Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in Fiscal Year 2017, 66691-66698 [2016-22988]

Download as PDF Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices submitted no later than October 31, 2016. Robert Brook, Assistant Chief, Environmental Enforcement Section, Environment and Natural Resources Division. [FR Doc. 2016–23309 Filed 9–27–16; 8:45 am] BILLING CODE 4410–15–P MILLENNIUM CHALLENGE CORPORATION [MCC FR 16–05] Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in Fiscal Year 2017 I. Which countries are evaluated? Millennium Challenge Corporation. ACTION: Notice. AGENCY: This report to Congress is provided in accordance with Section 608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. § 7707(b) (the ‘‘Act’’). SUMMARY: Dated: September 20, 2016. Sarah E. Fandell, VP/General Counsel and Corporate Secretary, Millennium Challenge Corporation. Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in Fiscal Year 2017 Summary In accordance with section 608(b)(2) of the Millennium Challenge Act of 2003 (the ‘‘Act,’’ 22 U.S.C. 7707(b)(l)), the Millennium Challenge Corporation (MCC) is submitting the enclosed report. This report identifies the criteria and methodology that MCC intends to use to determine which candidate countries may be eligible to be considered for assistance under the Act for fiscal year 2017. Under section 608 (c)(1) of the Act, MCC will, for a thirty-day period following publication, accept and consider public comment for purposes of determining eligible countries under section 607 of the Act (22 U.S.C. 7706). mstockstill on DSK3G9T082PROD with NOTICES Criteria and Methodology for FY 2017 This document explains how the Board of Directors (Board) of the Millennium Challenge Corporation (MCC) will identify, evaluate, and determine eligibility of countries for Millennium Challenge Account (MCA) assistance for fiscal year (FY) 2017. The statutory basis for this report is set forth VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 in Appendix A. Specifically, this document discusses: I. Which countries MCC will evaluate II. How the Board evaluates these countries A. Overall B. For selection for first compact eligibility C. For selection for second/ subsequent compact eligibility D. For threshold program assistance E. A note on potential regional investments F. A note on potential transition to upper middle income country (UMIC) status after initial selection As discussed in the August 2016 Report on Countries that are Candidates for Millennium Challenge Account Eligibility for Fiscal Year 2017 and Countries that Would be Candidates but for Legal Prohibitions (the ‘‘Candidate Country Report’’), MCC evaluates all low-income countries (LICs) and lowermiddle income countries (LMICs) as follows: • For scorecard evaluation purposes for FY 2017, MCC defines LICs as those countries between $0 and $1945 GNI per capita, and LMICs as those countries between $1946 and $4035 GNI per capita.1 • For funding purposes for FY 2017, MCC defines the poorest 75 countries as LICs, and the remaining countries up to the UMIC threshold of $4035 as LMICs.2 Under Appendix B, lists of all LICs, LMICs and statutorily prohibited countries for evaluation purposes are provided. The list using the ‘‘funding’’ definition was outlined in the FY 2017 Candidate Country Report and describes how funding categories work. II. How does the Board evaluate these countries? A. Overall evaluation The Board looks at three legislativelymandated factors in its evaluation of any candidate country for compact eligibility: (1) Policy performance; (2) the opportunity to reduce poverty and generate economic growth; and (3) the availability of MCC funds. 1. Policy Performance Because of the importance of needing to evaluate a country’s policy 1 This corresponds to LIC and LMIC definitions using the historic International Development Association (IDA) thresholds published by the World Bank. 2 By law, no more than 25 percent of all compact funds for a given fiscal year may be provided to LMIC countries (using this ‘‘funding’’ definition). PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 66691 performance and needing to do so in a comparable, cross-country way, the Board relies to the maximum extent possible upon the best-available objective and quantifiable indicators of policy performance. These indicators act as proxies of the country’s commitment to just and democratic governance, economic freedom, and investing in its people, as laid out in MCC’s founding legislation. Comprised of 20 third-party indicators in the categories of ‘‘encouraging economic freedom,’’ ‘‘investing in people,’’ and ‘‘ruling justly,’’ MCC ‘‘scorecards’’ are created for all LICs and LMICs. To ‘‘pass’’ the indicators on the scorecard, the country must perform above the median among its income group (as defined above), except in the cases of inflation, political rights, civil liberties, and immunization rates (LMICs only), where threshold scores have been established. In particular, the Board considers whether the country: • Passed at least 10 of the 20 indicators, with at least one in each category, • Passed either the ‘‘Political Rights’’ or ‘‘Civil Liberties’’ indicator, and • Passed the ‘‘Control of Corruption’’ indicator. While satisfaction of all three aspects means a country is termed to have ‘‘passed’’ the scorecard, the Board also considers whether the country performed ‘‘substantially worse’’ in any one policy category than it does on the scorecard overall. Appendix C describes all 20 indicators, their definitions, what is required to ‘‘pass,’’ their source, and their relationship to the legislative criteria. The mandatory passing of either the ‘‘Political Rights’’ or ‘‘Civil Liberties’’ indicators is called the ‘‘Democratic Rights’’ ‘‘hard hurdle’’ on the scorecard, while the mandatory passing of the ‘‘Control of Corruption’’ indicator is called the ‘‘Control of Corruption’’ ‘‘hard hurdle.’’ Not passing either ‘‘hard hurdle’’ results in not passing the scorecard overall, regardless of whether at least 10 of the 20 other indicators are passed. • Democratic Rights ‘‘hard hurdle:’’ This hurdle sets a minimum bar for democratic rights below which the Board will not consider a country for eligibility. Requiring that a country pass either the Political Rights or Civil Liberties indicator creates a democratic incentive for countries, recognizes the importance democracy plays in driving poverty-reducing economic growth, and holds MCC accountable to working with the best governed, poorest countries. When a candidate country is only passing one E:\FR\FM\28SEN1.SGM 28SEN1 66692 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices mstockstill on DSK3G9T082PROD with NOTICES of the two indicators comprising the hurdle (instead of both), the Board will also look closely at why it is not passing the other indicator to understand what the score implies for the broader democratic environment and trajectory of the country. • Control of Corruption ‘‘hard hurdle:’’ Corruption in any country is an unacceptable tax on economic growth and an obstacle to the private sector investment needed to reduce poverty. Accordingly, MCC seeks out partner countries that are committed to combatting corruption. It is for this reason that MCC also has the ‘‘Control of Corruption’’ ‘‘hard hurdle,’’ which helps ensure that MCC is working with countries where there is relatively strong performance in controlling corruption. Requiring the passage of the indicator provides an incentive for countries to demonstrate a clear commitment to controlling corruption, and allows MCC to better understand the issue by seeing how the country performs relative to its peers and over time. Together, the 20 policy performance indicators are the predominant basis for determining which countries will be eligible for MCC assistance, and the Board expects a country to be passing its scorecard at the point the Board decides to select the country for either a first or second/subsequent compact. However, the Board also recognizes that even the best-available data has inherent challenges. For example, data gaps, real-time events versus data lags, the absence of narratives and nuanced detail, and other similar weaknesses affect each of these indicators. In such instances, the Board uses its judgment to interpret policy performance as measured by the scorecards. The Board may also consult other sources of information to further enhance its understanding of a given country’s policy performance beyond the issues on the scorecard, which is especially useful given the unique perspective of each Board member (e.g., specific policy issues related to trade, civil society, other U.S. aid programs, financial sector performance, and security/foreign policy issues). The Board uses its judgment on how best to weigh such information in assessing overall policy performance. 2. The Opportunity To Reduce Poverty and Generate Economic Growth The Board also consults other sources of qualitative and quantitative information to have a more detailed view of the opportunity to reduce poverty and generate economic growth in a country. While the Board considers VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 a range of other information sources depending on the country, specific areas of attention typically include better understanding the issues on, trends in, and trajectory of: • The state of democratic and human rights (especially of vulnerable groups 3); • The perspective of civil society on salient governance issues; • The control of corruption and rule of law; • The potential for the private sector (both local and foreign) to lead investment and growth; • The levels of poverty within a country; and • The country’s institutional capacity. Where applicable, the Board also considers MCC’s own experience and ability to reduce poverty and generate economic growth in a given country— such as considering MCC’s core skills versus the country’s needs, capacity within MCC to work with a country, and the likelihood that MCC is seen by the country as a credible partner. This information provides greater clarity on the likelihood that MCC investments will have an appreciable impact on reducing poverty and generating economic growth in a given country. The Board has used such information both to not select countries that are otherwise passing their scorecards, as well as to better understand when a country’s performance on a particular indicator may not be up to date or is about to change. More details on this subject (sometimes referred to as ‘‘supplemental information’’) can be found on MCC’s website. 3. The Availability of MCC Funds The final factor that the Board must consider when evaluating countries is the funding available. The agency’s allocation of its budget is constrained, and often specifically limited, by provisions in the authorizing legislation and appropriations acts. MCC has a continuous pipeline of countries in compact development, compact implementation, and compact closeout, as well as threshold programs. Consequently, the Board factors in the overall portfolio picture when making its selection decisions given the funding available for each of the agency’s planned or existing programs. The following subsections describe how each of these three legislativelymandated factors are applied with regard to the selection situations the 3 For example, women; children; lesbian, gay, bisexual, and transgender individuals; people with disabilities; and workers. PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 Board encounters each December: Selection of countries for first compact eligibility, selection of countries for second/subsequent compact eligibility, and selection of countries for the threshold program. Thereafter, notes are included on consideration of countries for potential regional investments, and issues for consideration for countries that might graduate to upper middle income country status after selection. B. Evaluation for selection of countries for first compact eligibility When selecting countries for compact eligibility, the Board looks at all three legislatively-mandated aspects described in the previous section: (1) Policy performance, first and foremost as measured by the scorecards and bolstered through additional information (as described in the previous section); (2) the opportunity to reduce poverty and generate economic growth, examined through the use of other supporting information (as described in the previous section); and (3) the funding available. At a minimum, the Board looks to see that the country passes its scorecard. It also examines supporting evidence that the country’s commitment to just and democratic governance, economic freedom, and investing in its people is on a sound footing and performance is on a positive trajectory (especially on the ‘hard hurdles’ of Democratic Rights and Control of Corruption, as described in the previous section), and that MCC has funding to support a meaningful compact with that country. Where applicable, previous threshold program information is also considered. The Board then weighs the information described above across each of the three dimensions. The approach described above is then applied in any additional years of selection of a country to continue to develop a first compact, with the added benefit of having cumulative scorecards, cumulative records of policy performance, and other accumulated supporting information to determine the overall pattern of performance over the emerging multi-year trajectory. C. Evaluation for selection of countries for second/subsequent compact eligibility Section 609(k) of the Millennium Challenge Act of 2003, as amended, specifically authorizes MCC to enter into ‘‘one or more subsequent Compacts.’’ MCC does not consider subsequent compact eligibility, however, before countries have completed their compact or are within 18 months of completion, (e.g., a second compact if they have completed or are within 18 months of completing their E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices first compact). Selection for subsequent compacts is not automatic and is intended only for countries that (1) exhibit successful performance on their previous compact; (2) exhibit improved scorecard policy performance during the partnership; and (3) exhibit a continued commitment to further their sector reform efforts in any subsequent partnership. As a result, the Board has an even higher standard when selecting countries for subsequent compacts. 1. Successful implementation of the previous compact mstockstill on DSK3G9T082PROD with NOTICES To evaluate the degree of success of the previous compact, the Board looks to see if there is a clear evidence base of success within the budget and time limits of the compact, in particular by looking at three aspects: • The degree to which there is evidence of strong political will and management capacity: Is the partnership characterized by the country ensuring that both policy reforms and the compact program itself are both being implemented to the best ability that the country can deliver; • The degree to which the country has exhibited commitment and capacity to achieve program results: Are the financial and project results being achieved; to what degree is the country committing its own resources to ensure the compact is a success; to what extent is the private sector engaged (if relevant); and other compact-specific issues; and • The degree to which the country has implemented the compact in accordance with MCC’s core policies and standards: That is, is the country adhering to MCC’s policies and procedures, including in critical areas such as remediating unresolved fraud and corruption and abuse or misuse of funds issues; procurement; and monitoring and evaluation. Details on the specific types of information examined (and sources used) in each of the three areas are provided in Appendix D. Overall, the Board is looking for evidence that the previous compact will be completed or has been completed successfully, on time and on budget, and that there is a commitment to continued, robust reform going forward. 2. Improved scorecard policy performance Beyond successful implementation of the previous compact, the Board expects the country to have improved its overall scorecard policy performance during the partnership, and to pass the scorecard in VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 the year of selection for the subsequent compact. The Board focuses on: • The overall scorecard pass/fail rate over time, what this suggests about underlying policy performance, as well as an examination of the underlying reasons; • The progress over time on policy areas measured by both hard-hurdle indicators—Democratic Rights and Control of Corruption—including an examination of the underlying reasons; and • Other indicator trajectories as deemed relevant by the Board. In all cases, while the Board expects the country to be passing its scorecard, other sources of information are examined to understand the nuance and reasons behind scorecard or indicator performance over time, including any real-time updates, methodological changes within the indicators themselves, shifts in the relevant candidate pool, or alternative policy performance perspectives (such as gleaned through consultations with civil society and related stakeholders). Other sources of information are also consulted to look at policy performance over time in areas not covered by the scorecard, but that are deemed important by the Board (such as trade, foreign policy concerns, etc.). 3. A commitment to further sector reform The Board expects that subsequent compacts will endeavor to tackle deeper policy reforms necessary to unlock an identified constraint to growth. Consequently, the Board considers its own experience during the previous compact in considering how committed the country is to reducing poverty and increasing economic growth, and therefore tries to gauge the country’s commitment for further sector reform should it be selected for a subsequent compact. This includes: • Assessing the country’s delivery of policy reform during the previous compact (as described above); • Assessing expectations of the country’s ability and willingness to continue embarking on sector policy reform in a subsequent compact; • Examining both other sources of information that describe the nature of the opportunity to reduce poverty and generate growth (as outlined in A.2 above), and the relative success of the previous compact overall, as already discussed; and • Finally, considering how well funding can be leveraged for impact, given the country’s experience in the previous compact. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 66693 Through this overall approach to subsequent compact selection, the Board applies the three legislatively mandated evaluation criteria (policy performance, the opportunity to reduce poverty and generate economic growth, and the funding available) in a way that rests critically on deeply assessing the previous partnership: from a compact success standpoint, a commitment to improved scorecard policy performance standpoint, and a commitment to continued sector policy reform standpoint. The Board then weighs all of the information described above in making its decision. The approach described above is then applied in any additional years of selection necessary as the country continues to develop the subsequent compact, with the added benefit of having even further detail on previous compact implementation, cumulative scorecards, records of policy performance, and other accumulated supporting information to determine the overall pattern of performance over the resulting multi-year trajectory. D. Evaluation for threshold program assistance The Board may also evaluate countries for participation in the Threshold Program. The Threshold Program provides assistance to candidate countries that exhibit a significant commitment to meeting the criteria described in the previous subsections, but fail to meet such requirements. Specifically, in examining the policy performance, the opportunity to reduce poverty and generate economic growth, and the funding available, the Board will consider whether a country that potentially qualifies for threshold program assistance appears to be on a trajectory to becoming viable for compact eligibility in the medium term. E. A note on potential regional investments FY 2017 marks the second year that the Board may consider selecting countries where potential regional investments (i.e., complementary assistance by MCC to two or more countries in a region) may be developed. With respect to regional investments, the fundamental criteria and process for selection will remain unchanged: countries will continue to be evaluated and selected individually, as described in sections A, B, and C above. However, for countries where regional investments might be contemplated, the Board will also examine additional supplemental information looking at the E:\FR\FM\28SEN1.SGM 28SEN1 66694 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices policy environment from a regional dimension. Specifically, the Board will examine additional data and information related to: • The current state of the country’s political and economic integration with its region and neighbors; • Impediments to further integration with its region and neighbors; and • The potential gains from investing at a regional level, including illustrative potential sector opportunities. The Board will weigh this additional regional information in tandem with the other supplemental factors described earlier in sections A, B, and C. The Board will then decide whether or not it will direct MCC to explore some form of a regional investment with the country. mstockstill on DSK3G9T082PROD with NOTICES F. A note on potential transition to upper middle income country (UMIC) status after initial selection Some candidate countries may have a high LMIC per capita income and/or a high growth rate that implies there is a chance they could transition to UMIC status during the life of an MCC partnership. In such cases, it is not possible to accurately predict when such a country may or may not transition to UMIC status. Nonetheless, such countries may have more resources at their disposal for funding their own growth and poverty reduction strategies. As a result, in addition to using the regular selection criteria described in the previous sections, the Board will also use its discretion to assess both the need and the opportunity presented by partnering with such a country, in order to ensure that there is a higher bar for possible selection as compact eligible. Specifically, if a candidate country with a high probability of transitioning to UMIC status is under consideration for selection, the Board will examine additional data and information related to: • Whether the country faces significant challenges accessing other sources of development financing (such as international capital, domestic resources, and other donor assistance) and, if so, examining if MCC grant financing would be an appropriate tool. • Whether the nature of poverty in the country (for example, high inequality or poverty headcount ratios relative to peer countries) presents a clear and strategic opportunity for MCC to assist the country in reducing such poverty through investments that spur economic growth. VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 • Whether the country demonstrates particularly strong policy performance, including policies and actions that demonstrate a clear priority on poverty reduction. • Whether MCC can reasonably expect that the country would contribute a significant amount of funding to the compact. These additional criteria would then be applied in any additional years of selection as the country continues to develop its compact. Should the country eventually transition to UMIC status during compact development, the country would no longer be a candidate country for that fiscal year. Consequently, continuing the partnership beyond that point would then be at the Board’s discretion, and would rely on funding from previous fiscal years from when the country was a candidate country. Appendix A: Statutory Basis for this Report This report to Congress is provided in accordance with section 608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. § 7707(b) (the Act). Section 605 of the Act authorizes the provision of assistance to countries that enter into a Millennium Challenge Compact with the United States to support policies and programs that advance the progress of such countries in achieving lasting economic growth and poverty reduction. The Act requires MCC to take a number of steps in selecting countries for compact assistance for FY 2017 based on the countries’ demonstrated commitment to just and democratic governance, economic freedom, and investing in their people, MCC’s opportunity to reduce poverty and generate economic growth in the country, and the availability of funds. These steps include the submission of reports to the congressional committees specified in the Act and publication of information in the Federal Register that identify: 1. The countries that are ‘‘candidate countries’’ for MCA assistance for FY 2017 based on per capita income levels and eligibility to receive assistance under U.S. law. (section 608(a) of the Act; 22 U.S.C. § 7707(a)); 2. The criteria and methodology that MCC’s Board of Directors (Board) will use to measure and evaluate policy performance of the candidate countries consistent with the requirements of section 607 of the Act (22 U.S.C. § 7706) in order to determine ‘‘eligible countries’’ from among the ‘‘candidate countries’’ (section 608(b) of the Act; 22 U.S.C. § 