[Federal Register Volume 76, Number 192 (Tuesday, October 4, 2011)]
[Notices]
[Pages 61386-61391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25540]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 11-10]


Report on the Criteria and Methodology for Determining the 
Eligibility of Candidate Countries for Millennium Challenge Account 
Assistance in Fiscal Year 2011

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: This report to Congress is provided in accordance with Section 
608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 
7707(b) (the ``Act'').

    Dated: September 29, 2011.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Report on the Criteria and Methodology for Determining the Eligibility 
of Candidate Countries for Millennium Challenge Account Assistance in 
Fiscal Year 2012

Summary

    This report to Congress is provided in accordance with section 
608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 
7707(b) (the ``Act'').
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance to countries that enter into a Millennium 
Challenge Compact with the United States to support policies and 
programs that advance the prospects of such countries achieving lasting 
economic growth and poverty reduction. The Act requires the Millennium 
Challenge Corporation (``MCC'') to take a number of steps in 
determining what countries will be selected as eligible for MCA compact 
assistance for fiscal year 2012 (``FY12'') based on the countries' 
demonstrated commitment to just and democratic governance, economic 
freedom, and investing in their people, as well as MCC's opportunity to 
reduce poverty and generate economic growth in the country. These steps 
include the submission of reports to the congressional committees 
specified in the Act and publication of notices in the Federal Register 
that identify:
    The countries that are ``candidate countries'' for MCA assistance 
for FY12 based on their per-capita income levels and their eligibility 
to receive assistance under U.S. law. This report also identifies 
countries that would be candidate countries but for specified legal 
prohibitions on assistance (section 608(a) of the Act; 22 U.S.C. Sec.  
7707(a));
    The criteria and methodology that MCC's Board of Directors (``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 (22 U.S.C. 7706) in order to determine ``MCA eligible 
countries'' from among the ``candidate countries'' (section 608(b) of 
the Act); and
    The list of countries determined by the Board to be ``MCA eligible 
countries'' for FY12, with justification for eligibility determination 
and selection for compact negotiation, including which of the MCA 
eligible countries the Board will seek to enter into MCA compacts 
(section 608(d) of the Act).
    This report sets out the criteria and methodology to be applied in 
determining eligibility for FY12 MCA assistance.

Criteria and Methodology for FY12

    The Board will base its selection of eligible countries on several 
factors including the country's overall performance in three broad 
policy categories--Ruling Justly, Encouraging Economic Freedom, and 
Investing in People; MCC's opportunity to reduce poverty and generate 
economic growth in a country; and the availability of funds to MCC.
    Section 607 of the Act requires that the Board's determination of 
eligibility be based ``to the maximum extent possible, upon objective 
and quantifiable indicators of a country's

[[Page 61387]]

demonstrated commitment'' to the criteria set out in the Act.
    For FY12, there will be two groups of candidate countries--low 
income countries (``LIC'') and lower-middle income countries 
(``LMIC''). As outlined in the Report on Countries that are Candidates 
for Millennium Challenge Account Eligibility for Fiscal Year 2012 and 
Countries that would be Candidates but for Legal Prohibitions (August 
2011), LIC candidates refer to those countries that have a per capita 
income equal to or less than $1,915 and are not ineligible to receive 
United States economic assistance under part I of the Foreign 
Assistance Act of 1961 by reason of the application of any provision of 
the Foreign Assistance Act or any other provision of law. LMIC 
candidates are those countries that have a per capita income between 
$1,916 and $3,975 and are not ineligible to receive United States 
economic assistance under the same stipulations.

