Report on the Selection of Eligible Countries for Fiscal Year 2010, 66379-66380 [E9-29941]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 74, Number 239 (Tuesday, December 15, 2009)]
[Notices]
[Pages 66379-66380]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-29941]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 10-03]


Report on the Selection of Eligible Countries for Fiscal Year 
2010

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: This report is provided in accordance with section 608(d)(1) 
of the Millennium Challenge Act of 2003, Public Law 108-199, Division D 
(the ``Act''), 22 U.S.C. 7708(d)(1).

    Dated: December 11, 2009.
Henry C. Pitney,
(Acting) Vice President and General Counsel, Millennium Challenge 
Corporation.

Report on the Selection of Eligible Countries for Fiscal Year 2010

Summary

    This report is provided in accordance with section 608(d)(1) of 
the Millennium Challenge Act of 2003, Public Law 108-199, Division D 
(the ``Act''), 22 U.S.C. 7708(d)(1).
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance under section 605 of the Act to countries that 
enter into compacts with the United States to support policies and 
programs that advance the progress of such countries in achieving 
lasting economic growth and poverty reduction, and are in 
furtherance of the Act. The Act requires the Millennium Challenge 
Corporation (``MCC'') to determine the countries that will be 
eligible to receive MCA assistance during the fiscal year, based on 
their demonstrated commitment to just and democratic governance, 
economic freedom, and investing in their people, as well as on the 
opportunity to reduce poverty and generate economic growth in the 
country. The Act also requires the submission of reports to 
appropriate congressional committees and the publication of notices 
in the Federal Register that identify, among other things:
    1. The countries that are ``candidate countries'' for MCA 
assistance during fiscal year 2010 (FY10) 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; 22 U.S.C. 7708(a));
    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, 22 U.S.C. 7708(b)); and
    3. The list of countries determined by the Board to be ``MCA 
eligible countries'' for FY10, 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, 22 U.S.C. 7708(d)).
    This is the third of the above-described reports by MCC for 
FY10. It identifies countries determined by the Board to be eligible 
under section 607 of the Act for FY10 (22 U.S.C. 7706) and countries 
with which the Board will seek to enter into compacts under section 
609 of the Act, as well as the justification for such decisions.

Eligible Countries

    The Board met on December 9, 2009 to select countries that will 
be eligible for MCA compact assistance under section 607 of the Act 
for FY10. The Board selected the following countries as eligible for 
such assistance for FY10: Cape Verde, Indonesia, Jordan, Malawi, 
Moldova, the Philippines, and Zambia.
    In accordance with the Act and with the ``Report on the Criteria 
and Methodology for Determining the Eligibility of Candidate 
Countries for Millennium Challenge Account Assistance in Fiscal Year 
2010'' submitted to the Congress on September 11, 2009, selection 
was based primarily on a country's overall performance in three 
broad policy categories: (1) ``Ruling Justly''; (2) ``Encouraging 
Economic Freedom''; and (3) ``Investing in People.'' As a basis for 
determining which countries would be eligible for MCA compact 
assistance, the Board relied upon 17 transparent and independent 
indicators to assess, to the maximum extent possible, countries' 
policy performance and demonstrated commitment in these three broad 
policy areas. In determining eligibility, the Board compared 
countries' performance on the indicators relative to their income-
level peers, evaluating them in comparison to either the group of 
low income countries (LIC) or the group of lower-middle income 
countries (LMIC). In particular, the Board considered if a country 
performed above the median in relation to its peers on at least half 
of the indicators in the Ruling Justly and Economic Freedom policy 
categories, above the median on at least three of five indicators in 
the Investing in People policy category, and above the median on the 
``Control of Corruption'' indicator. The Board also took into 
account whether the country performed substantially below the median 
on any indictor, and if so, whether the country is taking 
appropriate action to address the shortcomings. Scorecards 
reflecting each country's performance on the indicators are 
available on MCC's Web site at https://www.mcc.gov.
    The Board also considered whether any adjustments should be made 
for data gaps, data lags, or recent events since the indicators were 
published, as well as strengths or weaknesses in particular

[[Page 66380]]

