[Federal Register Volume 78, Number 243 (Wednesday, December 18, 2013)]
[Notices]
[Pages 76658-76660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30084]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 13-08]


Report on the Selection of Eligible Countries for Fiscal Year 
2014

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).

    Dated: December 13, 2013.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Report on the Selection of Eligible Countries for Fiscal Year 2014

Summary

    This report is provided in accordance with section 608(d)(1) of the 
Millennium Challenge Act of 2003, as amended, 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:
    The countries that are ``candidate countries'' for MCA assistance 
during fiscal year 2014 (``FY14'') 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)));
    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
    The list of countries determined by the Board to be ``MCA eligible 
countries'' for FY14, 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 FY14. 
It identifies countries determined by the Board to be eligible under 
section 607 of the Act (22 U.S.C. 7706) for FY14 and countries with 
which the MCC 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. 
The report also identifies countries determined by the Board to be 
eligible for MCC's Threshold Program under section 616 of the Act (22 
U.S.C. 7715).

Eligible Countries

    The Board met on December 10, 2013, to select countries that will 
be eligible for MCA compact assistance under section 607 of the Act (22 
U.S.C. 7706) for FY14. The Board selected the following country as 
eligible for such assistance for FY14: Lesotho. The Board also 
reselected the following countries as eligible for FY14 MCA compact 
assistance--Ghana, Liberia, Morocco, Niger, and Tanzania. Two other 
countries currently developing compact proposals, Benin and Sierra 
Leone, were not put up for a vote. The Board discussed the fact that 
those two countries did not pass MCC's control of corruption indicator, 
which is a hard hurdle for passing the scorecard, and did not put them 
to a vote on reselection. Guatemala and Nepal were reselected as 
eligible for threshold assistance.

Criteria

    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 2014'' 
formally submitted to Congress on September 19, 2013, selection was 
based primarily on a country's overall performance in three broad 
policy categories: Ruling Justly, Encouraging Economic Freedom, and 
Investing in People. The Board relied, to the maximum extent possible, 
upon 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 scorecard countries (``LIC'') or the 
group of lower middle income scorecard countries (``LMIC'').
    The criteria and methodology used to assess countries on the annual 
scorecards is outlined in the ``Report on the Criteria and Methodology 
for Determining the Eligibility of Candidate Countries for Millennium 
Challenge Account Assistance in Fiscal Year

[[Page 76659]]

2014.'' Scorecards reflecting each country's performance on the 
indicators are available on MCC's Web site at www.mcc.gov/scorecards.
    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, investments in human development outcomes, or 
poverty rates. For example, for additional information in the area of 
corruption, the Board considered how a country is evaluated by 
supplemental sources like Transparency International's Corruption 
Perceptions Index, the Global Integrity Report, Open Government 
Partnership status, and the Extractive Industry Transparency 
Initiative, among others, as well as on the defined indicator. The 
Board may also take into account the margin of error around an 
indicator, when applicable. In keeping with legislative directives, the 
Board also considered the opportunity to reduce poverty and promote 
economic growth in a country, in light of the overall information 
available, as well as the availability of appropriated funds.
    This was the fifth 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)). The Board also considered the eligibility 
of countries for initial compacts. The Board sees the selection 
decision as an annual opportunity to determine where MCC funds can be 
most effectively invested to support poverty reduction through economic 
growth in relatively well-governed, poor countries. The Board carefully 
considers the appropriate nature of each country partnership--on a case 
by case basis--based on factors related to economic growth and poverty 
reduction, the sustainability of MCC's investments, and the country's 
ability to attract and leverage public and private resources in support 
of development.
    MCC's engagement with partner countries is not open-ended, and the 
Board is very deliberate when determining eligibility for follow-on 
partnerships. 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's 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. To the greatest 
extent possible, this was assessed using pre-existing monitoring and 
evaluation targets and regular quarterly reporting. This information 
was supplemented with direct surveys and consultation with MCC staff 
responsible for compact implementation, monitoring, and evaluation. MCC 
published a Guide to the Supplemental Information Sheet and a Guide to 
the Compact Survey Summary in order to increase transparency about the 
type of supplemental information the Board uses to assess a country's 
policy performance and compact implementation performance.
    As with previous years, 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 FY14. FY14 
was a particularly competitive year: seven countries are already 
working to develop compacts, four additional countries were within the 
window of consideration for subsequent compacts, multiple countries 
passed the scorecard (some for the first time), and funding was limited 
due to budget constraints. As a result, only one country that passed 
the scorecard was newly selected for MCC eligibility.

