[Federal Register Volume 69, Number 222 (Thursday, November 18, 2004)]
[Notices]
[Pages 67609-67610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25554]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 04-13]


Report on the Selection of Eligible Countries for FY 2005

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 2005. The Report is set forth below.
    Report: Report on the Selection of Eligible Countries for FY 2005.

Summary

    This report is provided in accordance with Section 608(d) of the 
Millennium Challenge Act of 2003, 22 U.S.C.A. 7707(d) (the ``Act'').
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance under section 605 of the Act 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 poverty reduction and economic growth. 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 to receive 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 in a fiscal year 
(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 for FY 2005. It 
identifies countries determined by the Board to be eligible for MCA 
assistance in FY 2005 under section 605 of the Act and those that the 
Board will seek to enter into MCA Compacts under section 609 of the 
Act, and the justification for such decisions.

Eligible Countries

    The MCC Board of Directors met on November 8, 2004, to select 
countries that will be eligible for FY 2005 MCA assistance under 
section 605 of the Act and will be invited to submit proposals for such 
assistance. The Board determined the following countries eligible for 
FY 2005 assistance: Armenia, Benin, Bolivia, Georgia, Ghana, Honduras, 
Lesotho, Madagascar, Mali, Mongolia, Morocco, 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 2005,'' submitted to the 
Congress on August 31,

[[Page 67610]]

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 took into account other data, 
such as trends and recent events since the indicators were published, 
and quantitative information as well as qualitative information to 
determine whether a country performed satisfactorily in relation to its 
peers in a given category, and other factors, including, inter alia, a 
country's commitment to economic policies that promote private sector 
growth and the sustainable management of natural resources, and the 
rights of people with disabilities. The Board considered whether any 
adjustments should be made for data gaps, lags, trends, or strengths or 
weaknesses in particular indicators.
    Only one new country was selected for FY05: Morocco. Morocco 
performed above the median in relation to its peers on at least half of 
the indicators in each of the three policy categories and above the 
median on the corruption indicator specifically. Although Morocco was 
substantially below average on one economic indicator--Trade Policy--
the Board decided that a positive eligibility determination was 
nonetheless justified based on positive trends and concrete actions 
taken by the Government of Morocco that were not fully reflected in the 
``point in time'' indicator data. Since 2000, Morocco has made 
significant efforts to liberalize its trade policy. Furthermore, in 
addition to the EU Agreement, which calls for the removal of all non-
agricultural tariffs on trade between the two areas by 2012, Morocco 
recently concluded free trade agreements with Turkey, Jordan, Egypt, 
Tunisia and the United States. These agreements put Morocco in a select 
group of countries that have negotiated among the most liberal market 
access for goods and services and the highest standards of trade and 
investment rules.
    With the exception of Morocco, all of the countries selected were 
previously selected by the Board as eligible for FY04 MCA assistance: 
Armenia, Benin, Bolivia, Ghana, Georgia, Honduras, Lesotho, Madagascar, 
Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu. 
These countries were re-endorsed by the Board on November 8, 2004, 
based on their continued performance since the May selection, most 
notably in the areas outlined in MCC's Report on the Selection of MCA 
Eligible Countries for FY 2004, submitted to Congress on May 7, 2004. 
The Board also determined that no material change has occurred in the 
performance of these countries on the selection criteria since the FY04 
selection that would justify removing them from the eligible country 
list.

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.
    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 poverty 
reduction through economic growth and other considerations. The quality 
of the initial proposal--including how well the country has 
demonstrated the relationship between the proposed priority areas and 
poverty reduction through economic growth--will be a determining 
factor, in addition to, the breadth of public support within the 
country for the proposal and the government's commitment to continued 
policy improvement. An eligible country's commitment and capacity to 
oversee effective implementation of the program 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 provided under section 605 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: November 12, 2004.
Paul V. Applegarth,
Chief Executive Officer, Millennium Challenge Corporation.
[FR Doc. 04-25554 Filed 11-17-04; 8:45 am]
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