Changes to the Criteria and Methodology for FY12

    MCC reviews all of its indicators annually to ensure the best 
measures are being used and, from time to time, recommends changes or 
refinements if MCC identifies better indicators or improved sources of 
data. MCC takes into account public comments received on the previous 
year's criteria and methodology and consults with a broad range of 
experts in the development community and within the U.S. Government. In 
assessing new indicators, MCC favors those that: (1) Are developed by 
an independent third party; (2) utilize objective and high quality data 
that rely upon an analytically rigorous methodology; (3) are publicly 
available; (4) have broad country coverage; (5) are comparable across 
countries; (6) have a clear theoretical or empirical link to economic 
growth and poverty reduction; (7) are policy linked (i.e., measure 
factors that governments can influence within a two to three year 
horizon); and (8) have broad consistency in results from year to year. 
There have been numerous noteworthy improvements to data quality and 
availability as a result of MCC's application of the indicators and the 
regular dialogue MCC has established with the indicator institutions.
    MCC also annually reviews the methodology used to evaluate country 
performance. Since FY04, the methodology has been that the Board 
considers whether a country performs above the median \1\ 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 Control of Corruption 
indicator. The Board may exercise discretion in evaluating and 
translating the indicators into a final list of eligible countries and, 
in this respect, the Board may also consider whether any adjustments 
should be made for data gaps, lags, trends or other weaknesses in 
particular indicators. Where necessary, the Board may also take into 
account other data and quantitative and qualitative information to 
determine whether a country performed satisfactorily in relation to its 
peers in a given category (``supplemental information''). Through this 
report, the Board publically affirms that it remains strongly committed 
to identifying countries for MCC eligibility that have demonstrated 
sound policies in each of the three policy categories.
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    \1\ The only exception is the Inflation indicator, which uses an 
absolute threshold of 15% as opposed to the median as its 
performance standard.
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    For FY12, MCC will implement a number of changes that modify the 
overall evaluation of candidate country performance. While improvements 
to the selection criteria and methodology are critical, MCC is also 
mindful of the need to provide countries with a fairly stable set of 
policy criteria to meet, if MCC is to create significant incentives for 
reform. Therefore, for this year of transition, the Board of Directions 
will consider countries' performance based on two sets of criteria and 
methodologies in FY12: the status quo set of indicators and decisions 
rules, and a revised set. Both of these are outlined below. By 
encouraging the Board to consider how countries would have performed 
under the previous system, as well as how countries perform under the 
new system, MCC will provide a transition year that allows countries to 
learn how they are being measured, engage in dialogue with MCC about 
performance, and solicit feedback from the institutions that produce 
these indicators.
    It is important to recognize that all of MCC's indicators have 
limitations, including these revised indicators. Over the next year, 
MCC intends to continue working with the indicator institutions to 
ensure the data and methodology are the best available.

Indicators

    In FY12 the Board will use two sets of indicators to assess the 
policy performance of individual countries. These indicators are 
grouped under the three policy categories listed below. The changes to 
the revised indicators include one substitution in Ruling Justly; two 
additions in Economic Freedom; and three substitutions/additions in 
Investing in People. Specific definitions of the indicators and their 
sources are set out in the attached Annex A.

Status Quo

Civil Liberties
Political Rights
Voice and Accountability
Government Effectiveness
Rule of Law
Control of Corruption
Inflation
Fiscal Policy
Business Start-Up
Trade Policy
Regulatory Quality
Land Rights and Access
Public Expenditure on Health
Public Expenditure on Primary Education
Immunization Rates
Girls' Primary Education Completion
Natural Resource Management

Revised

Civil Liberties
Political Rights
Freedom of Information
Government Effectiveness
Rule of Law
Control of Corruption
Inflation
Fiscal Policy
Business Start-Up
Trade Policy
Regulatory Quality
Land Rights and Access
Access to Credit
Gender in the Economy
Public Expenditure on Health
Public Expenditure on Primary Education
Immunization Rates
Girls' Education:
Primary Education Completion (LICs)
Secondary Education Enrolment (LMICs)
Child Health
Natural Resource Protection

Methodology

    Similarly, in FY12 the Board will apply a status quo methodology, 
and a revised methodology to the respective indicator groupings. These 
are described below.

Status Quo

    In making its determination of eligibility with respect to a 
particular candidate country, the Board will consider whether a country 
performs above the median in relation to its income level peers (LIC or 
LMIC) on at

[[Page 61388]]

least three of the indicators in each of the Ruling Justly, Encouraging 
Economic Freedom, and Investing in People categories, and above the 
median on the Control of Corruption indicator. One exception to this 
methodology is that the median is not used for the Inflation indicator. 
Instead, to pass the Inflation indicator a country's inflation rate 
must be under an absolute threshold of 15 percent. The Board may also 
take into consideration whether a country performs substantially below 
the median on any indicator (i.e., below the 25th percentile) and has 
not taken appropriate measures to address this shortcoming.

