[Federal Register Volume 76, Number 9 (Thursday, January 13, 2011)]
[Notices]
[Pages 2423-2425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-609]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 11-01]


Report on the Selection of Eligible Countries for Fiscal Year 
2011

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''), 22 U.S.C. 7708(d)(1).

Report on the Selection of Eligible Countries for Fiscal Year 2011

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'') (22 U.S.C. 7707(d)(1)).
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance under section 605 of the Act (22 U.S.C. 7704) 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 determine the countries that will be eligible 
to receive MCA assistance during the fiscal year, based on their 
demonstrated commitment to just and democratic governance, economic 
freedom, and investing in their people, as well as on the opportunity 
to reduce poverty and generate economic growth in the country. The Act 
also requires the submission of reports to appropriate congressional 
committees and the publication of notices in the Federal Register that 
identify, among other things:
    1. The countries that are ``candidate countries'' for MCA 
assistance during fiscal year 2011 (``FY11'') based on their per-capita 
income levels and their eligibility to receive assistance under U.S. 
law, and 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)));
    2. The criteria and methodology that the Board of Directors of MCC 
(the ``Board'') will use to measure and evaluate the policy performance 
of the ``candidate countries'' consistent with the requirements of 
section 607 of the Act in order to select ``MCA eligible countries'' 
from among the ``candidate countries'' (section 608(b) of the Act (22 
U.S.C. 7707(b))); and
    3. The list of countries determined by the Board to be ``MCA 
eligible countries'' for FY11, with justification for eligibility 
determination and selection for compact negotiation, including with 
which of the MCA eligible countries the Board will seek to enter into 
MCA compacts (section 608(d) of the Act (22 U.S.C. 7707(d))).
    This is the third of the above-described reports by MCC for FY11. 
It identifies countries determined by the Board to be eligible under 
section 607 of the Act (22 U.S.C. 7706) for FY11 and countries with 
which the Board will seek to enter into compacts under section 609 of 
the Act (22 U.S.C. 7708), as well as the justification for such 
decisions.
Eligible Countries
    The Board met on January 5, 2011, to select countries that will be 
eligible for MCA compact assistance under section 607 of the Act (22 
U.S.C. 7706) for FY11. The Board selected the following countries as 
eligible for such assistance for FY11: Cape Verde, Georgia, Ghana, 
Indonesia, Malawi, and Zambia.
    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 2011'' 
formally submitted to the Congress on September 30, 2010, selection was 
based primarily on a country's overall performance in three broad 
policy categories: Ruling Justly, Encouraging Economic Freedom, and 
Investing in People. As a basis for determining which countries would 
be eligible for MCA compact assistance, the Board relied, to the 
maximum extent possible, upon 17 transparent and independent indicators 
to assess countries' policy performance and demonstrated commitment in 
these three broad policy areas. The Board compared countries' 
performance on the indicators relative to their income-level peers, 
evaluating them in comparison to either the group of low income 
countries (``LIC'') or the group of lower-middle income countries 
(``LMIC''). In particular, the Board considered if a country performed 
above the median in relation to its peers on at least three indicators 
in each of the Ruling Justly, Investing in People, and Encouraging 
Economic Freedom policy categories, and above the median on the Control 
of Corruption indicator. 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, data lags, 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, and its 
effective protection of human rights. For countries that graduated from 
the LIC group to the LMIC group within the last two years, due to an 
increase in their per capita gross national income, the Board also took 
into account supplemental information that showed how the new LMIC 
countries would have performed in comparison to the LIC group. This is 
consistent with a 2009 congressional decision to allow MCC to fund as 
LICs a set of countries that had recently transitioned to the LMIC 
category. Finally, the Board considered the opportunity to reduce 
poverty and promote economic growth in a country, in light of the 
overall context of the information available, as well as the 
availability of appropriated funds.
    This was the second year the Board considered the eligibility of 
countries for subsequent compacts, as permitted under section 609(k) of 
the Act (22 U.S.C. 7708(k)). In determining subsequent compact 
eligibility, the Board considered--in addition to the criteria outlined 
above--the country's performance implementing its first compact, 
including the nature of the country partnership with MCC, the degree to 
which the country has