Countries Newly Selected for Compact Eligibility

    Using the criteria described above, Lesotho is the only candidate 
country under section 606(a) of the Act (22 U.S.C. 7705(a)) that was 
newly selected as eligible for MCA assistance for a compact under 
section 607 of the Act (22 U.S.C. 7706).
    Lesotho is a consistently strong performer on the MCC scorecard, 
passing for eleven consecutive years. Scorecards for Lesotho can be 
found here: www.mcc.gov/scorecards. Lesotho successfully completed its 
first $363 million compact in September 2013, including the completion 
of work on multiple health clinics, 14 hospital outpatient departments, 
rural and urban water projects, and a private sector development 
project that expanded access to credit, as well as expanding women's 
participation in the formal economy. The Government of Lesotho was a 
strong compact partner, proactively addressing issues as they arose, 
managing to project timelines, and spending over $50 million in 
additional funds from its own resources. Many of the initial compact 
investments target specific development challenges in Lesotho, 
including high rates of poverty and unemployment, and the third highest 
HIV/AIDS prevalence in the world.
    During development and implementation of its first compact, Lesotho 
did not shy away from making necessary--and often tough--policy 
reforms. This included passing landmark legislation expanding the legal 
rights of married women, such as the right of married women to own 
property or enter into a binding contract for the first time. Other 
policy reforms include the legislation that created the Land 
Administration Authority; the credit reporting and data protection 
legislation; the National Identification Bill; and changes that benefit 
the Basotho people by improving health care, water access and the 
private sector environment.

Countries Up for Reselection To Continue Compact Development

    Five of the countries selected as eligible for MCA compact 
assistance in FY14 were previously selected as eligible. Reselection 
allows them to access compact funding from FY14. These countries 
include Ghana, Liberia, Morocco, Niger, and Tanzania.
    The Board reselected these countries based on their continued 
performance since their prior selection. The Board determined that 
since their initial selection, there has been no material change in 
their performance on the indicator criteria that indicates a serious 
decline in policy performance.
    Three countries (Ghana, Niger, and Tanzania) passed the scorecards. 
Two countries (Liberia and Morocco) passed 9 indicators in FY14, just 
below the 10 needed to pass the scorecard criteria. In these two cases, 
the apparent declines were caused by historical data revisions or 
methodological changes from the indicator institutions. In neither case 
were the changes in scorecard performance due to policy declines on the 
part of the government. Due to this, the Board decided to reselect 
Liberia and Morocco, but expects to see those countries pass the 
scorecard before it would approve a compact in either country.
    Two other countries currently developing compact proposals--Benin 
and Sierra Leone--were not reselected. The Board discussed the fact 
that both countries fell just below the median on Control of Corruption 
in FY14, and therefore did not meet the Control of Corruption hurdle. 
Because of this, the Board did not put them up for a vote for 
reselection. This means neither Benin nor Sierra Leone are currently 
eligible

[[Page 76660]]

for FY14 compact funding. In these cases, the Board considered how the 
countries were evaluated by supplemental sources like Transparency 
International's Corruption Perceptions Index, the Global Integrity 
Report, Open Government Partnership status, and the Extractive Industry 
Transparency Initiative, as applicable. The Board also took into 
consideration recent actions by each government to address corruption. 
After accounting for this supplemental information, the Board directed 
MCC to continue a more limited engagement on compact development with 
both Benin and Sierra Leone and support their continued efforts to 
address corruption. The Board discussed the seriousness with which it 
take the scorecard's hard hurdles and indicated that it expects both 
countries to pass the Control of Corruption indicator before it would 
approve a compact with them.
    The Board asked all four countries that do not meet the scorecard 
criteria to work to improve their policy performance over the coming 
year.

Countries Newly Selected for Threshold Program Eligibility

    For FY14, the Board did not select any new countries as eligible 
for threshold assistance.

Countries Reselected To Continue Developing Threshold Programs

    Two countries selected as eligible for threshold assistance in FY14 
were previously selected as eligible. Reselection allows them to access 
funding from FY2014. These countries are Guatemala and Nepal.
    The Board reselected these countries based on their continued 
performance since their prior selection. The Board determined that 
since their initial selection, there has been no material change in 
their performance that would indicate a serious decline in policy 
performance.

Ongoing Review of Partner Countries' Policy Performance

    The Board also reviewed the policy performance of countries that 
are implementing compacts. 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, MCC does not consider the 
country for reselection on an annual basis during the term of its 
compact. The Board emphasized the need for all partner countries to 
maintain or improve their policy performance. 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.

Selection To Initiate the Compact Process

    The Board also authorized MCC to invite Lesotho to submit a 
proposal for a 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.

[FR Doc. 2013-30084 Filed 12-17-13; 8:45 am]
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