7707(b)); and PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 3. The list of countries determined by the Board to be ‘‘eligible countries’’ for FY 2017, with justification for eligibility determination and selection for compact negotiation, including those eligible countries with which MCC will seek to enter into compacts (section 608(d) of the Act; 22 U.S.C. § 7707(d)). This report reflects the satisfaction of item 2 above. Appendix B: Lists of all LICs, LMICs, and Statutorily Prohibited Countries for Evaluation Purposes Income Classification for Scorecards Since MCC was created, it has relied on the World Bank’s gross national income (GNI) per capita income data (Atlas method) and the historical ceiling for eligibility as set by the World Bank’s International Development Association (IDA) to divide countries into two income categories for purposes of creating scorecards: LICs and LMICs. These categories are used to account for the income bias that occurs when countries with more per capita resources perform better than countries with fewer. Using the historical IDA eligibility ceiling for the scorecards ensures that the poorest countries compete with their income level peers and are not compared against countries with more resources to mobilize. MCC will continue to use the traditional income categories for eligibility to categorize countries in two groups for purposes of FY 2017 scorecard comparisons: • LICs are countries with GNI per capita below IDA’s historical ceiling for eligibility ($1,945 for FY 2017); and • LMICs are countries with GNI per capita above IDA’s historical ceiling for eligibility but below the World Bank’s upper middle income country threshold ($1,946–$4,035 for FY 2017). The list of countries categorized as LICs and LMICs for the purpose of FY 2017 scorecard assessments can be found below.4 4 In December 2011, a statutory change requested by MCC altered the way MCC must group countries for the purposes of applying MCC’s 25 percent LMIC funding cap. This change, designed to bring stability to the funding stream, affects how MCC funds countries selected for compacts and does not affect the way scorecards are created. For determining whether a country can be funded as an LMIC or LIC: • The poorest 75 countries are now considered LICs for the purposes of MCC funding. They are not limited by the 25 percent funding cap on LMICs. • Countries with a GNI per capita above the poorest 75 but below the World Bank’s upper middle income country threshold ($4,035 for FY 2017) are considered LMICs for the purposes of MCC funding. By law, no more than 25 percent of all compact funds for a given fiscal year can be provided to these countries. E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices 5. Egypt 6. El Salvador 7. Guatemala 8. Honduras 9. Indonesia 10. Kiribati 11. Kosovo 12. Micronesia 13. Moldova 14. Mongolia 15. Morocco 16. Nigeria 17. Papua New Guinea 18. Philippines 19. Republic of Congo 20. Samoa 21. Sri Lanka 22. Swaziland 23. Tonga 24. Tunisia 25. Ukraine 26. Uzbekistan 27. Vanuatu 28. Vietnam Statutorily prohibited countries for FY17 5 1. Bolivia 2. Burma 3. Eritrea 4. North Korea 5. South Sudan 6. Sudan 7. Syria 8. Zimbabwe Low Income Countries (FY 2017 Scorecard) 1. Afghanistan 2. Bangladesh 3. Benin 4. Burkina Faso 5. Burma 6. Burundi 7. Cambodia 8. Cameroon 9. Central African Republic 10. Chad 11. Comoros 12. Cote d’Ivoire 13. Democratic Republic of Congo 14. Djibouti 15. Eritrea 16. Ethiopia 17. Gambia 18. Ghana 19. Guinea 20. Guinea-Bissau 21. Haiti 22. India 23. Kenya 24. Kyrgyz Republic 25. Lao PDR 26. Lesotho 27. Liberia 28. Madagascar 29. Malawi 30. Mali 31. Mauritania 32. Mozambique 33. Nepal 34. Nicaragua 35. Niger 36. North Korea 37. Pakistan 38. Rwanda 39. Sao Tome and Principe 40. Senegal 41. Sierra Leone 42. Solomon Islands 43. Somalia 44. South Sudan 45. Sudan 46. Syria 47. Tajikistan 48. Tanzania 49. Timor Leste 50. Togo 51. Uganda 52. Yemen 53. Zambia 54. Zimbabwe Appendix C: Indicator Definitions The following 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 are proxy measures of policies that are linked to broad-based sustainable economic growth. The indicators were selected based on (i) their relationship to economic growth and poverty reduction; (ii) the number of countries they cover; (iii) transparency and Lower Middle Income Countries mstockstill on DSK3G9T082PROD with NOTICES (FY 2017 Scorecard) 1. Armenia 2. Bhutan 3. Bolivia 4. Cabo Verde The FY 2017 Candidate Country Report lists LICs and LMICs based on this new definition and outlines which countries are subject to the 25 percent funding cap. VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 5 This list is current as of August 1, 2016. Between such date and the December 2016 selection Board meeting, other countries may also be the subject of future statutory restrictions or determinations, or changed country circumstances, that affect their legal eligibility for assistance under part I of the Foreign Assistance Act by reason of application of the Foreign Assistance Act or any other provision of law for FY 2017. Even though these countries are prohibited from received assistance, scorecards are still created for them to ensure all countries are included in an income group in order to determine the global medians/ scores for that income group. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 66695 availability; and (iv) relative soundness and objectivity. Where possible, the indicators are developed by independent sources.6 Listed below is a brief summary of the indicators (a detailed rationale for the adoption of these indicators can be found in the Public Guide to the Indicators on MCC’s public website at www.mcc.gov). Ruling Justly 1. Political Rights: Independent experts rate countries on the prevalence of free and fair electoral processes; political pluralism and participation of all stakeholders; government accountability and transparency; freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies and economic oligarchies; and the political rights of minority groups, among other things. Pass: Score must be above the minimum score of 17 out of 40. Source: Freedom House 2. Civil Liberties: Independent experts rate countries on freedom of expression and belief; association and organizational rights; rule of law and human rights; and personal autonomy and economic rights, among other things. Pass: Score must be above the minimum score of 25 out of 60. Source: Freedom House 3. Freedom of Information: Measures the legal and practical steps taken by a government to enable or allow information to move freely through society; this includes measures of press freedom, national freedom of information laws, and the extent to which a county is filtering internet content or tools. Pass: Score must be above the median score for the income group. Source: Freedom House/Centre for Law and Democracy 4. Government Effectiveness: An index of surveys and expert assessments that rate countries on the quality of public service provision; civil servants’ competency and independence from political pressures; and the government’s ability to plan and implement sound policies, among other things. Pass: Score must be above the median score for the income group. 6 Special note on Kosovo: Since UN agencies do not currently publish data for Kosovo due to nonrecognition status, MCC is unable to source data directly from the UN for the six indicators that are constructed in all or in part from this data: Land Rights and Access, Health Expenditures, Primary Education Expenditures, Immunization Rates, Girls’ Secondary Education Enrollment Rate, and Child Health. As result, MCC publishes data from UNKT (the UN Kosovo Team) in cases where UNKT uses comparable methodologies to their UN sister organizations. See http://www.unkt.org/ for more information. E:\FR\FM\28SEN1.SGM 28SEN1 66696 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices mstockstill on DSK3G9T082PROD with NOTICES Source: Worldwide Governance Indicators (World Bank/Brookings) 5. Rule of Law: An index of surveys and expert assessments that rate countries on the extent to which the public has confidence in and abides by the rules of society; the incidence and impact of violent and nonviolent crime; the effectiveness, independence, and predictability of the judiciary; the protection of property rights; and the enforceability of contracts, among other things. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings) 6. Control of Corruption: An index of surveys and expert assessments that rate countries on: ‘‘grand corruption’’ in the political arena; the frequency of petty corruption; the effects of corruption on the business environment; and the tendency of elites to engage in ‘‘state capture,’’ among other things. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings) Encouraging Economic Freedom 1. Fiscal Policy: General government net lending/borrowing as a percent of gross domestic product (GDP), averaged over a three year period. Net lending/ borrowing is calculated as revenue minus total expenditure. The data for this measure comes from the IMF’s World Economic Outlook. Pass: Score must be above the median score for the income group. Source: The International Monetary Fund’s World Economic Outlook Database 2. Inflation: The most recent average annual change in consumer prices. Pass: Score must be 15% or less. Source: The International Monetary Fund’s World Economic Outlook Database 3. Regulatory Quality: An index of surveys and expert assessments that rate countries on the burden of regulations on business; price controls; the government’s role in the economy; and foreign investment regulation, among other areas. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings) 4. Trade Policy: A measure of a country’s openness to international trade based on weighted average tariff rates and non-tariff barriers to trade. Pass: Score must be above the median score for the income group. Source: The Heritage Foundation 5. Gender in the Economy: An index that measures the extent to which laws provide men and women equal capacity to generate income or participate in the economy, including the capacity to VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 access institutions, get a job, register a business, sign a contract, open a bank account, choose where to live, and to travel freely. Pass: Score must be above the median score for the income group. Source: International Finance Corporation 6. Land Rights and Access: An index that rates countries on the extent to which the institutional, legal, and market framework provide secure land tenure and equitable access to land in rural areas and the time and cost of property registration in urban and periurban areas. Pass: Score must be above the median score for the income group. Source: The International Fund for Agricultural Development and the International Finance Corporation 7. Access to Credit: An index that rates countries on rules and practices affecting the coverage, scope, and accessibility of credit information available through either a public credit registry or a private credit bureau; as well as legal rights in collateral laws and bankruptcy laws. Pass: Score must be above the median score for the income group. Source: International Finance Corporation 8. Business Start-Up: An index that rates countries on the time and cost of complying with all procedures officially required for an entrepreneur to start up and formally operate an industrial or commercial business. Pass: Score must be above the median score for the income group. Source: International Finance Corporation Investing in People 9. Public Expenditure on Health: Total expenditures on health by government at all levels divided by GDP. Pass: Score must be above the median score for the income group. Source: The World Health Organization 10. Total Public Expenditure on Primary Education: Total expenditures on primary education by government at all levels divided by GDP. Pass: Score must be above the median score for the income group. Source: The United Nations Educational, Scientific and Cultural Organization and National Governments 11. Natural Resource Protection: Assesses whether countries are protecting up to 17 percent of all their biomes (e.g., deserts, tropical rainforests, grasslands, savannas and tundra). Pass: Score must be above the median score for the income group. Source: The Center for International Earth Science Information Network and the Yale Center for Environmental Law and Policy 12. Immunization Rates: The average of DPT3 and measles immunization PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 coverage rates for the most recent year available. Pass: Score must be above the median score for LICs, and 90% or higher for LMICs. Source: The World Health Organization and the United Nations Children’s Fund 13. Girls Education: a. Girls’ Primary Completion