Revised

    In making its determination of eligibility with respect to a 
particular candidate country, the Board will consider whether a country 
performs above the median or absolute threshold on at least half of the 
indicators and at least one indicator per category, above the median on 
the Control of Corruption indicator, and above the absolute threshold 
on either the Civil Liberties or Political Rights indicators. 
Indicators with absolute thresholds in lieu of a median include a) 
Inflation, on which a country's inflation rate must be under a fixed 
ceiling of 15 percent; b) Immunization Rates (LMICs only), on which an 
LMIC must have immunization coverage above 90%; c) Political Rights, on 
which countries must score above 17 and d) Civil Liberties, on which 
countries must score above 25. The Board will also take into 
consideration whether a country performs substantially worse in any 
category (Ruling Justly, Investing in People, or Economic Freedoms) 
than they do on the overall scorecard. Further details on how this 
methodology differs from the status quo can be found in Annex B.

Other Considerations for the Board of Directors

    Approach to Income Classification Transition
    Each year a number of countries shift income groups, and some 
countries formerly classified as LICs suddenly face new, higher 
performance standards in the LMIC group. As a result, they typically 
perform worse relative to LMIC countries, than they did compared to 
other LIC countries, even if in absolute terms they maintained or 
improved their performance over the previous year. To address the 
challenges associated with sudden changes in performance standards for 
these countries, MCC has adopted an approach to income category 
transition whereby the Board may consider the indicator performance of 
countries that transitioned from the LIC to the LMIC category both 
relative to their LMIC peers as well as in comparison to the current 
fiscal year's LIC pool for a period of three years.

Supplementary Information

    Consistent with the Act, the indicators will be the predominant 
basis for determining which countries will be eligible for MCA 
assistance. However, the Board may exercise discretion when evaluating 
performance on the indicators and determining a final list of eligible 
countries. Where necessary, the Board also may take into account other 
quantitative and qualitative information (supplemental information) to 
determine whether a country performed satisfactorily in relation to its 
peers in a given income category. There are elements of the criteria 
set out in the Act for which there is either limited quantitative 
information (e.g., the rights of people with disabilities) or no well-
developed performance indicator. Until such data and/or indicators are 
developed, the Board may rely on additional data and qualitative 
information to assess policy performance. For example, the State 
Department Human Rights Report contains qualitative information to make 
an assessment on a variety of criteria outlined by Congress, such as 
the rights of people with disabilities, the treatment of women and 
children, workers rights, and human rights. Similarly, MCC may consult 
a variety of third party sources to better understand the domestic 
potential for private sector led investment and growth.
    The Board may also consider whether supplemental information should 
be considered to make up for data gaps, lags, trends, or other 
weaknesses in particular indicators. As additional information in the 
area of corruption, the Board may consider how a country is evaluated 
by supplemental sources like Transparency International's Corruption 
Perceptions Index, the Global Integrity Report, and the Extractive 
Industry Transparency Initiative among others, as well as on the 
defined indicator.

Consideration for Subsequent Compacts

    Countries nearing the end of compact implementation may be 
considered for eligibility for a subsequent compact. In determining 
eligibility for subsequent compacts, MCC recommends that the Board 
consider, among other factors, the country's policy performance using 
the methodology and criteria described above, the opportunity to reduce 
poverty and generate economic growth in the country, the funds 
available to MCC to carry out compact assistance, and the country's 
track record of performance implementing its prior compact. To assess 
implementation of a prior compact, MCC recommends that the Board 
consider the nature of the country partnership with MCC, the degree to 
which the country has 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.

Continuing Policy Performance

    Country partners that are developing or implementing a compact are 
expected to seek to maintain and improve policy performance. MCC 
recognizes that country partners may not meet the eligibility criteria 
from time to time due to a number of factors, such as changes in the 
peer-group median; transition into a new income category (e.g., from 
LIC to LMIC); numerical declines in score that are within the 
statistical margin of error; slight declines in policy performance; 
revisions or corrections of data; the introduction of new sub-data 
sources; or changes in the indicators used to measure performance. None 
of these factors alone signifies a significant policy reversal nor 
warrants suspension or termination of eligibility and/or assistance.
    However, countries that demonstrate a significant policy reversal 
may be issued a warning, suspension, or termination of eligibility and/
or assistance. According to MCC's authorizing legislation, ``[a]fter 
consultation with the Board, the Chief Executive Officer may suspend or 
terminate assistance in whole or in part for a country or entity * * * 
if * * * the country or entity has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of the 
country or entity. * * *'' This pattern of actions need not be captured 
in the indicators for MCC to take action.

