[Federal Register Volume 72, Number 248 (Friday, December 28, 2007)]
[Notices]
[Pages 73885-73887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-25312]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 07-16]


Report on the Selection of Eligible Countries for Fiscal Year 
2008

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: This report is provided in accordance with section 608(d)(1) 
of the Millennium Challenge Act of 2003, Public Law 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 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 steps to determine the countries that, based to the 
maximum extent possible on 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

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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 2008 (FY08). It identifies countries determined by the Board to be 
eligible under section 607 of the Act for FY08 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 December 12, 2007 to select countries that will be 
eligible for MCA compact assistance under section 607 of the Act for 
FY08. The Board determined the following countries eligible for such 
assistance for FY08: Armenia, Benin, Bolivia, Burkina Faso, El 
Salvador, Georgia, Ghana, Honduras, Jordan, Lesotho, Madagascar, 
Malawi, Mali, Moldova, Mongolia, Morocco, Mozambique, Namibia, 
Nicaragua, Senegal, Tanzania, Timor Leste, Ukraine and Vanuatu, and 
with which MCC may seek to enter into a compact: Bolivia, Burkina Faso, 
Jordan, Malawi, Moldova, Namibia, Senegal, Tanzania, Timor Leste, and 
Ukraine.
    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 2008'' 
submitted to the Congress on September 17, 2007, 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 17 
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 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, as well as 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, and its effective protection of human rights and the rights 
of people with disabilities. In addition, the Board considered the 
opportunity to reduce poverty, promote economic growth and poverty 
reduction in a country, in light of the overall context of the 
information available to it as well as the availability of appropriated 
funds.
    One country was selected as eligible for the first time in FY08: 
Malawi, a low income candidate, was selected under section 606(a) of 
the Act. Malawi (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.
    Malawi is currently participating in the threshold program. Malawi 
meets the eligibility criteria for the first time in FY08, scoring 
above the median on 13 of 17 indicators, including the corruption 
indicator. The government of Malawi has demonstrated a strong 
commitment to fighting corruption, and is well into the implementation 
of a threshold program focused on accelerating anticorruption reforms 
and improving fiscal policy. There is a significant opportunity for a 
compact with Malawi to reduce poverty and promote economic growth. 
Roughly seven million people (over half the population) live on less 
than $2 a day. Although Malawi now meets the MCA eligibility criteria 
for compact assistance, successful implementation of its threshold 
program--and of the corresponding reform commitments--remains critical. 
Hence, the government of Malawi 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.
    Seventeen of the countries selected eligible for MCA assistance for 
FY08 were in the ``low income country'' category and were previously 
selected as eligible in at least one prior fiscal year--Benin, Bolivia, 
Burkina Faso, Ghana, Georgia, Honduras, Lesotho, Madagascar, Mali, 
Moldova, Mongolia, Mozambique, Nicaragua, Senegal, Tanzania, Timor 
Leste and Vanuatu. Six of the countries selected as eligible for MCA 
assistance for FY08 were in the ``lower middle income country'' 
category and were previously selected as eligible in at least one prior 
fiscal year--Armenia, El Salvador, Jordan, Morocco, Namibia, and 
Ukraine.
    On December 12, 2007, the Board reselected 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 FY07 selection that 
would justify not including them in the FY08 eligible country list. 
Eleven countries--Armenia, Benin, El Salvador, Honduras, Madagascar, 
Mali, Morocco, Mozambique, Namibia, Timor Leste, and Ukraine--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. Cape Verde was 
not reselected as eligible, as this is the third year it does not meet 
the criteria in its new lower middle income country competition. MCC 
does not believe that a serious policy reversal or a pattern of actions 
inconsistent with the selection criteria has occurred in any of these 
countries. In analyzing performance, MCC found that these countries did 
not meet the criteria, due to one or a combination of the following 
factors:
     Graduation from the ``low income country'' to the ``lower 
middle income country'' category,
     Data improvements and revisions,

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     The introduction of two new indicators and a new 
methodology in the ``iInvesting in people'' category,
     Slight declines in performance, and
     Score changes within the margin of error.
    Therefore, all of the 12 countries can continue with compact 
implementation or compact development, providing they demonstrate 
progress toward meeting the criteria. These MCC countries will be 
required to develop and implement a remediation plan to address policy 
performance and/or data issues which prevent countries from meeting the 
eligibility criteria. The remediation process will give MCC and other 
U.S. Government agencies a basis for policy dialogue with the country 
about how to improve performance while allowing the country to 
demonstrate commitment to and progress toward meeting the eligibility 
criteria.
    The Board also did not reselect Sri Lanka and the Gambia. Sri Lanka 
was not reselected this year due to the ongoing conflict in the 
country, which has escalated to a level that precludes MCC activities 
and which is inconsistent with the performance of an MCC-eligible 
country. The Gambia's eligibility was suspended in previous years and 
it was not considered this year for eligibility.
    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 FY08. 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 the countries 
in which MCC would likely have the best opportunity to reduce poverty 
and generate economic growth).

Selection for Compact Negotiation

    The Board also authorized MCC to invite Malawi to submit a proposal 
for a compact, as described in section 609 of the Act. MCC will 
initiate the process by inviting Malawi to submit a program proposal to 
MCC for due diligence review (previously eligible countries will not be 
asked to submit another proposal for FY08 assistance). MCC has posted 
guidance on the MCC Web site (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: December 21, 2007.
William G. Anderson, Jr.,
Vice President and General Counsel, Millennium Challenge Corporation.

Henry Pitney,
Alternate Certifying Officer.
[FR Doc. E7-25312 Filed 12-27-07; 8:45 am]
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