Report on the Selection of Eligible Countries for Fiscal Year 2019, 65363-65366 [2018-27571]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Notices]
[Pages 65363-65366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27571]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 18-14]


Report on the Selection of Eligible Countries for Fiscal Year 
2019

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: This report is provided in accordance with section 608(d)(2) 
of the Millennium Challenge Act of 2003.

    Dated: December 14, 2018.
Jeanne M. Hauch,
VP/General Counsel and Corporate Secretary.

Report on the Selection of Eligible Countries for Fiscal Year 2019

Summary

    This report is provided in accordance with section 608(d)(1) of the 
Millennium Challenge Act of 2003, as amended (the ``Act'') (22 U.S.C. 
7707(d)(1)).
    The Act authorizes the provision of assistance under section 605 of 
the Act (22 U.S.C. 7704) to countries that enter into compacts with the 
United States to support policies and programs that advance the 
progress of such countries in achieving lasting economic growth and 
poverty reduction, and are in

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furtherance of the Act. The Act requires the Millennium Challenge 
Corporation (``MCC'') to determine the countries that will be eligible 
to receive assistance for the fiscal year, based on their demonstrated 
commitment to just and democratic governance, economic freedom, and 
investing in their people, as well as on the opportunity to reduce 
poverty and generate economic growth in the country. The Act also 
requires the submission of reports to appropriate congressional 
committees and the publication of notices in the Federal Register that 
identify, among other things:
    1. The countries that are ``candidate countries'' for assistance 
for fiscal year (``FY'') 2019 based on their per-capita income levels 
and their eligibility to receive assistance under U.S. law, and 
countries that would be candidate countries but for specified legal 
prohibitions on assistance (section 608(a) of the Act (22 U.S.C. 
7707(a)));
    2. The criteria and methodology that the Board of Directors of MCC 
(the ``Board'') will use to measure and evaluate the policy performance 
of the ``candidate countries'' consistent with the requirements of 
section 607 of the Act in order to determine ``eligible countries'' 
from among the ``candidate countries'' (section 608(b) of the Act (22 
U.S.C. 7707(b))); and
    3. The list of countries determined by the Board to be ``eligible 
countries'' for FY 2019, with justification for eligibility 
determination and selection for compact negotiation, including with 
which of the eligible countries the Board will seek to enter into 
compacts (section 608(d) of the Act (22 U.S.C. 7707(d))).
    This is the third of the above-described reports by MCC for FY 
2019. It identifies countries determined by the Board to be eligible 
under section 607 of the Act (22 U.S.C. 7706) for FY 2019 with which 
the MCC will seek to enter into compacts under section 609 of the Act 
(22 U.S.C. 7708), as well as the justification for such decisions. The 
report also identifies countries selected by the Board to receive 
assistance under MCC's threshold program pursuant to section 616 of the 
Act (22 U.S.C. 7715).