Rate: The number of female students enrolled in the last grade of primary education minus repeaters divided by the population in the relevant age cohort (gross intake ratio in the last grade of primary). LICs are assessed on this indicator. Pass: Score must be above the median score for the income group. Source: United Nations Educational, Scientific and Cultural Organization b. Girls Secondary Enrollment Education: The number of female pupils enrolled in lower secondary school, regardless of age, expressed as a percentage of the population of females in the theoretical age group for lower secondary education. LMICs will be assessed on this indicator instead of Girls Primary Completion Rates. Pass: Score must be above the median score for the income group. Source: United Nations Educational, Scientific and Cultural Organization 14. Child Health: An index made up of three indicators: (i) access to improved water, (ii) access to improved sanitation, and (iii) child (ages 1–4) mortality. Pass: Score must be above the median score for the income group. Source: The Center for International Earth Science Information Network and the Yale Center for Environmental Law and Policy Relationship to Legislative Criteria Within each policy category, the Act sets out a number of specific selection criteria. A set of objective and quantifiable policy indicators is used to inform eligibility decisions for MCA assistance and to 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 objective indicators. Most are addressed by multiple indicators. The specific indicators appear in parentheses next to the corresponding criterion set out in the Act. Section 607(b)(1): Just and democratic governance, including a demonstrated commitment to— (A) promote political pluralism, equality and the rule of law (Political Rights, Civil Liberties, Rule of Law, and Gender in the Economy); (B) respect human and civil rights, including the rights of people with E:\FR\FM\28SEN1.SGM 28SEN1 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices disabilities (Political Rights, Civil Liberties, and Freedom of Information); (C) protect private property rights (Civil Liberties, Regulatory Quality, Rule of Law, and Land Rights and Access); (D) encourage transparency and accountability of government (Political Rights, Civil Liberties, Freedom of Information, Control of Corruption, Rule of Law, and Government Effectiveness); and (E) combat corruption (Political Rights, Civil Liberties, Rule of Law, Freedom of Information, and Control of 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 (Fiscal Policy, Inflation, Trade Policy, and Regulatory Quality); (B) promote private sector growth (Inflation, Business Start-Up, Fiscal Policy, Land Rights and Access, Access to Credit, Gender in the Economy, and Regulatory Quality); (C) strengthen market forces in the economy (Fiscal Policy, Inflation, Trade Policy, Business Start-Up, Land Rights and Access, Access to Credit, and Regulatory Quality); and (D) respect worker rights, including the right to form labor unions (Civil Liberties and Gender in the Economy); and Section 607(b)(3): Investments in the people of such country, particularly women and children, including programs that— (A) promote broad-based primary education (Girls’ Primary Completion Rate, Girls’ Secondary Education Enrollment Rate, and Total Public Expenditure on Primary Education); (B) strengthen and build capacity to provide quality public health and reduce child mortality (Immunization Rates, Public Expenditure on Health, and Child Health); and (C) promote the protection of biodiversity and the transparent and Topic mstockstill on DSK3G9T082PROD with NOTICES VerDate Sep<11>2014 18:04 Sep 27, 2016 sustainable management and use of natural resources (Natural Resource Protection). Appendix D: Subsequent Compact Considerations MCC reporting and data in the following chart are used to assess compact performance of MCC partners nearing the end of compact implementation (i.e., within 18-months of compact end date). Some reporting used for assessment may contain sensitive information and adversely affect implementation or MCC partner country relations. This information is for MCC’s internal use and is not made public. However, key implementation information is summarized in compact status and results reports that are published quarterly on MCC’s website under MCC country programs (https:// www.mcc.gov/where-we-work) or monitoring and evaluation (https:// www.mcc.gov/our-impact/m-and-e) webpages. MCC reporting/data source COUNRY PARTNERSHIP Political Will • Status of major conditions precedent • Program oversight/implementation Æ project restructures Æ partner response to MCA capacity issues • Political independence of MCA Management Capacity • Project management capacity • Project performance • Level of MCC intervention/oversight • Relative level of resources required PROGRAM RESULTS Financial Results • Commitments—including contributions to compact funding • Disbursements Project Results • Output, outcome, objective targets • MCA commitment to ‘focus on results’ • MCA cooperation on impact evaluation • Percent complete for process/outputs • Relevant outcome data • Details behind target delays Target Achievements ADHERENCE TO STANDARDS • Procurement • Environmental and social • Fraud and corruption • Program closure • Monitoring and evaluation • All other legal provisions Jkt 238001 • Quarterly implementation reporting • Quarterly results reporting • Survey of MCC staff 66697 Published documents • Quarterly results published as ‘‘Table of Key Performance Indicators’’ (available by country): http://go.usa.gov/jMcC • Survey questions to be posted: https:// www.mcc.gov/resources/doc/summary-compact-survey-summary-fy17 • • • • • • Indicator tracking tables Quarterly financial reporting Quarterly implementation reporting Quarterly results reporting Survey of MCC staff Impact evaluations • Monitoring and Evaluation Plans (available by country): http://go.usa.gov/jMcC • Quarterly Status Reports (available by country): http://1.usa.gov/NfEbcI • Quarterly results published as ‘‘Table of Key Performance Indicators’’ (available by country): https://www.mcc.gov/our-impact/m-andel • Survey questions to be posted: https:// www.mcc.gov/resources/doc/summary-compact-survey-summary-fy17 • Audits (GAO and OIG) • Quarterly implementation reporting • Survey of MCC staff • Published OIG and GAO Audits • Survey questions to be posted: https:// www.mcc.gov/resources/doc/summary-compact-survey-summary-fy17 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1 66698 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices Topic MCC reporting/data source COUNTRY SPECIFIC Sustainability • Implementation entity • MCC investments Role of private sector or other donors • Other relevant investors/investments • Other donors/programming • Status of related reforms • Trajectory of private sector involvement going forward [FR Doc. 2016–22988 Filed 9–27–16; 8:45 am] BILLING CODE 9211–03–P NATIONAL ARCHIVES AND RECORDS ADMINISTRATION [NARA–2016–052] Records Schedules; Availability and Request for Comments National Archives and Records Administration (NARA). ACTION: Notice of availability of proposed records schedules; request for comments. AGENCY: The National Archives and Records Administration (NARA) publishes notice at least once monthly of certain Federal agency requests for records disposition authority (records schedules). Once approved by NARA, records schedules provide mandatory instructions on what happens to records when agencies no longer need them for current Government business. The records schedules authorize agencies to preserve records of continuing value in the National Archives of the United States and to destroy, after a specified period, records lacking administrative, legal, research, or other value. NARA publishes notice in the Federal Register for records schedules in which agencies propose to destroy records not previously authorized for disposal or reduce the retention period of records already authorized for disposal. NARA invites public comments on such records schedules, as required by 44 U.S.C. 3303a(a). DATES: NARA must receive requests for copies in writing by October 28, 2016. Once NARA finishes appraising the records, we will send you a copy of the schedule you requested. We usually prepare appraisal memoranda that contain additional information concerning the records covered by a proposed schedule. You may also request these. If you do, we will also provide them once we have completed the appraisal. You have 30 days after we mstockstill on DSK3G9T082PROD with NOTICES SUMMARY: VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 Published documents • Quarterly implementation reporting • Quarterly results reporting • Survey of MCC staff • Quarterly results published as ‘‘Table of Key Performance Indicators’’ (available by country): https://www.mcc.gov/our-impact/m-ande • Survey questions to be posted: https:// www.mcc.gov/resources/doc/summary-compact-survey-summary-fy17 send to you these requested documents in which to submit comments. ADDRESSES: You may request a copy of any records schedule identified in this notice by contacting Records Appraisal and Agency Assistance (ACRA) using one of the following means: Mail: NARA (ACRA); 8601 Adelphi Road; College Park, MD 20740–6001. Email: request.schedule@nara.gov. FAX: 301–837–3698. You must cite the control number, which appears in parentheses after the name of the agency that submitted the schedule, and a mailing address. If you would like an appraisal report, please include that in your request. FOR FURTHER INFORMATION CONTACT: Margaret Hawkins, Director, by mail at Records Appraisal and Agency Assistance (ACRA); National Archives and Records Administration; 8601 Adelphi Road; College Park, MD 20740– 6001, by phone at 301–837–1799, or by email at request.schedule@nara.gov. SUPPLEMENTARY INFORMATION: Each year, Federal agencies create billions of records on paper, film, magnetic tape, and other media. To control this accumulation, agency records managers prepare schedules proposing records retention periods and submit these schedules for NARA’s approval. These schedules provide for timely transfer into the National Archives of historically valuable records and authorize the agency to dispose of all other records after the agency no longer needs them to conduct its business. Some schedules are comprehensive and cover all the records of an agency or one of its major subdivisions. Most schedules, however, cover records of only one office or program or a few series of records. Many of these update previously approved schedules, and some include records proposed as permanent. The schedules listed in this notice are media neutral unless otherwise specified. An item in a schedule is media neutral when an agency may apply the disposition instructions to records regardless of the medium in which it creates or maintains the records. Items included in schedules submitted to NARA on or after December 17, 2007, are media neutral unless the item is expressly limited to a specific medium. (See 36 CFR 1225.12(e).) Agencies may not destroy Federal records without Archivist of the United States’ approval. The Archivist approves destruction only after thoroughly considering the records’ administrative use by the agency of origin, the rights of the Government and of private people directly affected by the Government’s activities, and whether or not the records have historical or other value. In addition to identifying the Federal agencies and any subdivisions requesting disposition authority, this notice lists the organizational unit(s) accumulating the records (or notes that the schedule has agency-wide applicability when schedules cover records that may be accumulated throughout an agency); provides the control number assigned to each schedule, the total number of schedule items, and the number of temporary items (the records proposed for destruction); and includes a brief description of the temporary records. The records schedule itself contains a full description of the records at the file unit level as well as their disposition. If NARA staff has prepared an appraisal memorandum for the schedule, it also includes information about the records. You may request additional information about the disposition process at the addresses above. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 Schedules Pending 1. Department of Agriculture, Farm Service Agency (DAA–0145–2016–0003, 3 items, 3 temporary items). Records relating to Federal acquisition contracting and certification. 2. Department of Justice, Bureau of Alcohol, Tobacco, Firearms, and Explosives (DAA–0436–2016–0005, 2 items, 2 temporary items). Records related to the importers of firearms and ammunition. 3. Department of the Treasury, Bureau of Fiscal Service (DAA–0425–2016– E:\FR\FM\28SEN1.SGM 28SEN1

