U.S. Aid Agency Names 23 Countries Eligible for FY 2006 FundingMillennium Challenge Corporation bases decision on countries' policies




By Kathryn McConnell
Washington File Staff Writer


Washington -- The United States' Millennium Challenge Corporation (MCC) has named 23 countries eligible to apply for funding during the fiscal year that began October 1 (fiscal year 2006).

The selected countries from the “low income” category are: Armenia, Benin, Bolivia, Burkina Faso, East Timor, The Gambia, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Morocco, Mozambique, Nicaragua, Senegal, Sri Lanka, Tanzania and Vanuatu.

The MCC Board also selected three countries as eligible for the new “lower middle income” category.  Two of the countries, El Salvador and Namibia, are new to MCC projects. The third country, Cape Verde, previously was selected as MCA-eligible in the low-income category and currently is implementing a compact with the MCC.

The announcement followed a November 8 meeting of the MCC board of directors in Washington, according to an MCC press release.

THE MILLENNIUM CHALLENGE INITIATIVE

MCC administers the Millennium Challenge Account (MCA), President Bush's initiative that promotes democratic change and sound economic policies in developing countries by linking additional U.S. aid to reforms designed to combat corruption and stimulate growth.

The secretary of state chairs the MCC board, an independent U.S. agency. The board includes the secretary of the Treasury, U.S. Trade Representative (USTR), the administrator of the U.S. Agency for International Development (USAID) and representatives of the private sector.

The countries selected met or exceeded national governance performance measures, developed using data supplied by the World Bank, International Monetary Fund (IMF), the research organization Freedom House and other internationally recognized groups. The measures -- indicators -- demonstrate a county's commitment to ruling justly, investing in people and encouraging economic freedom.

Eligible countries for 2006 funding could not exceed $1,575 in per capita gross domestic income if considered "low income," or $3,255 if considered lower-middle income.

For additional information, see Millennium Challenge Account.

ELIGIBILITY AND DEVELOPING A COMPACT

Once certified as eligible, the MCC works with the country to develop a compact -- or formal agreement -- setting forth a commitment between the United States and the country to meet agreed performance benchmarks. Countries identify their highest priorities for achieving sustainable economic growth and poverty reduction, in recognition that economic growth largely is driven by their own policy decisions.

The measures used to determine eligibility include:

·Political Rights -- the prevalence of free and fair elections of officials with real power; ability of citizens to form political parties that may compete fairly in elections; freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies and economic oligarchies; and political rights of minority groups.

·Voice and Accountability -- the ability of institutions to protect civil liberties, the extent to which citizens are able to participate in the selection of governments; independence of the media.

·Government Effectiveness -- the quality of public service provision, civil services’ competency and independence from political pressures; government’s ability to plan and implement sound policies.

·Rule of Law – the extent to which the public has confidence in and abides by rules of society, the incidence of violent and nonviolent crime, effectiveness and predictability of the judiciary, and the enforceability of contracts.

·Control of Corruption -- the frequency of "additional payments to get things done," effects of corruption on the business environment, "grand corruption” in the political arena, tendency of elites to engage in “state capture.”

·Encouraging Economic Freedom -- the regulations that affect business investment, such as the cost of starting a new business as a percentage of per capita income.

·Inflation – the most recent 12-month change in consumer prices as reported by the IMF or in another public forum by the relevant national monetary authorities.

·Fiscal Policy: overall budget deficit divided by gross domestic products (GDP), averaged over a three-year period.

·Days to Start a Business: how many days it takes to open a new business.

·Trade Policy -- openness to international trade based on average tariff rates and nontariff barriers to trade.

·Regulatory Quality -- burden of regulations on business, price controls, the government’s role in the economy, foreign investment regulation and many others.

·Public Expenditure on Health -- expenditures by the government at all levels on health divided by gross domestic product (GDP).

·Immunization: Average DPT3 (diphtheria, pertussis -- whooping cough -- and tetanus) and measles immunization rates for the most recent year available.

·Total Public Expenditure on Primary Education -- total expenditures by government at all levels on primary education divided by GDP.

·Girls’ Primary Completion Rate -- number of female students completing primary education divided by the population in the relevant age cohort.

The House of Representatives November 4 passed the final version of a $20.9 billion foreign spending bill that would provide $1.8 billion for the Millennium Challenge Account (MCA) for FY06.

The press release about the eligible countries is available on the MCC Web site.






Created: 08 Nov 2005 Updated: 08 Nov 2005

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