Potential Future Changes

    MCC will continue to explore potential changes to the indicators 
for future years. There are important areas of policy performance in 
which indicators have not yet been developed, or expanded, to the 
degree needed for inclusion in the MCC selection system. MCC would not 
envision expanding the number of indicators beyond the current twenty 
indicators. However, MCC remains interested in indicators that measure 
policy performance related to educational quality, maternal health, 
environmental degradation, budget

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transparency, and more actionable indicators of corruption, which could 
be used to substitute for existing indicators in the future or as 
supplemental information. While we have reviewed some indicators with 
promise--including education policy and quality indicators piloted by 
the World Bank's Education for All, measures of maternal health from 
the World Health Organization or the United Nations (including skilled 
birth attendants or process indicators regarding access to emergency 
obstetric care), preliminary data on air pollution provided by NASA 
satellites, assessments of budget transparency by Open Budget Index, 
and corruption assessments published by Global Integrity--none of these 
indicators have sufficient periodicity and country coverage to be 
incorporated into MCC's scorecard at this time.
    It should be noted that the new Freedom of Information indicator 
adopted as part of the revised methodology draws on independent, third 
party data, but is compiled by MCC, similar to how MCC compiles third 
party data for the Land Rights and Access indicator. MCC welcomes the 
efforts of third party institutions to improve and publish similar and 
improved indicators.

Relationship to Legislative Criteria

    Within each policy category, the Act sets out a number of specific 
selection criteria. As indicated above, a set of objective and 
quantifiable policy indicators is used to determine eligibility for MCA 
assistance and measure the relative performance by candidate countries 
against these criteria. The Board's approach to determining eligibility 
ensures that performance against each of these criteria is assessed by 
at least one of the objective indicators. Most are addressed by 
multiple indicators. The specific indicators appear in parentheses next 
to the corresponding criterion set out in the Act.
    Section 607(b)(1): Just and democratic governance, including a 
demonstrated commitment to --promote political pluralism, equality and 
the rule of law (Political Rights, Civil Liberties, and Rule of Law, 
Gender in the Economy); respect human and civil rights, including the 
rights of people with disabilities (Political Rights, Civil Liberties, 
and Freedom of Information); protect private property rights (Civil 
Liberties, Regulatory Quality, Rule of Law, and Land Rights and 
Access); encourage transparency and accountability of government 
(Political Rights, Civil Liberties, Freedom of Information, Control of 
Corruption, Rule of Law, and Government Effectiveness); and combat 
corruption (Political Rights, Civil Liberties, Rule of Law, Freedom of 
Information, and Control of Corruption);
    Section 607(b)(2): Economic freedom, including a demonstrated 
commitment to economic policies that--encourage citizens and firms to 
participate in global trade and international capital markets (Fiscal 
Policy, Inflation, Trade Policy, and Regulatory Quality); promote 
private sector growth (Inflation, Business Start-Up, Fiscal Policy, 
Land Rights and Access, Access to Credit, Gender in the Economy, and 
Regulatory Quality); strengthen market forces in the economy (Fiscal 
Policy, Inflation, Trade Policy, Business Start-Up, Land Rights and 
Access, Access to Credit, and Regulatory Quality); and respect worker 
rights, including the right to form labor unions (Civil Liberties and 
Gender in the Economy);
    Section 607(b)(3): Investments in the people of such country, 
particularly women and children, including programs that--promote 
broad-based primary education (Girls' Primary Education Completion, 
Girls' Secondary Education, and Public Expenditure on Primary 
Education); strengthen and build capacity to provide quality public 
health and reduce child mortality (Immunization Rates, Public 
Expenditure on Health, and Child Health); and promote the protection of 
biodiversity and the transparent and sustainable management and use of 
natural resources (Natural Resource Protection).