Agencies

[Federal Register Volume 81, Number 188 (Wednesday, September 28, 2016)]
[Notices]
[Pages 66691-66698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22988]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 16-05]


Report on the Criteria and Methodology for Determining the 
Eligibility of Candidate Countries for Millennium Challenge Account 
Assistance in Fiscal Year 2017

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: This report to Congress is provided in accordance with Section 
608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 
Sec.  7707(b) (the ``Act'').

    Dated: September 20, 2016.
Sarah E. Fandell,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.
Report on the Criteria and Methodology for Determining the Eligibility 
of Candidate Countries for Millennium Challenge Account Assistance in 
Fiscal Year 2017
Summary
    In accordance with section 608(b)(2) of the Millennium Challenge 
Act of 2003 (the ``Act,'' 22 U.S.C. 7707(b)(l)), the Millennium 
Challenge Corporation (MCC) is submitting the enclosed report. This 
report identifies the criteria and methodology that MCC intends to use 
to determine which candidate countries may be eligible to be considered 
for assistance under the Act for fiscal year 2017.
    Under section 608 (c)(1) of the Act, MCC will, for a thirty-day 
period following publication, accept and consider public comment for 
purposes of determining eligible countries under section 607 of the Act 
(22 U.S.C. 7706).
Criteria and Methodology for FY 2017
    This document explains how the Board of Directors (Board) of the 
Millennium Challenge Corporation (MCC) will identify, evaluate, and 
determine eligibility of countries for Millennium Challenge Account 
(MCA) assistance for fiscal year (FY) 2017. The statutory basis for 
this report is set forth in Appendix A. Specifically, this document 
discusses:

I. Which countries MCC will evaluate
II. How the Board evaluates these countries
    A. Overall
    B. For selection for first compact eligibility
    C. For selection for second/subsequent compact eligibility
    D. For threshold program assistance
    E. A note on potential regional investments
    F. A note on potential transition to upper middle income country 
(UMIC) status after initial selection
I. Which countries are evaluated?
    As discussed in the August 2016 Report on Countries that are 
Candidates for Millennium Challenge Account Eligibility for Fiscal Year 
2017 and Countries that Would be Candidates but for Legal Prohibitions 
(the ``Candidate Country Report''), MCC evaluates all low-income 
countries (LICs) and lower-middle income countries (LMICs) as follows:

 For scorecard evaluation purposes for FY 2017, MCC defines 
LICs as those countries between $0 and $1945 GNI per capita, and LMICs 
as those countries between $1946 and $4035 GNI per capita.\1\
---------------------------------------------------------------------------

    \1\ This corresponds to LIC and LMIC definitions using the 
historic International Development Association (IDA) thresholds 
published by the World Bank.
---------------------------------------------------------------------------

 For funding purposes for FY 2017, MCC defines the poorest 75 
countries as LICs, and the remaining countries up to the UMIC threshold 
of $4035 as LMICs.\2\
---------------------------------------------------------------------------

    \2\ By law, no more than 25 percent of all compact funds for a 
given fiscal year may be provided to LMIC countries (using this 
``funding'' definition).

    Under Appendix B, lists of all LICs, LMICs and statutorily 
prohibited countries for evaluation purposes are provided. The list 
using the ``funding'' definition was outlined in the FY 2017 Candidate 
Country Report and describes how funding categories work.
II. How does the Board evaluate these countries?
A. Overall evaluation
    The Board looks at three legislatively-mandated factors in its 
evaluation of any candidate country for compact eligibility: (1) Policy 
performance; (2) the opportunity to reduce poverty and generate 
economic growth; and (3) the availability of MCC funds.
1. Policy Performance
    Because of the importance of needing to evaluate a country's policy 
performance and needing to do so in a comparable, cross-country way, 
the Board relies to the maximum extent possible upon the best-available 
objective and quantifiable indicators of policy performance. These 
indicators act as proxies of the country's commitment to just and 
democratic governance, economic freedom, and investing in its people, 
as laid out in MCC's founding legislation. Comprised of 20 third-party 
indicators in the categories of ``encouraging economic freedom,'' 
``investing in people,'' and ``ruling justly,'' MCC ``scorecards'' are 
created for all LICs and LMICs. To ``pass'' the indicators on the 
scorecard, the country must perform above the median among its income 
group (as defined above), except in the cases of inflation, political 
rights, civil liberties, and immunization rates (LMICs only), where 
threshold scores have been established. In particular, the Board 
considers whether the country:

 Passed at least 10 of the 20 indicators, with at least one in 
each category,
 Passed either the ``Political Rights'' or ``Civil Liberties'' 
indicator, and
 Passed the ``Control of Corruption'' indicator.

    While satisfaction of all three aspects means a country is termed 
to have ``passed'' the scorecard, the Board also considers whether the 
country performed ``substantially worse'' in any one policy category 
than it does on the scorecard overall. Appendix C describes all 20 
indicators, their definitions, what is required to ``pass,'' their 
source, and their relationship to the legislative criteria.
    The mandatory passing of either the ``Political Rights'' or ``Civil 
Liberties'' indicators is called the ``Democratic Rights'' ``hard 
hurdle'' on the scorecard, while the mandatory passing of the ``Control 
of Corruption'' indicator is called the ``Control of Corruption'' 
``hard hurdle.'' Not passing either ``hard hurdle'' results in not 
passing the scorecard overall, regardless of whether at least 10 of the 
20 other indicators are passed.

 Democratic Rights ``hard hurdle:'' This hurdle sets a minimum 
bar for democratic rights below which the Board will not consider a 
country for eligibility. Requiring that a country pass either the 
Political Rights or Civil Liberties indicator creates a democratic 
incentive for countries, recognizes the importance democracy plays in 
driving poverty-reducing economic growth, and holds MCC accountable to 
working with the best governed, poorest countries. When a candidate 
country is only passing one

[[Page 66692]]

of the two indicators comprising the hurdle (instead of both), the 
Board will also look closely at why it is not passing the other 
indicator to understand what the score implies for the broader 
democratic environment and trajectory of the country.
 Control of Corruption ``hard hurdle:'' Corruption in any 
country is an unacceptable tax on economic growth and an obstacle to 
the private sector investment needed to reduce poverty. Accordingly, 
MCC seeks out partner countries that are committed to combatting 
corruption. It is for this reason that MCC also has the ``Control of 
Corruption'' ``hard hurdle,'' which helps ensure that MCC is working 
with countries where there is relatively strong performance in 
controlling corruption. Requiring the passage of the indicator provides 
an incentive for countries to demonstrate a clear commitment to 
controlling corruption, and allows MCC to better understand the issue 
by seeing how the country performs relative to its peers and over time.

    Together, the 20 policy performance indicators are the predominant 
basis for determining which countries will be eligible for MCC 
assistance, and the Board expects a country to be passing its scorecard 
at the point the Board decides to select the country for either a first 
or second/subsequent compact.
    However, the Board also recognizes that even the best-available 
data has inherent challenges. For example, data gaps, real-time events 
versus data lags, the absence of narratives and nuanced detail, and 
other similar weaknesses affect each of these indicators. In such 
instances, the Board uses its judgment to interpret policy performance 
as measured by the scorecards. The Board may also consult other sources 
of information to further enhance its understanding of a given 
country's policy performance beyond the issues on the scorecard, which 
is especially useful given the unique perspective of each Board member 
(e.g., specific policy issues related to trade, civil society, other 
U.S. aid programs, financial sector performance, and security/foreign 
policy issues). The Board uses its judgment on how best to weigh such 
information in assessing overall policy performance.
2. The Opportunity To Reduce Poverty and Generate Economic Growth
    The Board also consults other sources of qualitative and 
quantitative information to have a more detailed view of the 
opportunity to reduce poverty and generate economic growth in a 
country. While the Board considers a range of other information sources 
depending on the country, specific areas of attention typically include 
better understanding the issues on, trends in, and trajectory of:

 The state of democratic and human rights (especially of 
vulnerable groups \3\);
---------------------------------------------------------------------------

    \3\ For example, women; children; lesbian, gay, bisexual, and 
transgender individuals; people with disabilities; and workers.
---------------------------------------------------------------------------

 The perspective of civil society on salient governance issues;
 The control of corruption and rule of law;
 The potential for the private sector (both local and foreign) 
to lead investment and growth;
 The levels of poverty within a country; and
 The country's institutional capacity.