Eligible Countries

    The Board met on December 11, 2018, to select those eligible 
countries with which the United States, through MCC, will seek to enter 
into a Millennium Challenge Compact pursuant to section 607 of the Act 
(22 U.S.C. 7706). The Board selected the following eligible countries 
for such assistance for FY 2019: Indonesia, Malawi, Kosovo, Benin, 
Burkina Faso, C[ocirc]te d'Ivoire, Ghana and Niger. The Board also 
selected the following previously-selected countries for compact 
assistance for FY 2019: Burkina Faso, Lesotho, Timor-Leste and Tunisia.
Criteria
    In accordance with the Act and with the ``Report on the Criteria 
and Methodology for Determining the Eligibility of Candidate Countries 
for Millennium Challenge Account Assistance in Fiscal Year 2019'' 
formally submitted to Congress on September 13, 2018, selection was 
based primarily on a country's overall performance in three broad 
policy categories: Ruling Justly, Encouraging Economic Freedom, and 
Investing in People. The Board relied, to the fullest extent possible, 
upon transparent and independent indicators to assess countries' policy 
performance and demonstrated commitment in these three broad policy 
areas. The Board compared countries' performance on the indicators 
relative to their income-level peers, evaluating them in comparison to 
either the group of countries with a GNI per capita equal to or less 
than $1,875, or the group with a GNI per capita between $1,876 and 
$3,895.
    The criteria and methodology used to assess countries on the annual 
scorecards are outlined in the ``Report on the Criteria and Methodology 
for Determining the Eligibility of Candidate Countries for Millennium 
Challenge Account Assistance in Fiscal Year 2019.'' \1\ Scorecards 
reflecting each country's performance on the indicators are available 
on MCC's website at www.mcc.gov/scorecards.
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    \1\ Available at https://www.mcc.gov/resources/doc/report-selection-criteria-and-methodology-fy19.
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    The Board also considered whether any adjustments should be made 
for data gaps, data lags, or recent events since the indicators were 
published, as well as strengths or weaknesses in particular indicators. 
Where appropriate, the Board took into account additional quantitative 
and qualitative information, such as evidence of a country's commitment 
to fighting corruption, investments in human development outcomes, or 
poverty rates. In keeping with legislative directives, the Board also 
considered the opportunity to reduce poverty and promote economic 
growth in a country, in light of the overall information available, as 
well as the availability of appropriated funds.
    The Board sees the selection decision as an annual opportunity to 
determine where MCC funds can be most effectively used to support 
poverty reduction through economic growth in relatively well-governed, 
poor countries. The Board carefully considers the appropriate nature of 
each country partnership--on a case-by-case basis--based on factors 
related to economic growth and poverty reduction, the sustainability of 
MCC's programs, and the country's ability to attract and leverage 
public and private resources in support of development.
    This was the first year the Board considered the eligibility of 
countries for concurrent compacts, as permitted under the African 
Growth and Opportunity Act and MCA Modernization Act, Public Law 115-
167, signed by President Trump in April 2018, which authorizes MCC to 
enter into one additional concurrent compact with a country if one or 
both of the compacts with the country are for the purpose of regional 
economic integration, increased regional trade, or cross-border 
collaborations. In addition to the considerations for compact 
eligibility detailed above, the Board considered whether a country 
being considered for a concurrent compact is making considerable and 
demonstrable progress in implementing the terms of its existing 
Compact.
    This was the tenth year the Board considered the eligibility of 
countries for subsequent compacts, as permitted under section 609(k) of 
the Act. MCC's engagement with partner countries is not open-ended, and 
the Board is very deliberate when selecting countries for follow-on 
partnerships, particularly regarding the higher bar applicable to 
subsequent compact countries. In making these selection decisions, the 
Board considered--in addition to the criteria outlined above--the 
country's performance implementing its first compact, including the 
nature of the country's partnership with MCC, the degree to which the 
country has demonstrated a commitment and capacity to achieve program 
results, and the degree to which the country has implemented the 
compact in accordance with MCC's core policies and standards. To the 
greatest extent possible, these factors were assessed using pre-
existing monitoring and evaluation targets and regular quarterly 
reporting. This information was supplemented with direct surveys and 
consultation with MCC staff responsible for compact implementation, 
monitoring, and evaluation. MCC published a Guide to Supplemental 
Information \2\ and a Guide to the Compact Survey Summary \3\ in

