Daily Rules, Proposed Rules, and Notices of the Federal Government
The Act authorizes the provision of Millennium Challenge Account (MCA) assistance to countries that enter into a Millennium Challenge Compact with the United States to support policies and programs that advance the prospects of such countries achieving lasting economic growth and poverty reduction. The Act requires the Millennium Challenge Corporation (MCC) to take a number of steps in determining what countries will be selected as eligible for MCA compact assistance for fiscal year (FY) 2013 based on the countries' demonstrated commitment to just and democratic governance, economic freedom, and investing in their people, as well as MCC's opportunity to reduce poverty and generate economic growth in the country. These steps include the submission of reports to the congressional committees specified in the Act and publication of notices in the
The countries that are "candidate countries" for MCA assistance for FY 2013 based on per capita income levels and eligibility to receive assistance under U.S. law. This report identifies 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));
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); and
The list of countries determined by the Board to be "eligible countries" for FY 2013, with justification for eligibility determination and selection for compact
This report sets out the criteria and methodology to be applied in determining eligibility for FY 2013 MCA assistance.
The Board will base its selection of eligible countries on several factors, including:
The country's overall performance in the three broad policy categories of Ruling Justly, Encouraging Economic Freedom, and Investing in People;
MCC's opportunity to reduce poverty and generate economic growth in a country;
Performance during implementation of a prior compact (if selecting a country to be eligible for a subsequent compact); and
The availability of MCC funds.
Section 607 of the Act requires that the Board's determination of eligibility be based "to the maximum extent possible, upon objective and quantifiable indicators of a country's demonstrated commitment" to the criteria set out in the Act.
For the purpose of assessing countries' policy performance, MCC strives to ensure countries are consistently and appropriately compared against their income peers. Since its founding, MCC has relied on the historical ceiling for eligibility as set by the World Bank's International Development Association (IDA) to divide the pool of candidate countries into two groups for the purpose of comparative analysis on the policy performance indicators (described in the section immediately below). A Scorecard low income country (LIC) is defined as a country with a per capita income on or below IDA's historical ceiling for eligibility ($1,945 for FY 2013) and will continue to be compared against other Scorecard LICs. A Scorecard lower middle income country (LMIC) is defined as a country with a per capita income above the IDA's historical ceiling for eligibility, but below the World Bank's lower middle income country threshold ($1,946-$4,035 for FY13) and will continue to be compared against other Scorecard LMICs.
In FY 2013 the Board will use 20 indicators to assess the policy performance of individual countries. These indicators are grouped under the three policy categories listed in Table 1. A description of each indicator, including definitions and sources, can be found in Annex A.
(1) Ruling Justly: Political Rights, Civil Liberties, Freedom of Information, Government Effectiveness, Rule of Law, Control of Corruption. (Sources: Freedom House, FRINGE Special, Open Net Initiative, World Bank/Brookings)
(2) Encouraging Economic Freedom: Fiscal Policy, Inflation, Regulatory Quality, Trade Policy, Gender in the Economy, Land Rights and Access, Access to Credit, Business Start-Up (Sources: IMF, World Bank/Brookings, Heritage Foundation, IFC, International Fund for Agricultural Development)
(3) Investing in People: Public Expenditure on Health, Total Public Expenditure on Primary Education, Natural Resource Protection, Immunization Rates, Girls' Education (Primary Completion Rate for Scorecard LICs, Secondary Education Enrollment for Scorecard LMICs), Child Health. (Sources: World Health Organization, UNICEF, UNESCO, National Sources, CIESIN/YCLEP)
To determine eligibility for a particular candidate country, the Board will consider whether a country performs above the median or absolute threshold on at least half of the indicators; above the median on the Control of Corruption indicator; and above the absolute threshold on either the Civil Liberties or Political Rights indicators. Indicators with absolute thresholds in lieu of a median include: (i) Inflation, on which a country's inflation rate must be under a fixed ceiling of 15 percent; (ii) Immunization Rates (Scorecard LMICs only), on which a Scorecard LMIC must have immunization coverage above 90 percent; (iii) Political Rights, on which countries must score above 17; and (iv) Civil Liberties, on which countries must score above 25. The Board will also consider whether a country performs substantially worse in any policy category than they do on the overall scorecard, and countries must meet a minimum standard of passing one indicator in each category.