indicators. Where appropriate, the Board took into account 
additional quantitative and qualitative information, such as 
evidence of a country's commitment to fighting corruption and 
promoting democratic governance, and its effective protection of 
human rights. For countries that graduated from the LIC group to the 
LMIC group in FY10 due to an increase in their per capita gross 
national income, the Board also took into account supplemental 
information that showed how the new LMIC country would have 
performed in comparison to the LIC group. In addition, the Board 
considered the opportunity to reduce poverty and promote economic 
growth in a country, in light of the overall context of the 
information available, as well as the availability of appropriated 
funds.
    This was the first year the Board considered countries for 
eligibility for second compacts, which is permissible under section 
609(k) of the Act. In determining second compact eligibility, the 
Board considered--in addition to the criteria outlined above--the 
country's performance implementing its first compact, including the 
nature of the country partnership with MCC, the degree to which the 
country has demonstrated a commitment and capacity to achieve 
program results, and the degree to which the country has implemented 
the compact in accordance with MCC's core policies and standards.
    There were no countries selected as eligible for the first time 
in FY10. However, Cape Verde, an LMIC, was selected as eligible for 
MCA assistance for a second compact under section 606(b) (22 U.S.C. 
7705(b)) of the Act.
    Cape Verde meets MCC's indicator criteria this year for the 
first time since it advanced from the LIC group to the LMIC group 
four years ago. Cape Verde has been an economic reformer over the 
past two decades and has consistently displayed good economic and 
political governance. Since becoming an LMIC, the Government of Cape 
Verde has worked hard to raise its indicator performance to meet the 
standards of its more competitive peer group. It has worked over the 
past four years on ongoing reforms to streamline business 
registration, as well as on efforts to improve the accuracy of its 
indicator data. These efforts are now reflected on Cape Verde's MCC 
scorecard. Cape Verde's current compact is due to conclude in 
October 2010. Cape Verde corrected some early compact implementation 
difficulties and is now a relatively strong performer on the 
implementation of its compact.
    Country partners that are developing or implementing compacts 
must also show a commitment to maintaining and improving their 
policy performance. While MCC's indicators work well as a 
transparent way of identifying those countries that are most 
committed to sound development policies and for discerning trends 
over the medium-term, they are not as well-suited for tracking 
incremental progress from year-to-year. Countries may be generally 
maintaining performance but not meet the criteria in a given year 
due to factors such as:
     Graduation from the LIC category to the LMIC category,
     Data improvements or revisions,
     MCC's introduction of two new indicators in fiscal year 
2008 and the accompanying requirement that countries pass three of 
the five indicators in the Investing in People category,
     Increases in peer-group medians, and
     Slight declines in performance.
    Six countries selected as eligible for MCA assistance in FY10 
were previously selected as eligible in at least one prior fiscal 
year. Because they have not yet signed a compact agreement, they 
needed to be reselected as eligible for FY10 funds to continue 
compact development. Three of these countries are in the LIC 
category: Malawi, Moldova, and Zambia. Three countries, Indonesia, 
Jordan, and the Philippines, are in the LMIC category.
    The Board reselected these countries based on their continued 
performance since their prior selection. The Board determined that 
no material change has occurred in their performance on the 
indicator criteria since the fiscal year 2009 selection that 
indicates a serious decline in policy performance. While two of the 
countries--Indonesia and the Philippines--graduated to the more 
competitive LMIC category this year and fare less well against the 
higher standards, both countries would have met MCC's indicator 
criteria as LICs.
    The Board also reviewed the policy performance of countries that 
are implementing compacts. However, these countries do not need to 
be reselected each year in order to continue implementation. Once 
MCC makes a commitment to a country through a compact agreement, MCC 
will not consider the country for reselection on an annual basis 
during the term of its compact. MCC will continue to work with a 
country--even if it does not meet the indicator criteria each year--
as long as the country has not demonstrated a pattern of actions 
inconsistent with the eligibility criteria. If it is determined that 
a country has demonstrated a significant policy reversal, the Board 
can hold it accountable by applying MCC's Suspension and Termination 
Policy.
    For those countries that have not demonstrated a significant 
policy reversal but do not meet the indicator criteria, MCC will 
invite these countries to participate or continue their 
participation in MCC's policy improvement process. Countries 
participating in the policy improvement process are asked to develop 
and implement a forward-looking action plan that outlines the steps 
they plan to take to improve performance on certain policy criteria. 
They then periodically report on progress made on the plan.
    Finally, a number of countries that performed well on the 
quantitative elements of the selection criteria (i.e., on the policy 
indicators) were not chosen as eligible countries for FY10. As 
discussed above, the Board considered a variety of factors in 
addition to the country's performance on the policy indicators in 
determining whether it was an appropriate candidate for assistance 
(e.g., the country's commitment to fighting corruption and promoting 
democratic governance; the availability of appropriated funds; and 
where MCC would likely have the best opportunity to reduce poverty 
and generate economic growth).

Selection To Initiate the Compact Process

    The Board also authorized MCC to invite Cape Verde to submit a 
proposal for a second compact, as described in section 609 of the 
Act (22 U.S.C. 7708) (previously eligible countries that were 
reselected but have not yet signed a compact will not be asked to 
submit another proposal for FY10 assistance). Submission of a 
proposal is not a guarantee that MCC will finalize a compact with an 
eligible country. Any MCA assistance provided under section 605 of 
the Act will be contingent on the successful negotiation of a 
mutually agreeable compact between the eligible country and MCC, 
approval of the compact by the Board, and the availability of funds.

[FR Doc. E9-29941 Filed 12-11-09; 4:15 pm]
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