[Federal Register Volume 71, Number 222 (Friday, November 17, 2006)]
[Notices]
[Pages 66983-66985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19488]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 06-19]


Report on the Selection of Eligible Countries for Fiscal Year 
2007

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, Pub. L. 108-199, Division D, 
(the ``Act''), Report on the Selection of Eligible Countries for Fiscal 
Year 2007.

Summary

    This report is provided in accordance with Section 608(d)(2) of the 
Millennium Challenge Act of 2003, Pub. L. 108-199, Division 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

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policies and programs that advance the progress of such countries in 
achieving lasting economic growth and poverty reduction and are in 
furtherance of the Act. The Act requires the Millennium Challenge 
Corporation (MCC) to take a number of steps to determine the countries 
that, based to the maximum extent possible upon objective and 
quantifiable indicators of a country's demonstrated commitment to just 
and democratic governance, economic freedom and investing in their 
people, will be eligible to receive MCA assistance for 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, among other things:
    1. The ``candidate countries'' for MCA assistance for a fiscal year 
and all countries that would be candidate countries if they met the 
requirement of Section 606(a)(1)(B) (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 a Compact and a 
justification for the decisions regarding eligibility and selection for 
negotiation (Section 608(d)(1) of the Act).
    This is the third of the above-described reports by MCC for fiscal 
year 2007 (FY07). It identifies countries determined by the Board to be 
eligible under Section 607 of the Act for FY07 and those that the Board 
will seek to enter into Compacts under Section 609 of the Act, and the 
justification for such decisions.

Eligible Countries

    The Board met on November 8, 2006, to select countries that will be 
eligible for MCA Compact assistance under Section 607 of the Act for 
FY07. The Board determined the following countries eligible for such 
assistance for FY07 and with which MCC may seek to enter into a 
Compact: Armenia; Benin; Bolivia; Burkina Faso; Cape Verde; East Timor; 
El Salvador; Georgia; Ghana; Honduras; Jordan; Lesotho; Madagascar; 
Mali; Moldova; Mongolia; Mozambique; Namibia; Nicaragua; Senegal; Sri 
Lanka; Tanzania; Ukraine; and Vanuatu.
    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 2007'' 
submitted to the Congress on, September 8, 2006, selection was based 
primarily on a country's overall performance in relation to three broad 
policy categories: (1) ``Ruling Justly''; (2) ``Encouraging Economic 
Freedom''; and (3) ``Investing in People.'' The Board relied upon 16 
publicly available and independent indicators to assess policy 
performance and demonstrated commitment in these three areas, to the 
maximum extent possible, for determining which countries would be 
eligible for MCA Compact assistance. In determining eligibility, the 
Board considered if a country 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 ``Control of Corruption'' 
and, if the country performed substantially below the median on any 
indictor, whether it is taking appropriate action to address the 
shortcomings. Scorecards reflecting each country's performance on the 
indicators are available on MCC's Web site at http://www.mcc.gov.
    The Board also considered whether any adjustments should be made 
for data gaps, lags, trends, or recent events since the indicators were 
published and 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 and promoting democratic governance, its economic 
policies to promote the sustainable management of natural resources, 
human rights, and the rights of people with disabilities. In addition, 
the Board considered the opportunity to reduce poverty, promote 
economic growth and have a transformational impact in a country in 
light of the overall context of the information available to it as well 
as the availability of appropriated funds.
    Eighteen of the countries selected eligible for MCA assistance for 
FY07 were in the ``low income'' category and were previously selected 
as eligible in at least one previous fiscal year--Armenia, Benin, 
Bolivia, Burkina Faso, East Timor, Ghana, Georgia, Honduras, Lesotho, 
Madagascar, Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka, 
Tanzania, and Vanuatu. Three of the countries selected as eligible for 
MCA assistance for FY07 were in the ``lower middle income'' category 
and were previously selected as eligible in at least one previous 
fiscal year--Cape Verde, El Salvador, and Namibia. On November 8, 2006, 
the Board re-selected these countries based on their continued 
performance since their prior selection. The Board also determined that 
no material change has occurred in the performance of these countries 
on the selection criteria since the FY06 selection that would justify 
not including them in the FY07 eligible country list. Six of these 
countries--Benin, Cape Verde, Ghana, Madagascar, Senegal, and Sri 
Lanka--either did not perform above the median on Control of Corruption 
or did not perform above the median in relation to their peers on at 
least half of the indicators in each of the three policy categories. 
However, at this time, MCC does not believe that a serious erosion of 
policy performance has occurred in any of these countries. MCC will ask 
each of these countries to commit to specific actions by their 
respective governments to address indicator performance weaknesses and 
to strive to maintain or improve upon their performance overall.
    Three additional countries were selected for the first time in 
FY07: (1) Two in the ``low income'' category under Section 606(a) of 
the Act--Moldova and Ukraine; and (2) one in the ``lower middle 
income'' category under Section 606(b) of the Act--Jordan. Each of 
these countries: (1) Performed above the median in relation to their 
peers on at least half of the indicators in each of the three policy 
categories; (2) performed above the median on corruption; and (3) in 
cases where they performed substantially below the median on an 
indicator, there was either evidence that the data did not adequately 
reflect their policy performance or that the government is taking 
corrective action to address the problem.
    All three of these countries are currently participating in the 
Threshold Program. Each country now meets the MCA eligibility criteria 
for Compact assistance but successful implementation of their 
respective Threshold Program--and of the corresponding reform 
commitments--remains critical. The governments will be required to 
demonstrate successful implementation of the Threshold Program during 
the Compact development process in order to reach a Compact and then to 
continue to receive MCA funding under a Compact.
     Moldova: Moldova presents an excellent opportunity for MCC 
to use its Compact funding in a transformational way. Moldova is the 
poorest country in Europe with half of its population living on less 
than $2 per day. It now passes 15 of the 16 indicators, as well as both 
of the two new Natural Resource Management indices. The Government of 
Moldova has adopted a series of

