[Federal Register Volume 69, Number 94 (Friday, May 14, 2004)]
[Notices]
[Pages 26897-26899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10980]


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MILLENNIUM CHALLENGE CORPORATION

[FR 04-06]


Notice of Report on the Selection of Eligible Countries for FY 
2004

AGENCY: Millennium Challenge Corporation.

SUMMARY: Section 608(d) of the Millennium Challenge Act of 2003, Pub. 
L. 108-199 (Division D) requires the Millennium Challenge Corporation 
to publish a report that lists the countries determined by the Board of 
Directors of the Corporation to be eligible for assistance for Fiscal 
Year 2004. The report is set forth below.
    Report: The Act authorizes the provision of assistance to countries 
that enter into compacts with the United States to support policies and 
programs that advance the prospects of such countries to achieve 
lasting economic growth and poverty reduction. The Act requires the 
Millennium Challenge Corporation (``MCC'') to take a number of steps to 
determine the countries that, based on their demonstrated commitment to 
just and democratic governance, economic freedom and investing in their 
people, will be eligible

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to receive Millennium Challenge Account (``MCA'') assistance during a 
fiscal year. These steps include the submission of reports to 
appropriate congressional committees and the publication of notices in 
the Federal Register that identify:
    1. The ``candidate countries'' for MCA assistance (Section 608(a) 
of the Act);
    2. The eligibility criteria and methodology that the MCC Board of 
Directors (the ``Board'') will use to select ``eligible countries'' 
from among the ``candidate countries'' (Section 608(b) of the Act); and
    3. The countries determined by the Board to be ``eligible 
countries'' for a fiscal year, the countries on the list of eligible 
countries with which the Board will seek to enter into MCA ``Compacts'' 
and a justification for such decisions (Section 608(d) of the Act).
    This is the third of the above-described reports. It identifies the 
countries determined by the Board to be eligible for MCA assistance in 
FY 2004 (other than under Section 616 of the Act) and those that the 
Board will seek to enter into MCA Compacts, and the justification for 
such decisions.

Eligible Countries

    The MCC Board of Directors met on May 6, 2004, to select countries 
that will be eligible for FY 2004 MCA assistance (other than under 
Section 616 of the Act) and will be invited to submit proposals for 
such assistance. The Board determined the following countries eligible 
for FY 2004 assistance: Armenia, Benin, Bolivia, Cape Verde, Georgia, 
Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Mozambique, 
Nicaragua, Senegal, Sri Lanka, and Vanuatu.
    In accordance with the Act and with MCC's ``Criteria and 
Methodology for Determining the Eligibility of Candidate Countries for 
Millennium Challenge Account Assistance in FY 2004,'' submitted to the 
Congress on March 2, 2004, selection was based on a country's overall 
performance in relation to three broad policy categories: Ruling 
Justly, Encouraging Economic Freedom, and Investing in People. The 
Board relied on sixteen publicly available indicators to assess policy 
performance as the predominant basis for determining which countries 
would be eligible for assistance. Where appropriate, the Board also 
considered other data and quantitative information as well as 
qualitative information to determine whether a country performed 
satisfactorily in relation to its peers in a given category, including 
performance with respect to investing in their people, particularly 
women and children, economic policies that promote private sector 
growth, the sustainable management of natural resources, and human and 
civil rights, including the rights of people with disabilities. The 
Board also considered whether any adjustments should be made for data 
gaps, lags, trends, or strengths or weaknesses in particular 
indicators.
    The following countries were selected because (i) they performed 
above the median in relation to their peers on at least half of the 
indicators in each of the three policy categories, (ii) they performed 
above the median on corruption, (iii) they did not perform 
substantially below average on any indicator, and (iv) the supplemental 
information available to the Board supported their selection: Armenia, 
Benin, Ghana, Honduras, Madagascar, Mali, Mongolia, Nicaragua, Senegal, 
and Vanuatu.
    Three of the countries performed above the median in relation to 
their peers on at least half of the indicators in each of the three 
policy categories and above the median on corruption, though they were 
substantially below average on one indicator: Cape Verde, Lesotho and 
Sri Lanka. The following is some of the information that was available 
to the Board in making its eligibility determinations that suggested 
that each of these countries was taking measures to address these 
shortcomings:
     Cape Verde--Although Cape Verde received a low score on 
the ``Trade Policy'' indicator, its score did not capture improvements 
resulting from a recent shift to a Value Added Tax that reduced Cape 
Verde's reliance on revenue from import tariffs. Cape Verde is also 
making good progress in its efforts toward World Trade Organization 
accession.
     Lesotho--Although Lesotho scores substantially below the 
median on the ``Days to Start a Business'' indicator, it recently 
established a one-stop shop to facilitate new business formation. It 
also performs very well overall in the ``Economic Freedom'' category 
and the other categories. Lesotho also performs well on other measures 
of starting a business; for example, it costs 68% of per capita income 
to start a business in Lesotho, versus a sub-Saharan Africa average of 
256%, and Lesotho's minimum capital requirement for new businesses is 
only a tenth of the sub-Saharan average.
     Sri Lanka--Although Sri Lanka's score on the ``Fiscal 
Policy'' indicator falls substantially below the median, the deficit 
has declined each year since 2001, reflecting a positive trend over the 
past several years. Additionally, Sri Lanka's non-concessional 
borrowing in 2004 is expected to be less than half of the 2002 level.
    Finally, three countries were determined by the Board to be 
eligible despite the fact that they (i) were not above the median in 
relation to their peers on at least half of the indicators in one of 
the three policy categories and/or (ii) were at or below the median on 
the corruption indicator. The Board made a positive eligibility 
determination on these countries in light of the notable actions taken 
by their governments and positive trends contained in supplemental 
information available to the Board. The following is some of the 
information that was available to the Board that suggested the policy 
performance of each of these countries was better than was reflected in 
the indicator data:
     Bolivia--Bolivia is right at the median on the 
``Corruption'' indicator and is above the median on all of the other 
indicators in the ``Ruling Justly'' category; however, its current 
score on the ``Corruption'' indicator does not reflect changes made 
since President Mesa assumed power in October 2003. For instance, 
President Mesa has created a cabinet-level position to coordinate anti-
corruption efforts as well as establishing an office to provide for the 
swift investigation of police corruption.
     Georgia--Although Georgia is at or below the median on 
more than half of the ``Ruling Justly'' categories, including the 
``Corruption'' indicator, this data does not capture the substantial 
progress made by the newly elected Georgian government in only three 
months time. The Government of Georgia has, among other things, created 
an anti-corruption bureau, a new bureau to investigate and prosecute 
corruption cases, a single treasury account for all government revenue 
to ensure transparency and accountability, and has started revamping 
procurement legislation to ensure an open and competitive process.
     Mozambique--The trends and supplemental information that 
filled in data lags for Mozambique's ``Investing in People'' indicators 
demonstrated Mozambique's progress and achievement that were not 
reflected in the indicators. Primary education completion rates, for 
example, have been steadily rising in Mozambique, and this positive 
trend is backed by the fact that enrollment rates have increased to 
over 90% in 2000, from 60% in 1995. Girls' primary school enrollment 
rates increased by 60% between 1995 and 2000.
    Although Mozambique scores above the median in four of the six 
``Ruling Justly'' categories, it falls below the