    Where applicable, the Board also considers MCC's own experience and 
ability to reduce poverty and generate economic growth in a given 
country--such as considering MCC's core skills versus the country's 
needs, capacity within MCC to work with a country, and the likelihood 
that MCC is seen by the country as a credible partner.
    This information provides greater clarity on the likelihood that 
MCC investments will have an appreciable impact on reducing poverty and 
generating economic growth in a given country. The Board has used such 
information both to not select countries that are otherwise passing 
their scorecards, as well as to better understand when a country's 
performance on a particular indicator may not be up to date or is about 
to change. More details on this subject (sometimes referred to as 
``supplemental information'') can be found on MCC's website.
3. The Availability of MCC Funds
    The final factor that the Board must consider when evaluating 
countries is the funding available. The agency's allocation of its 
budget is constrained, and often specifically limited, by provisions in 
the authorizing legislation and appropriations acts. MCC has a 
continuous pipeline of countries in compact development, compact 
implementation, and compact closeout, as well as threshold programs. 
Consequently, the Board factors in the overall portfolio picture when 
making its selection decisions given the funding available for each of 
the agency's planned or existing programs.
    The following subsections describe how each of these three 
legislatively-mandated factors are applied with regard to the selection 
situations the Board encounters each December: Selection of countries 
for first compact eligibility, selection of countries for second/
subsequent compact eligibility, and selection of countries for the 
threshold program. Thereafter, notes are included on consideration of 
countries for potential regional investments, and issues for 
consideration for countries that might graduate to upper middle income 
country status after selection.
    B. Evaluation for selection of countries for first compact 
eligibility
    When selecting countries for compact eligibility, the Board looks 
at all three legislatively-mandated aspects described in the previous 
section: (1) Policy performance, first and foremost as measured by the 
scorecards and bolstered through additional information (as described 
in the previous section); (2) the opportunity to reduce poverty and 
generate economic growth, examined through the use of other supporting 
information (as described in the previous section); and (3) the funding 
available.
    At a minimum, the Board looks to see that the country passes its 
scorecard. It also examines supporting evidence that the country's 
commitment to just and democratic governance, economic freedom, and 
investing in its people is on a sound footing and performance is on a 
positive trajectory (especially on the `hard hurdles' of Democratic 
Rights and Control of Corruption, as described in the previous 
section), and that MCC has funding to support a meaningful compact with 
that country. Where applicable, previous threshold program information 
is also considered. The Board then weighs the information described 
above across each of the three dimensions.
    The approach described above is then applied in any additional 
years of selection of a country to continue to develop a first compact, 
with the added benefit of having cumulative scorecards, cumulative 
records of policy performance, and other accumulated supporting 
information to determine the overall pattern of performance over the 
emerging multi-year trajectory.
    C. Evaluation for selection of countries for second/subsequent 
compact eligibility
    Section 609(k) of the Millennium Challenge Act of 2003, as amended, 
specifically authorizes MCC to enter into ``one or more subsequent 
Compacts.'' MCC does not consider subsequent compact eligibility, 
however, before countries have completed their compact or are within 18 
months of completion, (e.g., a second compact if they have completed or 
are within 18 months of completing their

[[Page 66693]]

first compact). Selection for subsequent compacts is not automatic and 
is intended only for countries that (1) exhibit successful performance 
on their previous compact; (2) exhibit improved scorecard policy 
performance during the partnership; and (3) exhibit a continued 
commitment to further their sector reform efforts in any subsequent 
partnership. As a result, the Board has an even higher standard when 
selecting countries for subsequent compacts.
1. Successful implementation of the previous compact
    To evaluate the degree of success of the previous compact, the 
Board looks to see if there is a clear evidence base of success within 
the budget and time limits of the compact, in particular by looking at 
three aspects:

 The degree to which there is evidence of strong political will 
and management capacity: Is the partnership characterized by the 
country ensuring that both policy reforms and the compact program 
itself are both being implemented to the best ability that the country 
can deliver;
 The degree to which the country has exhibited commitment and 
capacity to achieve program results: Are the financial and project 
results being achieved; to what degree is the country committing its 
own resources to ensure the compact is a success; to what extent is the 
private sector engaged (if relevant); and other compact-specific 
issues; and
 The degree to which the country has implemented the compact in 
accordance with MCC's core policies and standards: That is, is the 
country adhering to MCC's policies and procedures, including in 
critical areas such as remediating unresolved fraud and corruption and 
abuse or misuse of funds issues; procurement; and monitoring and 
evaluation.

    Details on the specific types of information examined (and sources 
used) in each of the three areas are provided in Appendix D. Overall, 
the Board is looking for evidence that the previous compact will be 
completed or has been completed successfully, on time and on budget, 
and that there is a commitment to continued, robust reform going 
forward.
2. Improved scorecard policy performance
    Beyond successful implementation of the previous compact, the Board 
expects the country to have improved its overall scorecard policy 
performance during the partnership, and to pass the scorecard in the 
year of selection for the subsequent compact. The Board focuses on:

 The overall scorecard pass/fail rate over time, what this 
suggests about underlying policy performance, as well as an examination 
of the underlying reasons;
 The progress over time on policy areas measured by both hard-
hurdle indicators--Democratic Rights and Control of Corruption--
including an examination of the underlying reasons; and
 Other indicator trajectories as deemed relevant by the Board.

    In all cases, while the Board expects the country to be passing its 
scorecard, other sources of information are examined to understand the 
nuance and reasons behind scorecard or indicator performance over time, 
including any real-time updates, methodological changes within the 
indicators themselves, shifts in the relevant candidate pool, or 
alternative policy performance perspectives (such as gleaned through 
consultations with civil society and related stakeholders). Other 
sources of information are also consulted to look at policy performance 
over time in areas not covered by the scorecard, but that are deemed 
important by the Board (such as trade, foreign policy concerns, etc.).
3. A commitment to further sector reform
    The Board expects that subsequent compacts will endeavor to tackle 
deeper policy reforms necessary to unlock an identified constraint to 
growth. Consequently, the Board considers its own experience during the 
previous compact in considering how committed the country is to 
reducing poverty and increasing economic growth, and therefore tries to 
gauge the country's commitment for further sector reform should it be 
selected for a subsequent compact. This includes:

 Assessing the country's delivery of policy reform during the 
previous compact (as described above);
 Assessing expectations of the country's ability and 
willingness to continue embarking on sector policy reform in a 
subsequent compact;
 Examining both other sources of information that describe the 
nature of the opportunity to reduce poverty and generate growth (as 
outlined in A.2 above), and the relative success of the previous 
compact overall, as already discussed; and
 Finally, considering how well funding can be leveraged for 
impact, given the country's experience in the previous compact.

    Through this overall approach to subsequent compact selection, the 
Board applies the three legislatively mandated evaluation criteria 
(policy performance, the opportunity to reduce poverty and generate 
economic growth, and the funding available) in a way that rests 
critically on deeply assessing the previous partnership: from a compact 
success standpoint, a commitment to improved scorecard policy 
performance standpoint, and a commitment to continued sector policy 
reform standpoint. The Board then weighs all of the information 
described above in making its decision.
    The approach described above is then applied in any additional 
years of selection necessary as the country continues to develop the 
subsequent compact, with the added benefit of having even further 
detail on previous compact implementation, cumulative scorecards, 
records of policy performance, and other accumulated supporting 
information to determine the overall pattern of performance over the 
resulting multi-year trajectory.
D. Evaluation for threshold program assistance
    The Board may also evaluate countries for participation in the 
Threshold Program. The Threshold Program provides assistance to 
candidate countries that exhibit a significant commitment to meeting 
the criteria described in the previous sub-sections, but fail to meet 
such requirements. Specifically, in examining the policy performance, 
the opportunity to reduce poverty and generate economic growth, and the 
funding available, the Board will consider whether a country that 
potentially qualifies for threshold program assistance appears to be on 
a trajectory to becoming viable for compact eligibility in the medium 
term.
E. A note on potential regional investments
    FY 2017 marks the second year that the Board may consider selecting 
countries where potential regional investments (i.e., complementary 
assistance by MCC to two or more countries in a region) may be 
developed.
    With respect to regional investments, the fundamental criteria and 
process for selection will remain unchanged: countries will continue to 
be evaluated and selected individually, as described in sections A, B, 
and C above. However, for countries where regional investments might be 
contemplated, the Board will also examine additional supplemental 
information looking at the

[[Page 66694]]

policy environment from a regional dimension.
    Specifically, the Board will examine additional data and 
information related to:

 The current state of the country's political and economic 
integration with its region and neighbors;
 Impediments to further integration with its region and 
neighbors; and
 The potential gains from investing at a regional level, 
including illustrative potential sector opportunities.

    The Board will weigh this additional regional information in tandem 
with the other supplemental factors described earlier in sections A, B, 
and C. The Board will then decide whether or not it will direct MCC to 
explore some form of a regional investment with the country.
F. A note on potential transition to upper middle income country (UMIC) 
status after initial selection
    Some candidate countries may have a high LMIC per capita income 
and/or a high growth rate that implies there is a chance they could 
transition to UMIC status during the life of an MCC partnership. In 
such cases, it is not possible to accurately predict when such a 
country may or may not transition to UMIC status.
    Nonetheless, such countries may have more resources at their 
disposal for funding their own growth and poverty reduction strategies. 
As a result, in addition to using the regular selection criteria 
described in the previous sections, the Board will also use its 
discretion to assess both the need and the opportunity presented by 
partnering with such a country, in order to ensure that there is a 
higher bar for possible selection as compact eligible.
    Specifically, if a candidate country with a high probability of 
transitioning to UMIC status is under consideration for selection, the 
Board will examine additional data and information related to:

 Whether the country faces significant challenges accessing 
other sources of development financing (such as international capital, 
domestic resources, and other donor assistance) and, if so, examining 
if MCC grant financing would be an appropriate tool.
 Whether the nature of poverty in the country (for example, 
high inequality or poverty headcount ratios relative to peer countries) 
presents a clear and strategic opportunity for MCC to assist the 
country in reducing such poverty through investments that spur economic 
growth.
 Whether the country demonstrates particularly strong policy 
performance, including policies and actions that demonstrate a clear 
priority on poverty reduction.
 Whether MCC can reasonably expect that the country would 
contribute a significant amount of funding to the compact.