Annex A: Indicator Definitions

    MCC is incorporating six new measures into the selection criteria 
and dropping two previous measures. MCC's Board of Directors approved 
these changes for the FY12 selection process, though the Board will 
also consider how countries perform on the previous set of indicators. 
This gradual integration of the indicators was designed to provide 
adequate notice to compact, threshold and candidate countries of the 
new measures and their performance before the new indicators fully 
replaced the previous indicators. A brief summary of the indicators 
follows; a detailed rationale for the adoption of these indicators can 
be found in the Public Guide to the Indicators (available at http://www.mcc.gov).
    The following indicators will be used to measure candidate 
countries' demonstrated commitment to the criteria found in section 
607(b) of the Act. The indicators are intended to assess the degree to 
which the political and economic conditions in a country serve to 
promote broad-based sustainable economic growth and reduction of 
poverty and thus provide a sound environment for the use of MCA funds. 
The indicators are not goals in themselves; rather they are proxy 
measures of policies that are linked to broad-based sustainable 
economic growth. The indicators were selected based on their (i) 
relationship to economic growth and poverty reduction, (ii) the number 
of countries they cover, (iii) transparency and availability, and (iv) 
relative soundness and objectivity. Where possible, the indicators are 
developed by independent sources.

Ruling Justly

    Civil Liberties: Independent experts rate countries on: freedom of 
expression; association and organizational rights; rule of law and 
human rights; and personal autonomy and economic rights, among other 
things. Source: Freedom House
    Political Rights: Independent experts rate countries on: the 
prevalence of free and fair elections of officials with real power; the 
ability of citizens to form political parties that may compete fairly 
in elections; freedom from domination by the military, foreign powers, 
totalitarian parties, religious hierarchies and economic oligarchies; 
and the political rights of minority groups, among other things. 
Source: Freedom House
    Voice and Accountability (status quo indicators only): An index of 
surveys and expert assessments that rate countries on: the ability of 
institutions to protect civil liberties; the extent to which citizens 
of a country are able to participate in the selection of governments; 
and the independence of the media, among other things. Source: 
Worldwide Governance Indicators (World Bank/Brookings)
    Freedom of Information (revised indicators only): Measures the 
legal and practical steps taken by a government to enable or allow 
information to move freely through society; this includes measures of 
press freedom, national freedom of information laws, and the extent to 
which a county is filtering internet content or tools. Source: Freedom 
House/FRINGE Special/Open Net Initiative
    Government Effectiveness: An index of surveys and expert 
assessments that rate countries on: the quality of public service 
provision; civil servants' competency and independence from political 
pressures; and the government's ability to plan and implement sound 
policies, among other things. Source: Worldwide Governance Indicators 
(World Bank/Brookings)

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    Rule of Law: An index of surveys and expert assessments that rate 
countries on: the extent to which the public has confidence in and 
abides by the rules of society; the incidence and impact of violent and 
nonviolent crime; the effectiveness, independence, and predictability 
of the judiciary; the protection of property rights; and the 
enforceability of contracts, among other things. Source: Worldwide 
Governance Indicators (World Bank/Brookings)
    Control of Corruption: An index of surveys and expert assessments 
that rate countries on: ``grand corruption'' in the political arena; 
the frequency of petty corruption; the effects of corruption on the 
business environment; and the tendency of elites to engage in ``state 
capture'', among other things. Source: Worldwide Governance Indicators 
(World Bank/Brookings)

Encouraging Economic Freedom

    Inflation: The most recent average annual change in consumer 
prices. Source: The International Monetary Fund's World Economic 
Outlook Database
    Fiscal Policy: The overall budget balance divided by GDP, averaged 
over a three-year period. The data for this measure come primarily from 
IMF country reports or, where public IMF data are outdated or 
unavailable, are provided directly by the recipient government with 
input from U.S. missions in host countries. All data are cross-checked 
with the IMF's World Economic Outlook database to try to ensure 
consistency across countries and made publicly available. Source: 
International Monetary Fund Country Reports, National Governments, and 
the International Monetary Fund's World Economic Outlook Database
    Business Start-Up: An index that rates countries on the time and 
cost of complying with all procedures officially required for an 
entrepreneur to start up and formally operate an industrial or 
commercial business. Source: International Finance Corporation
    Trade Policy: A measure of a country's openness to international 
trade based on weighted average tariff rates and non-tariff barriers to 
trade. Source: The Heritage Foundation
    Regulatory Quality: An index of surveys and expert assessments that 
rate countries on: the burden of regulations on business; price 
controls; the government's role in the economy; and foreign investment 
regulation, among other areas. Source: Worldwide Governance Indicators 
(World Bank)
    Land Rights and Access: An index that rates countries on the extent 
to which the institutional, legal, and market framework provide secure 
land tenure and equitable access to land in rural areas and the time 
and cost of property registration in urban and peri-urban areas. 
Source: The International Fund for Agricultural Development and the 
International Finance Corporation
    Access to Credit (revised indicators only): An index that rates 
countries on rules and practices affecting the coverage, scope and 
accessibility of credit information available through either a public 
credit registry or a private credit bureau; as well as legal rights in 
collateral laws and bankruptcy laws. Source: International Finance 
Corporation
    Gender in the Economy (revised indicators only): An index that 
measures the extent to which laws provide men and women equal capacity 
to generate income or participate in the economy, including the 
capacity to access institutions, get a job, register a business, sign a 
contract, open a bank account, choose where to live, and travel freely. 
Source: International Finance Corporation