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median on the World Bank's anti-corruption indicator. However, certain 
indications suggest that this data is lagged and that Mozambique is 
making significant progress to fight corruption. Mozambique has passed 
new legislation to fight corruption and has created a special Anti-
Corruption Unit that is conducting numerous investigations. These 
recent improvements on corruption are in fact reflected in another 
source--Transparency International's anti-corruption index--a more up-
to-date indicator, in which it scored well above the median (74th 
percentile).
    MCC will closely monitor the continued progress of these countries 
in these and other policy areas between the time of this report and the 
presentation to the Board of any proposed MCA Compact, and anticipates 
that continued performance and improvement in these areas will be part 
of the Compacts themselves.

Selection for Compact Negotiation

    The Board also authorized the MCC to seek to negotiate an MCA 
Compact, as described in Section 609 of the Act, with each of the 
eligible countries identified above that develops a proposal that 
justifies beginning such negotiations. MCC will initiate the process by 
inviting eligible countries to submit program proposals to MCC. MCC has 
posted guidance on the MCC Web site (http://www.mcc.gov) regarding the 
development and submission of MCA program proposals, and will soon 
begin outreach visits to each of the eligible countries where this and 
related information on developing their proposals for MCA assistance 
will be discussed.
    Submission of a proposal is not a guarantee that MCC will finalize 
a Compact with an eligible country. MCC will evaluate proposals and 
make funding decisions based on the potential for impacting economic 
growth and other considerations. The quality of the initial proposal--
including how well the country has demonstrated the relationship 
between the proposed priority area(s) and economic growth and poverty 
reduction--will be a determining factor. An eligible country's 
commitment and capacity will also be a factor in determining how 
quickly MCC can begin substantive discussions with a country on a 
Compact and will likely influence the speed with which a Compact can be 
negotiated as well as the amount and timing of any MCA assistance 
approved by the Board.
    Any MCA assistance (other than certain types of technical 
assistance or assistance provided under Section 616 of the Act) will be 
contingent on the successful negotiation of a mutually agreeable 
Compact between the eligible country and MCC, and approval of the 
Compact by the Board.

    Dated: May 11, 2004.
Paul V. Applegarth,
Chief Executive Officer, Millennium Challenge Corporation.
[FR Doc. 04-10980 Filed 5-13-04; 8:45 am]
BILLING CODE 9210-01-P