibility to receive assistance under U.S. law, and countries that would be candidate countries but for specified legal prohibitions on assistance (section 608(a) of the Act);
2. The criteria and methodology that the Board of Directors of MCC (the Board) will use to measure and evaluate the relative policy performance of the candidate countries consistent with the requirements of section 607 of the Act in order to select "MCA eligible countries" from among the "candidate countries" (section 608(b) of the Act); and
3. The list of countries determined by the Board to be "MCA eligible countries" for FY09, with justification for eligibility determination and selection for compact negotiation, including which of the MCA eligible countries the Board will seek to enter into MCA compacts (section 608(d) of the Act).
This report sets out the criteria and methodology to be applied in determining eligibility for new partner countries for FY09 MCA assistance.
MCC reviews all of its indicators and methodology annually to ensure that the best measures are being used and, from time to time, recommends changes or refinements if MCC identifies better methodologies, better indicators, or improved sources of data. MCC takes into account public comments received on the previous year's criteria and methodology and consults with a broad range of experts in the development community and within the U.S. Government.
MCC recommends no changes to the selection criteria and methodology for this fiscal year.
Since FY07, MCC has pursued research and consultation to explore the possibility of adopting a new education indicator in the
Many of MCC's candidate countries in the lower middle income category have realized substantial success in achieving high levels of performance on select
Several of MCC's early compacts are due to conclude within the next two years. MCC will review whether the selection criteria and methodology should be modified when applied to selecting a country as eligible for a second compact.
The Board will select eligible countries based on the following, among
The Board will make use of seventeen indicators to assess policy performance of individual countries (specific definitions of the indicators and their sources are set out in annex A). These indicators are grouped for purposes of the FY09 assessment methodology under the three policy categories listed below.
In making its determination of eligibility with respect to a particular candidate country, the Board will consider whether a country performs above the median in relation to its peers on at least half of the indicators in the Ruling Justly and Economic Freedom categories, above the median on at least three of the five indicators in the Investing in People category, and above the median on the
Where necessary, the Board may also take into account other quantitative and qualitative information (supplemental information) to determine whether a country performed satisfactorily in relation to its peers in a given category. There are elements of the criteria set out in the Act for which there is either limited quantitative information (e.g., rights of people with disabilities) or no well-developed performance indicator. Until such data and/or indicators are developed, the Board may rely on additional data and qualitative information to assess policy performance. The Board may also consider whether any adjustments should be made for data gaps, lags, trends, or other weaknesses in particular indicators. For example, the State Department Human Rights Report contains qualitative information to make an assessment on a variety of criteria outlined by Congress, such as the rights of people with disabilities, the treatment of women and children, workers rights, and human rights. Similarly, as additional information in the area of corruption, the Board may consider how a country scores on Transparency International's Corruption Perceptions Index and the Global Integrity Index, as well as on the defined indicator.
Compact eligible partners are expected to seek to maintain and improve policy performance. MCC recognizes that partner countries may not meet the formal eligibility criteria from time to time due to a number of factors, such as changes in the peer-group median; graduation into a new income category (e.g., from low income to lower middle income); numerical declines that are within the margin of error; slight declines in policy performance; revisions or corrections of data; the introduction of new sub-data sources; or changes in the indicators used to measure performance. None of these factors alone warrants suspension or termination of eligibility and/or assistance. Countries that demonstrate a significant policy reversal can face a warning, suspension, or termination of eligibility and/or assistance. According to MCC's authorizing legislation, "[a]fter consultation with the Board, the Chief Executive Officer may suspend or terminate assistance in whole or in part for a country or entity * * * if * * * the country or entity has engaged in a pattern of actions inconsistent with the criteria used to determine the eligibility of the country or entity * * *." Given data lags, this pattern of behavior need not be captured in the indicators for MCC to take action. [See MCC's Policy on Suspension and Termination]
As provided in the Act, following the determination of eligible countries, the Chief Executive Officer's Report to Congress will set out the list of eligible countries, identify with which of those countries MCC will seek to enter into compact negotiations, and include a justification for such eligibility determinations and selections for compact negotiation.
Within each policy category, the Act sets out a number of specific selection criteria. As indicated above, a set of objective and quantifiable policy indicators is used to establish eligibility for MCA assistance and measure the relative performance by candidate countries against these criteria. The Board's approach to determining eligibility ensures that performance against each of these criteria is assessed by at least one of the seventeen objective indicators. Most are addressed by multiple indicators. The specific indicators used to measure each of the criteria set out in the Act are listed below.
Section 607(b)(1): Just and democratic governance, including a demonstrated commitment to:
(a) Promote political pluralism, equality and the rule of law;
(b) Respect human and civil rights, including the rights of people with disabilities;
(c) Protect private property rights;
(d) Encourage transparency and accountability of government; and
(e) Combat corruption;
Section 607(b)(2): Economic freedom, including a demonstrated commitment to economic policies that:
(a) Encourage citizens and firms to participate in global trade and international capital markets;
(b) Promote private sector growth and the sustainable management of natural resources;
(c) Resource Management, and Regulatory Quality strengthen market forces in the economy; and
(d) Respect worker rights, including the right to form labor unions;
Section 607(b)(3): Investments in the people of such country, particularly women and children, including programs that (A) promote broad-based primary education and (B) strengthen and build capacity to provide quality public health and reduce child mortality.
Where necessary the Board will also draw on supplemental data and qualitative information, including the State Department's Human Rights Report, Transparency International's Corruption Perceptions Index, and the Global Integrity Index.
The following 17 indicators will be used to measure candidate countries' demonstrated commitment to the criteria found in section 607(b) of the Act. The indicators are intended to assess the degree to which the political and economic conditions in a country serve to promote broad-based sustainable economic growth and reduction of poverty; and thus provide a sound environment for the use of MCA funds. The indicators are not goals in themselves; rather they measure policies that are linked to broad-based sustainable economic growth. The indicators were selected based on their relationship to economic growth and poverty reduction, the number of countries they cover, their transparency and availability, and their relative soundness and objectivity. Where possible, the indicators are developed by independent sources.