    These additional criteria would then be applied in any additional 
years of selection as the country continues to develop its compact. 
Should the country eventually transition to UMIC status during compact 
development, the country would no longer be a candidate country for 
that fiscal year. Consequently, continuing the partnership beyond that 
point would then be at the Board's discretion, and would rely on 
funding from previous fiscal years from when the country was a 
candidate country.
Appendix A: Statutory Basis for this Report
    This report to Congress is provided in accordance with section 
608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 
Sec.  7707(b) (the Act).
    Section 605 of the Act authorizes the provision of assistance to 
countries that enter into a Millennium Challenge Compact with the 
United States to support policies and programs that advance the 
progress of such countries in achieving lasting economic growth and 
poverty reduction. The Act requires MCC to take a number of steps in 
selecting countries for compact assistance for FY 2017 based on the 
countries' demonstrated commitment to just and democratic governance, 
economic freedom, and investing in their people, MCC's opportunity to 
reduce poverty and generate economic growth in the country, and the 
availability of funds. These steps include the submission of reports to 
the congressional committees specified in the Act and publication of 
information in the Federal Register that identify:
    1. The countries that are ``candidate countries'' for MCA 
assistance for FY 2017 based on per capita income levels and 
eligibility to receive assistance under U.S. law. (section 608(a) of 
the Act; 22 U.S.C. Sec.  7707(a));
    2. The criteria and methodology that MCC's Board of Directors 
(Board) will use to measure and evaluate policy performance of the 
candidate countries consistent with the requirements of section 607 of 
the Act (22 U.S.C. Sec.  7706) in order to determine ``eligible 
countries'' from among the ``candidate countries'' (section 608(b) of 
the Act; 22 U.S.C. Sec.  7707(b)); and
    3. The list of countries determined by the Board to be ``eligible 
countries'' for FY 2017, with justification for eligibility 
determination and selection for compact negotiation, including those 
eligible countries with which MCC will seek to enter into compacts 
(section 608(d) of the Act; 22 U.S.C. Sec.  7707(d)).
    This report reflects the satisfaction of item 2 above.
Appendix B: Lists of all LICs, LMICs, and Statutorily Prohibited 
Countries for Evaluation Purposes
Income Classification for Scorecards
    Since MCC was created, it has relied on the World Bank's gross 
national income (GNI) per capita income data (Atlas method) and the 
historical ceiling for eligibility as set by the World Bank's 
International Development Association (IDA) to divide countries into 
two income categories for purposes of creating scorecards: LICs and 
LMICs. These categories are used to account for the income bias that 
occurs when countries with more per capita resources perform better 
than countries with fewer. Using the historical IDA eligibility ceiling 
for the scorecards ensures that the poorest countries compete with 
their income level peers and are not compared against countries with 
more resources to mobilize.
    MCC will continue to use the traditional income categories for 
eligibility to categorize countries in two groups for purposes of FY 
2017 scorecard comparisons:

 LICs are countries with GNI per capita below IDA's historical 
ceiling for eligibility ($1,945 for FY 2017); and
 LMICs are countries with GNI per capita above IDA's historical 
ceiling for eligibility but below the World Bank's upper middle income 
country threshold ($1,946-$4,035 for FY 2017).
    The list of countries categorized as LICs and LMICs for the purpose 
of FY 2017 scorecard assessments can be found below.\4\
---------------------------------------------------------------------------

    \4\ In December 2011, a statutory change requested by MCC 
altered the way MCC must group countries for the purposes of 
applying MCC's 25 percent LMIC funding cap. This change, designed to 
bring stability to the funding stream, affects how MCC funds 
countries selected for compacts and does not affect the way 
scorecards are created. For determining whether a country can be 
funded as an LMIC or LIC:
     The poorest 75 countries are now considered LICs for 
the purposes of MCC funding. They are not limited by the 25 percent 
funding cap on LMICs.
     Countries with a GNI per capita above the poorest 75 
but below the World Bank's upper middle income country threshold 
($4,035 for FY 2017) are considered LMICs for the purposes of MCC 
funding. By law, no more than 25 percent of all compact funds for a 
given fiscal year can be provided to these countries.
    The FY 2017 Candidate Country Report lists LICs and LMICs based 
on this new definition and outlines which countries are subject to 
the 25 percent funding cap.

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[[Page 66695]]

Low Income Countries
(FY 2017 Scorecard)
1. Afghanistan
2. Bangladesh
3. Benin
4. Burkina Faso
5. Burma
6. Burundi
7. Cambodia
8. Cameroon
9. Central African Republic
10. Chad
11. Comoros
12. Cote d'Ivoire
13. Democratic Republic of Congo
14. Djibouti
15. Eritrea
16. Ethiopia
17. Gambia
18. Ghana
19. Guinea
20. Guinea-Bissau
21. Haiti
22. India
23. Kenya
24. Kyrgyz Republic
25. Lao PDR
26. Lesotho
27. Liberia
28. Madagascar
29. Malawi
30. Mali
31. Mauritania
32. Mozambique
33. Nepal
34. Nicaragua
35. Niger
36. North Korea
37. Pakistan
38. Rwanda
39. Sao Tome and Principe
40. Senegal
41. Sierra Leone
42. Solomon Islands
43. Somalia
44. South Sudan
45. Sudan
46. Syria
47. Tajikistan
48. Tanzania
49. Timor Leste
50. Togo
51. Uganda
52. Yemen
53. Zambia
54. Zimbabwe
Lower Middle Income Countries
(FY 2017 Scorecard)
1. Armenia
2. Bhutan
3. Bolivia
4. Cabo Verde
5. Egypt
6. El Salvador
7. Guatemala
8. Honduras
9. Indonesia
10. Kiribati
11. Kosovo
12. Micronesia
13. Moldova
14. Mongolia
15. Morocco
16. Nigeria
17. Papua New Guinea
18. Philippines
19. Republic of Congo
20. Samoa
21. Sri Lanka
22. Swaziland
23. Tonga
24. Tunisia
25. Ukraine
26. Uzbekistan
27. Vanuatu
28. Vietnam
    Statutorily prohibited countries for FY17 \5\
---------------------------------------------------------------------------

    \5\ This list is current as of August 1, 2016. Between such date 
and the December 2016 selection Board meeting, other countries may 
also be the subject of future statutory restrictions or 
determinations, or changed country circumstances, that affect their 
legal eligibility for assistance under part I of the Foreign 
Assistance Act by reason of application of the Foreign Assistance 
Act or any other provision of law for FY 2017. Even though these 
countries are prohibited from received assistance, scorecards are 
still created for them to ensure all countries are included in an 
income group in order to determine the global medians/scores for 
that income group.
---------------------------------------------------------------------------

1. Bolivia
2. Burma
3. Eritrea
4. North Korea
5. South Sudan
6. Sudan
7. Syria
8. Zimbabwe
Appendix C: Indicator Definitions
    The following 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 are proxy 
measures of policies that are linked to broad-based sustainable 
economic growth. The indicators were selected based on (i) their 
relationship to economic growth and poverty reduction; (ii) the number 
of countries they cover; (iii) transparency and availability; and (iv) 
relative soundness and objectivity. Where possible, the indicators are 
developed by independent sources.\6\ Listed below is a brief summary of 
the indicators (a detailed rationale for the adoption of these 
indicators can be found in the Public Guide to the Indicators on MCC's 
public website at www.mcc.gov).
---------------------------------------------------------------------------

    \6\ Special note on Kosovo: Since UN agencies do not currently 
publish data for Kosovo due to non-recognition status, MCC is unable 
to source data directly from the UN for the six indicators that are 
constructed in all or in part from this data: Land Rights and 
Access, Health Expenditures, Primary Education Expenditures, 
Immunization Rates, Girls' Secondary Education Enrollment Rate, and 
Child Health. As result, MCC publishes data from UNKT (the UN Kosovo 
Team) in cases where UNKT uses comparable methodologies to their UN 
sister organizations. See http://www.unkt.org/ for more information.
---------------------------------------------------------------------------

Ruling Justly
    1. Political Rights: Independent experts rate countries on the 
prevalence of free and fair electoral processes; political pluralism 
and participation of all stakeholders; government accountability and 
transparency; freedom from domination by the military, foreign powers, 
totalitarian parties, religious hierarchies and economic oligarchies; 
and the political rights of minority groups, among other things. Pass: 
Score must be above the minimum score of 17 out of 40. Source: Freedom 
House
    2. Civil Liberties: Independent experts rate countries on freedom 
of expression and belief; association and organizational rights; rule 
of law and human rights; and personal autonomy and economic rights, 
among other things. Pass: Score must be above the minimum score of 25 
out of 60. Source: Freedom House
    3. Freedom of Information: Measures the legal and practical steps 
taken by a government to enable or allow information to move freely 
through society; this includes measures of press freedom, national 
freedom of information laws, and the extent to which a county is 
filtering internet content or tools. Pass: Score must be above the 
median score for the income group. Source: Freedom House/Centre for Law 
and Democracy
    4. Government Effectiveness: An index of surveys and expert 
assessments that rate countries on the quality of public service 
provision; civil servants' competency and independence from political 
pressures; and the government's ability to plan and implement sound 
policies, among other things. Pass: Score must be above the median 
score for the income group.