Countries that have completed their compact, or are within 18 months of compact completion, may be considered for eligibility for a subsequent compact. To determine eligibility for subsequent compacts, the Board will consider the country's policy performance using the methodology and criteria described above, as well as the country's track record of performance implementing its prior compact.
To assess implementation of a prior compact, the Board will consider 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.
In FY 2013, the Board will assess countries on their performance on the prior compact through supplemental information covering the categories and issues shown in Table 2. A more detailed list of compact performance considerations and MCC reporting sources is provided in Annex B.
(1) Country Partnership: Political Will, Management Capacity (Sources: Quarterly reporting, Survey of MCC staff)
(2) Program Results: Financial Results, Project Results, Target Achievements (Sources: Indicator tracking tables, Quarterly reporting, Survey of MCC staff, Impact Evaluations)
(3) Adherence to Standards: Commitment to MCC Operational Guidelines and Policies, Audit Findings (Sources: Quarterly reporting, GAO Audits, OIG Audits, Survey of MCC staff)
Consistent with the Act, the indicators will be the predominant basis for determining which countries will be eligible for MCA assistance. However, the Board may exercise discretion when evaluating performance on the indicators and determining a final list of eligible countries. Where necessary, the Board also may take into account other
The Board may also consider whether supplemental information should be considered to make up for data gaps, lags, trends, or other weaknesses in particular indicators. As additional information in the area of corruption, the Board may consider how a country is evaluated by supplemental sources like Transparency International's Corruption Perceptions Index, the Global Integrity Report, and the Extractive Industry Transparency Initiative, among others, as well as on the defined indicator.
Each year a number of countries shift income groups, and some countries formerly classified as Scorecard LIC suddenly face new, higher performance standards in the Scorecard LMIC group. As a result, they typically perform worse relative to other Scorecard LMICs, than they did compared to other Scorecard LICs, even if in absolute terms they maintained or improved their performance in the previous year. To address the challenges associated with sudden changes in performance standards for these countries, MCC has adopted an approach to income category transition whereby the Board may consider the indicator performance of countries that transitioned from the Scorecard LIC to the Scorecard LMIC country category both relative to their Scorecard LMIC peers as well as in comparison to the current fiscal year's Scorecard LIC pool for a period of three years.
Partner countries that are developing or implementing a compact are expected to seek to maintain and improve policy performance. MCC recognizes that partner countries may not meet the eligibility criteria from time to time due to a number of factors, such as: (i) Changes in the peer group median; (ii) transition into a new income category (
However, countries that demonstrate a significant policy reversal may be issued a warning or face suspension or termination of eligibility and/or assistance. According to the Act, "[a]fter consultation with the Board, the Chief Executive Officer may suspend or terminate assistance in whole or in part for a country or entity * * * if * * * the country or entity has engaged in a pattern of actions inconsistent with the criteria used to determine the eligibility of the country or entity * * *." Consistent with the Act and MCC's Policy on Suspension and Termination, this pattern of actions does not need to be captured in the indicators for MCC to take action.
Within each policy category, the Act sets out a number of specific selection criteria. As indicated in Table 1, a set of objective and quantifiable policy indicators is used to determine eligibility 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--
Promote political pluralism, equality and the rule of law (Political Rights, Civil Liberties, Rule of Law, and Gender in the Economy);
Respect human and civil rights, including the rights of people with disabilities (Political Rights, Civil Liberties, and Freedom of Information);
Protect private property rights (Civil Liberties, Regulatory Quality, Rule of Law, and Land Rights and Access);
Encourage transparency and accountability of government (Political Rights, Civil Liberties, Freedom of Information, Control of Corruption, Rule of Law, and Government Effectiveness); and
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--
Encourage citizens and firms to participate in global trade and international capital markets (Fiscal Policy, Inflation, Trade Policy, and Regulatory Quality);
Promote private sector growth (Inflation, Business Start-Up, Fiscal Policy, Land Rights and Access, Access to Credit, Gender in the Economy, and Regulatory Quality);
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
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--
Promote broad-based primary education (Girls' Primary Completion Rate, Girls' Secondary Education Enrollment Rate, and Total Public Expenditure on Primary Education);
Strengthen and build capacity to provide quality public health and reduce child mortality (Immunization Rates, Public Expenditure on Health, and Child Health); and
Promote the protection of biodiversity and the transparent and sustainable management and use of natural resources (Natural Resource Protection).
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
MCC reporting and data in the following chart are used to assess compact performance of MCC partners nearing the end of compact implementation. 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 Web site under MCC country programs (