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order to increase transparency about the type of supplemental 
information the Board uses to assess a country's policy performance and 
compact implementation performance. The Board also considered a 
country's commitment to further sector reform, as well as evidence of 
improved scorecard policy performance.
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    \2\ Available at https://www.mcc.gov/resources/doc/guide-to-supplemental-information-fy19.
    \3\ Available at https://www.mcc.gov/resources/doc/guide-to-the-compact-survey-summary-fy19.
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    In addition, this is the third year where the Board considered an 
explicit higher bar for those countries close to the upper end of the 
candidate pool, looking closely in such cases at a country's access to 
development financing, the nature of poverty in the country, and its 
policy performance.
Countries Newly Selected for Compact Assistance
    Countries selected for a first or subsequent compact: Using the 
criteria described above, three candidate countries under section 
606(a) of the Act (22 U.S.C. 7705(a)) were newly selected for 
assistance under section 607 of the Act (22 U.S.C. 7706): Indonesia, 
Malawi and Kosovo.
    Indonesia: Indonesia has demonstrated impressive gains on its 
scorecard, now passing 15 of 20 indicators overall in the higher income 
category. In particular, Indonesia's Control of Corruption score has 
risen every year for eight straight years, while its Political Rights 
and Civil Liberties scores remain strong. Key metrics were achieved in 
two projects in the first compact and both have been adopted as models 
for implementation across the government. While the third project ran 
into delays that led to the deobligation of funds, MCC has learned from 
the experience of partnering with the Government of Indonesia and will 
work with it to focus a subsequent compact and leverage the lessons 
learned from the first compact to maximize the impact and effectiveness 
of U.S. assistance.
    Kosovo: Kosovo has been an engaged and committed partner in the 
threshold program, demonstrating a willingness to commit to governance 
reforms. The country passes the scorecard for the second year in a row, 
passing 13 of 20 indicators overall, including Control of Corruption. 
At the same time, it remains one of the poorest countries in Europe, 
suffering from chronically high unemployment, low educational outcomes, 
and poor employment security. By selecting Kosovo for a compact, MCC 
will accelerate the government's efforts to strengthen economic growth 
to reduce poverty.
    Malawi: Malawi is one of the strongest scorecard performers in 
MCC's entire candidate pool, passing 18 of 20 indicators, including 
high Democratic Rights scores, despite being the third-poorest country 
in the world and MCC's poorest partner country. The country 
demonstrated commitment in the first compact. In addition to finishing 
all planned construction works, Malawi achieved important milestones 
under the compact, including approving and implementing an electricity 
tariff that is partially cost-reflective, and signing the first power-
purchasing agreement with an independent power producer, moving the 
energy sector closer to long-term sustainability.
    Countries selected for a concurrent compact: In accordance with 
section 609(k) of the Act, five candidate countries were newly selected 
to explore development of a concurrent compact under section 607 of the 
Act (22 U.S.C. 7706): Benin, Burkina Faso, C[ocirc]te d'Ivoire, Ghana, 
and Niger.
    Benin: Benin continues its strong scorecard performance in FY 2019, 
passing 13 of 20 indicators, with particularly high scores on 
Democratic Rights and Control of Corruption. MCC's partnership with the 
government has remained strong throughout the current compact, despite 
politically challenging reforms required under the program and the 
arrival of a new government in 2016. A strong scorecard performer and 
current partner, Benin presents substantial regional potential.
    Burkina Faso: In FY 2019, Burkina Faso maintains its stronger 
scorecard performance compared to its first partnership with MCC, 
passing 13 of 20 indicators with strong performance on Control of 
Corruption (92nd percentile) and both Democratic Rights indicators. 
Selected to develop a subsequent compact in December 2016, Burkina Faso 
has a long track record of engagement with MCC and has been an 
effective partner throughout compact development. Burkina Faso has 
demonstrated strong scorecard performance, robust engagement as a 
compact partner, and presents potentially rich opportunities to 
strengthen regional integration efforts.
    C[ocirc]te d'Ivoire: Passing 14 of 20 scorecard indicators in FY 
2019, C[ocirc]te d'Ivoire is a positive ``MCC effect'' story, with 
clear scorecard improvement over multiple years through intensive 
engagement with indicator institutions and implementing policy reforms. 
C[ocirc]te d'Ivoire's current compact focuses on urban transport and 
planning and training skilled workers. Compact development and early 
implementation have benefited from high-level government support. 
C[ocirc]te d'Ivoire is a model partner that has strongly engaged MCC 
throughout compact development and early implementation and presents 
substantial regional opportunities.
    Ghana: A strong scorecard performer, passing 17 of 20 indicators, 
Ghana registers some of the highest Democratic Rights scores among MCC 
partners, while also scoring in the 90th percentile on Control of 
Corruption. Ghana's current compact entered into force in September 
2016 and is expected to close in September 2021. Significant progress 
has already been made toward the goal of the current power sector 
compact to transform the country's power sector through private sector 
participation in its electricity utilities and key sector reforms. 
Ghana has demonstrated strong scorecard performance, built a successful 
compact partnership with MCC, and has significant regional potential.
    Niger: Niger has been a solid scorecard performer, passing 12 of 20 
indicators in FY 2019. Niger's current compact is focused on large-
scale irrigation systems, road rehabilitation, and activities to ensure 
infrastructure sustainability. The compact entered into force in 
January 2018 and is expected to close in January 2023. Niger has been a 
committed partner, with high-level participation and strong engagement, 
and is a country with significant regional potential.
Countries Selected To Continue Compact Development
    Four of the countries selected for compact assistance for FY 2019 
were previously selected for FY 2018. These countries are Burkina Faso, 
Lesotho, Timor-Leste, and Tunisia, whose selection for FY 2019 was 
based on their continued or improved policy performance since their 
prior selection.

Countries Selected To Receive Threshold Program Assistance

    The Board selected Ethiopia and the Solomon Islands to receive 
threshold program assistance.
    Ethiopia: Ethiopia offers MCC the opportunity to recognize the 
Government of Ethiopia's important reform efforts following the arrival 
of a new Prime Minister, Abiy Ahmed, in April. Since he took office, 
the Government of Ethiopia has embarked on a series of significant 
reforms, including releasing thousands of political prisoners, 
apologizing for past state-led human rights abuses, and easing 
restrictions on media outlets. Ethiopia also renewed relations with 
neighboring Eritrea and signed a 20-year old peace treaty. Despite 
historically low Democratic Rights scores, the remarkable initial pace 
of change presents an opportunity for MCC to

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partner with Ethiopia as it seeks to accelerate its reform agenda.
    Solomon Islands: In FY 2019 the Solomon Islands graduated from the 
lower income scorecard category to the higher income scorecard 
category, and as a result of the stiffer competition now fails the 
scorecard, passing only 9 of 20 indicators, while still passing Control 
of Corruption and Democratic Rights. The Solomon Islands represents an 
opportunity to engage a historically strong scorecard performer in the 
Indo-Pacific, a region of increasing interest.

Ongoing Review of Partner Countries' Policy Performance

    The Board emphasized the need for all partner countries to maintain 
or improve their policy performance. If it is determined during compact 
implementation that a country has demonstrated a significant policy 
reversal, MCC can hold it accountable by applying MCC's Suspension and 
Termination Policy.

[FR Doc. 2018-27571 Filed 12-19-18; 8:45 a.m.]
 BILLING CODE 9211-03-P