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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. Using this higher 
bar to measure eligibility, Ghana and Georgia were selected as eligible 
for MCA assistance for a second compact under section 607 of the Act 
(22 U.S.C. 7706).
    As a candidate country under section 606(a) of the Act (22 U.S.C. 
7705(a)), Ghana consistently performs well on the MCC indicator 
criteria. Its continued track record of democratic governance is 
demonstrated by its regular ranking among the top LIC performers in the 
Ruling Justly category. Implementation of Ghana's Compact is on track 
to achieve its objectives, and the investment is managed by a strong 
Ghanaian-led and staffed team. The Ghana Compact has also already 
generated tangible interest from the private sector. MCC believes that 
a second compact offers opportunities for deeper investment in a low 
income country that not only has a demonstrated commitment to a 
positive policy environment and effective program implementation, but 
is also considered a regional economic anchor in West Africa.
    As a candidate country under section 606(b) of the Act (22 U.S.C. 
7705(b)), Georgia performs well on the MCC indicator criteria, even 
after having transitioned from the LIC group to the more competitive 
LMIC group two years ago. Georgia is widely recognized as an investment 
climate reformer and is regularly among the top performers in the 
Encouraging Economic Freedom category for all MCC candidate countries. 
Although Georgia does not meet the formal indicator criteria in the 
Investing in People category this year, supplemental information, 
including analysis from the World Health Organization, describes a 
situation in which the performance on MCC's Immunization Rates 
indicator can be largely attributed to a temporary shortage of one 
vaccine and the introduction of alternative, private vaccination 
facilities that were not captured in 2010 data. As a result, MCC does 
not have policy concerns in this category. The government of Georgia 
has demonstrated commitment to the ongoing Georgia Compact and the 
Georgian-led implementation unit is effectively managing the compact 
through its final months. MCC sees a subsequent compact in Georgia as 
an opportunity to support growth and poverty reduction in a country 
with a track record of rigorous policy reform and a desire to foster 
private sector investment in its own development.
    Country partners that are developing or implementing compacts must 
also show a commitment to maintaining and improving their policy 
performance. While MCC's indicators work well as a transparent way of 
identifying those countries that are most committed to sound 
development policies and for discerning trends over the medium-term, 
they are not as well-suited for tracking incremental progress from 
year-to-year. Countries may be generally maintaining performance but 
not meet the criteria in a given year due to factors such as:
     Graduation from the LIC category to the LMIC category,
     Data improvements or revisions,
     MCC's introduction of two new indicators in fiscal year 
2008 and the accompanying requirement that countries pass three of the 
five indicators in the Investing in People category,
     Increases in peer-group medians for some indicators, and
     Slight declines in performance.
    Four of the countries selected as eligible for MCA compact 
assistance in FY11 were previously selected as eligible last year. 
Because they have not yet signed a compact agreement, they needed to be 
reselected as eligible for FY11 to continue compact development and 
receive funding from this fiscal year. Two of these countries are in 
the LIC category: Malawi and Zambia. Two countries, Indonesia and Cape 
Verde, are in the LMIC category.
    The Board reselected these countries based on their continued good 
performance since their prior selection. The Board determined that 
since their fiscal year 2010 selection, there has been no material 
change in their performance on the indicator criteria that indicates a 
serious decline in policy performance. This includes the two 
countries--Cape Verde and Indonesia--that do not meet the formal 
indicator criteria this year. Although the data available at the time 
of the publication of the scorecards suggested that Cape Verde did not 
meet the Investing in People criteria this year, after the publication 
of the scorecards, revised data for FY11 were received from UNESCO. The 
revised data for the expenditures on primary education indicator 
indicate that Cape Verde would have passed this indicator, and the 
Investing in People category, had the revised figures been available at 
the time of scorecard publication. Additionally, Cape Verde's progress 
in achieving high levels of primary education attainment is widely 
recognized by third party experts. Indonesia transitioned to the more 
competitive LMIC category last year and fares less well against the 
higher standards, but would have continued to meet MCC's indicator 
criteria as an LIC. Last year, Congress granted MCC authority that 
allows Indonesia to be funded as a LIC for up to three years.
    The Board also reviewed the policy performance of countries that 
are implementing compacts. However, these countries do not need to be 
reselected each year in order to continue implementation. Once MCC 
makes a commitment to a country through a compact agreement, MCC will 
not consider the country for reselection on an annual basis during the 
term of its compact. MCC will continue to work with a country--even if 
it does not meet the indicator criteria each year--as long as the 
country has not demonstrated a pattern of actions inconsistent with the 
eligibility criteria. If it is determined that a country has 
demonstrated a significant policy reversal, MCC can hold it accountable 
by applying MCC's Suspension and Termination Policy.
    The Board emphasized the need for all partners to continue to 
improve their policy environment and, if they do not meet the criteria, 
to demonstrate their ongoing commitment by informing MCC of actions 
they are undertaking. Countries participating in this policy 
improvement process may work with MCC to develop and implement a 
forward-looking action plan that outlines the steps they plan to take 
to improve performance on certain policy criteria, including key areas 
of governance (e.g., public financial management), or provide periodic 
reports on government efforts to improve performance on specific 
indicators. MCC recognizes that there are cases in which countries that 
do not meet the indicator criteria have not demonstrated a significant 
policy reversal.
    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 FY11. As 
discussed above, the Board considered a variety of factors in addition 
to the country's performance on the policy indicators in determining 
whether it was an appropriate candidate for assistance (e.g., the 
country's commitment to fighting corruption and promoting democratic 
governance; the availability of appropriated funds; and where MCC would 
likely have the best opportunity to reduce poverty and generate 
economic growth).

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Selection To Initiate the Compact Process
    The Board also authorized MCC to invite Ghana and Georgia to submit 
a proposal for a second compact, as described in section 609 of the Act 
(22 U.S.C. 7708).
    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 (22 U.S.C. 7704) 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 the 
availability of funds.

    Dated: January 7, 2011.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.
[FR Doc. 2011-609 Filed 1-12-11; 8:45 am]
BILLING CODE 9211-03-P