[[Page 66696]]

Source: Worldwide Governance Indicators (World Bank/Brookings)
    5. Rule of Law: An index of surveys and expert assessments that 
rate countries on the extent to which the public has confidence in and 
abides by the rules of society; the incidence and impact of violent and 
nonviolent crime; the effectiveness, independence, and predictability 
of the judiciary; the protection of property rights; and the 
enforceability of contracts, among other things. Pass: Score must be 
above the median score for the income group. Source: Worldwide 
Governance Indicators (World Bank/Brookings)
    6. Control of Corruption: An index of surveys and expert 
assessments that rate countries on: ``grand corruption'' in the 
political arena; the frequency of petty corruption; the effects of 
corruption on the business environment; and the tendency of elites to 
engage in ``state capture,'' among other things. Pass: Score must be 
above the median score for the income group. Source: Worldwide 
Governance Indicators (World Bank/Brookings)
Encouraging Economic Freedom
    1. Fiscal Policy: General government net lending/borrowing as a 
percent of gross domestic product (GDP), averaged over a three year 
period. Net lending/borrowing is calculated as revenue minus total 
expenditure. The data for this measure comes from the IMF's World 
Economic Outlook. Pass: Score must be above the median score for the 
income group. Source: The International Monetary Fund's World Economic 
Outlook Database
    2. Inflation: The most recent average annual change in consumer 
prices. Pass: Score must be 15% or less. Source: The International 
Monetary Fund's World Economic Outlook Database
    3. Regulatory Quality: An index of surveys and expert assessments 
that rate countries on the burden of regulations on business; price 
controls; the government's role in the economy; and foreign investment 
regulation, among other areas. Pass: Score must be above the median 
score for the income group. Source: Worldwide Governance Indicators 
(World Bank/Brookings)
    4. Trade Policy: A measure of a country's openness to international 
trade based on weighted average tariff rates and non-tariff barriers to 
trade. Pass: Score must be above the median score for the income group. 
Source: The Heritage Foundation
    5. Gender in the Economy: An index that measures the extent to 
which laws provide men and women equal capacity to generate income or 
participate in the economy, including the capacity to access 
institutions, get a job, register a business, sign a contract, open a 
bank account, choose where to live, and to travel freely. Pass: Score 
must be above the median score for the income group. Source: 
International Finance Corporation
    6. Land Rights and Access: An index that rates countries on the 
extent to which the institutional, legal, and market framework provide 
secure land tenure and equitable access to land in rural areas and the 
time and cost of property registration in urban and peri-urban areas. 
Pass: Score must be above the median score for the income group. 
Source: The International Fund for Agricultural Development and the 
International Finance Corporation
    7. Access to Credit: An index that rates countries on rules and 
practices affecting the coverage, scope, and accessibility of credit 
information available through either a public credit registry or a 
private credit bureau; as well as legal rights in collateral laws and 
bankruptcy laws. Pass: Score must be above the median score for the 
income group. Source: International Finance Corporation
    8. Business Start-Up: An index that rates countries on the time and 
cost of complying with all procedures officially required for an 
entrepreneur to start up and formally operate an industrial or 
commercial business. Pass: Score must be above the median score for the 
income group. Source: International Finance Corporation
Investing in People
    9. Public Expenditure on Health: Total expenditures on health by 
government at all levels divided by GDP. Pass: Score must be above the 
median score for the income group. Source: The World Health 
Organization
    10. Total Public Expenditure on Primary Education: Total 
expenditures on primary education by government at all levels divided 
by GDP. Pass: Score must be above the median score for the income 
group. Source: The United Nations Educational, Scientific and Cultural 
Organization and National Governments
    11. Natural Resource Protection: Assesses whether countries are 
protecting up to 17 percent of all their biomes (e.g., deserts, 
tropical rainforests, grasslands, savannas and tundra). Pass: Score 
must be above the median score for the income group. Source: The Center 
for International Earth Science Information Network and the Yale Center 
for Environmental Law and Policy
    12. Immunization Rates: The average of DPT3 and measles 
immunization coverage rates for the most recent year available. Pass: 
Score must be above the median score for LICs, and 90% or higher for 
LMICs. Source: The World Health Organization and the United Nations 
Children's Fund
    13. Girls Education:
    a. Girls' Primary Completion Rate: The number of female students 
enrolled in the last grade of primary education minus repeaters divided 
by the population in the relevant age cohort (gross intake ratio in the 
last grade of primary). LICs are assessed on this indicator. Pass: 
Score must be above the median score for the income group. Source: 
United Nations Educational, Scientific and Cultural Organization
    b. Girls Secondary Enrollment Education: The number of female 
pupils enrolled in lower secondary school, regardless of age, expressed 
as a percentage of the population of females in the theoretical age 
group for lower secondary education. LMICs will be assessed on this 
indicator instead of Girls Primary Completion Rates. Pass: Score must 
be above the median score for the income group. Source: United Nations 
Educational, Scientific and Cultural Organization
    14. Child Health: An index made up of three indicators: (i) access 
to improved water, (ii) access to improved sanitation, and (iii) child 
(ages 1-4) mortality. Pass: Score must be above the median score for 
the income group. Source: The Center for International Earth Science 
Information Network and the Yale Center for Environmental Law and 
Policy
Relationship to Legislative Criteria
    Within each policy category, the Act sets out a number of specific 
selection criteria. A set of objective and quantifiable policy 
indicators is used to inform eligibility decisions for MCA assistance 
and to 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 objective indicators. Most are addressed by multiple 
indicators. The specific indicators appear in parentheses next to the 
corresponding criterion set out in the Act.
    Section 607(b)(1): Just and democratic governance, including a 
demonstrated commitment to--
    (A) promote political pluralism, equality and the rule of law 
(Political Rights, Civil Liberties, Rule of Law, and Gender in the 
Economy);
    (B) respect human and civil rights, including the rights of people 
with

[[Page 66697]]

disabilities (Political Rights, Civil Liberties, and Freedom of 
Information);
    (C) protect private property rights (Civil Liberties, Regulatory 
Quality, Rule of Law, and Land Rights and Access);
    (D) encourage transparency and accountability of government 
(Political Rights, Civil Liberties, Freedom of Information, Control of 
Corruption, Rule of Law, and Government Effectiveness); and
    (E) combat corruption (Political Rights, Civil Liberties, Rule of 
Law, Freedom of Information, and Control of 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 (Fiscal Policy, Inflation, Trade Policy, 
and Regulatory Quality);
    (B) promote private sector growth (Inflation, Business Start-Up, 
Fiscal Policy, Land Rights and Access, Access to Credit, Gender in the 
Economy, and Regulatory Quality);
    (C) strengthen market forces in the economy (Fiscal Policy, 
Inflation, Trade Policy, Business Start-Up, Land Rights and Access, 
Access to Credit, and Regulatory Quality); and
    (D) respect worker rights, including the right to form labor unions 
(Civil Liberties and Gender in the Economy); and
    Section 607(b)(3): Investments in the people of such country, 
particularly women and children, including programs that--
    (A) promote broad-based primary education (Girls' Primary 
Completion Rate, Girls' Secondary Education Enrollment Rate, and Total 
Public Expenditure on Primary Education);
    (B) strengthen and build capacity to provide quality public health 
and reduce child mortality (Immunization Rates, Public Expenditure on 
Health, and Child Health); and
    (C) promote the protection of biodiversity and the transparent and 
sustainable management and use of natural resources (Natural Resource 
Protection).
Appendix D: Subsequent Compact Considerations
    MCC reporting and data in the following chart are used to assess 
compact performance of MCC partners nearing the end of compact 
implementation (i.e., within 18-months of compact end date). Some 
reporting used for assessment may contain sensitive information and 
adversely affect implementation or MCC partner country relations. This 
information is for MCC's internal use and is not made public. However, 
key implementation information is summarized in compact status and 
results reports that are published quarterly on MCC's website under MCC 
country programs (https://www.mcc.gov/where-we-work) or monitoring and 
evaluation (https://www.mcc.gov/our-impact/m-and-e) webpages.

------------------------------------------------------------------------
                            MCC reporting/data
         Topic                    source            Published documents
------------------------------------------------------------------------
COUNRY PARTNERSHIP        Quarterly        Quarterly
Political Will            implementation           results published as
 Status of        reporting                ``Table of Key
 major conditions         Quarterly        Performance
 precedent                results reporting        Indicators''
                          Survey of MCC    (available by
                          staff                    country): http://go.usa.gov/jMcC
 Program
 oversight/
 implementation
    [cir] project        .......................   Survey
     restructures                                  questions to be
    [cir] partner                                  posted: https://
     response to MCA                               www.mcc.gov/resources/
     capacity issues                               doc/summary-compact-
                                                   survey-summary-fy17
 Political
 independence of MCA
Management Capacity
 Project
 management capacity
 Project
 performance
 Level of MCC
 intervention/oversight
 Relative level
 of resources required
PROGRAM RESULTS           Indicator        Monitoring
Financial Results         tracking tables          and Evaluation Plans
 Commitments--    Quarterly        (available by
 including                financial reporting      country): http://
 contributions to         Quarterly        go.usa.gov/jMcC
 compact funding          implementation           Quarterly
 Disbursements    reporting                Status Reports
Project Results           Quarterly        (available by
 Output,          results reporting        country): http://
 outcome, objective       Survey of MCC    1.usa.gov/NfEbcI
 targets                  staff                    Quarterly
 MCA commitment   Impact           results published as
 to `focus on results'    evaluations              ``Table of Key
 MCA                                       Performance
 cooperation on impact                             Indicators''
 evaluation                                        (available by
 Percent                                   country): https://
 complete for process/                             www.mcc.gov/our-
 outputs                                           impact/m-and-el
 Relevant                                  Survey
 outcome data                                      questions to be
 Details behind                            posted: https://
 target delays                                     www.mcc.gov/resources/
Target Achievements                                doc/summary-compact-
                                                   survey-summary-fy17
ADHERENCE TO STANDARDS    Audits (GAO      Published OIG
 Procurement      and OIG)                 and GAO Audits
 Environmental    Quarterly        Survey
 and social               implementation           questions to be
 Fraud and        reporting                posted: https://
 corruption               Survey of MCC    www.mcc.gov/resources/
 Program          staff                    doc/summary-compact-
 closure                                           survey-summary-fy17
 Monitoring and
 evaluation
 All other
 legal provisions

[[Page 66698]]

 
COUNTRY SPECIFIC          Quarterly        Quarterly
Sustainability            implementation           results published as
 Implementation   reporting                ``Table of Key
 entity                   Quarterly        Performance
 MCC              results reporting        Indicators''
 investments              Survey of MCC    (available by
Role of private sector    staff                    country): https://
 or other donors                                   www.mcc.gov/our-
 Other relevant                            impact/m-and-e
 investors/investments                             Survey
 Other donors/                             questions to be
 programming                                       posted: https://
 Status of                                 www.mcc.gov/resources/
 related reforms                                   doc/summary-compact-
 Trajectory of                             survey-summary-fy17
 private sector
 involvement going
 forward
------------------------------------------------------------------------

[FR Doc. 2016-22988 Filed 9-27-16; 8:45 am]
BILLING CODE 9211-03-P