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significant policy and institutional reforms over the last several 
years. After being selected as a Threshold Program Country in FY06, the 
Government of Moldova proposed an ambitious anti-corruption Threshold 
Program and improved its performance on the ``Control of Corruption'' 
indicator from the 46th percentile to the 55th percentile.
     Ukraine: For the first time, Ukraine also passes the MCA 
selection eligibility criteria and has made significant improvements on 
all of the indictors in the ``Ruling Justly'' category. In addition, 
Ukraine passes one of the new supplementary Natural Resources 
Management indices. Ukraine was selected as a Threshold country in 
FY06, and in June 2006, the Board approved its Threshold program which 
is focused on accelerating anti-corruption efforts. MCC expects that 
implementation of Ukraine's Threshold Program will begin soon and will 
bolster the Government of Ukraine's reform efforts.
     Jordan: Jordan passes the MCA selection eligibility 
criteria, including ``Control of Corruption,'' and has demonstrated its 
commitment to MCC principles through home-grown democratic reform 
initiatives, which MCC is currently supporting through the 
implementation of the Threshold Program agreement signed in October, 
2006. Jordan has made significant reform commitments in its Threshold 
Program and MCC will require successful implementation of the Threshold 
Program as the Government of Jordan works to develop and implement a 
Compact. A Compact in Jordan could have a transformation impact as 
structural reforms over the last decade have liberalized the private 
investment regime, opened the trade environment, and established modern 
regulation and institutions for private sector development.
    Finally, a number of countries that performed well on the 
quantitative elements of the selection criteria (i.e., on the policy 
indicators) were not chosen as eligible countries for FY07. As 
discussed above, the Board considered a variety of factors in addition 
to the country's performance on the policy indicators in determining 
whether they were appropriate candidates for assistance (e.g., the 
country's commitment to fighting corruption and promoting democratic 
governance; the availability of appropriated funds; and in which 
countries MCC would likely have the best opportunity to reduce poverty, 
generate economic growth and have a transformational impact).

Selection for Compact Negotiation

    The Board also authorized MCC to seek to negotiate a 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 
newly eligible countries to submit program proposals to MCC (previously 
eligible countries will not be asked to submit another proposal for 
FY07 assistance). 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. 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, approval of the Compact by the Board, and 
availability of funds.

    Dated: November 14, 2006.
William G. Anderson, Jr.,
Vice President and General Counsel (Acting), Millennium Challenge 
Corporation.
 [FR Doc. E6-19488 Filed 11-16-06; 8:45 am]
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