Investing in People

    Public Expenditure on Health: Total expenditures on health by 
government at all levels divided by GDP. Source: The World Health 
Organization
    Immunization Rates: The average of DPT3 and measles immunization 
coverage rates for the most recent year available. Source: The World 
Health Organization and the United Nations Children's Fund
    Total Public Expenditure on Primary Education: Total expenditures 
on primary education by government at all levels divided by GDP. 
Source: The United Nations Educational, Scientific and Cultural 
Organization and National Governments
    Girls' Primary Completion Rate: The number of female students 
enrolled in the last grade of primary education minus repeaters divided 
by the population in the relevant age cohort (gross intake ratio in the 
last grade of primary). Source: United Nations Educational, Scientific 
and Cultural Organization
    Girls Secondary Education (revised indicators only): The number of 
female pupils enrolled in lower secondary school, regardless of age, 
expressed as a percentage of the population of females in the 
theoretical age group for lower secondary education. Lower middle 
income counties (LMICs) will be assessed on this indicator instead of 
Girls Primary Completion Rates. Source: United Nations Educational, 
Scientific and Cultural Organization
    Natural Resource Management (status quo indicators only): An index 
made up of four indicators: eco-region protection, access to improved 
water, access to improved sanitation, and child (ages 1-4) mortality. 
Source: The Center for International Earth Science Information Network 
and the Yale Center for Environmental Law and Policy
    Natural Resource Protection (revised indicators only): Assesses 
whether countries are protecting up to 10 percent of all their biomes 
(e.g., deserts, tropical rainforests, grasslands, savannas and tundra). 
Source: The Center for International Earth Science Information Network 
and the Yale Center for Environmental Law and Policy
    Child Health (revised indicators only): An index made up of three 
indicators: access to improved water, access to improved sanitation, 
and child (ages 1-4) mortality. Source: The Center for International 
Earth Science Information Network and the Yale Center for Environmental 
Law and Policy

Annex B: Changes to the Methodology

New Absolute Thresholds

    Political Rights: Countries that receive a score above 17 will be 
considered as passing this indicator. The median will no longer be 
calculated or utilized.
    Civil Liberties: Countries that receive a score above 25 will be 
considered as passing this indicator. The median will no longer be 
calculated or utilized.
    Immunization Rates: Lower middle income countries (LMICs) that 
exceed an immunization coverage rate of 90% will be considered as 
passing this indicator. The median will no longer be calculated or 
utilized for countries classified as LMICs.

New Democratic Rights Hard Hurdle

    In making its determination of eligibility with respect to a 
particular candidate country, the Board will consider whether a country 
performs above the thresholds described above on either Political 
Rights or Civil Liberties.

Require Countries to Pass Half of the Indicators Overall

    In making its determination of eligibility with respect to a 
particular candidate country, the Board will consider whether a country 
performs above the median or absolute threshold on at least half of the 
indicators and at least one indicator per category. In order to 
maintain a focus on the breadth of sound policy performance, the Board 
will also take into consideration whether a country performs 
substantially worse on any category (Ruling Justly, Investing in 
People, or Economic Freedoms).

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    As with the current selection system, the Board may exercise 
discretion in evaluating and translating the indicators into a final 
list of eligible countries and, in this respect, the Board may also 
consider whether any adjustments should be made for data gaps, lags, 
trends or other weaknesses in particular indicators. Where necessary, 
the Board may also take into account other data and quantitative and 
qualitative information to determine whether a country performed 
satisfactorily in relation to its peers in a given category 
(``supplemental information'').

[FR Doc. 2011-25540 Filed 9-29-11; 4:15 pm]
BILLING CODE 9211-03-P