[Federal Register Volume 80, Number 187 (Monday, September 28, 2015)]
[Notices]
[Pages 58307-58314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24490]


=======================================================================
-----------------------------------------------------------------------

MILLENNIUM CHALLENGE CORPORATION

[MCC FR 15-03]


Report on the Criteria and Methodology for Determining the 
Eligibility of Candidate Countries for Millennium Challenge Account 
Assistance in Fiscal Year 2016

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

-----------------------------------------------------------------------

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 22, 2015.
Maame Ewusi-Mensah Frimpong,
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 2016

Summary

    In accordance with section 608(b)(2) of the Millennium Challenge 
Act of 2003 (the ``Act'', 22 U.S.C. 7707(b)(1)), the Millennium 
Challenge Corporation (MCC) is submitting the following report. This 
report identifies the criteria and methodology that the Millennium 
Challenge Corporation (MCC) intends to use to determine which candidate 
countries may be eligible to be considered for assistance under the Act 
for FY 2016.
    Under section 608 (c)(1) of the Act, MCC will, for a thirty-day 
period following publication, accept and consider public comment for 
purposes of determining eligible countries under section 607 of the Act 
(22 U.S.C. 7706).

[[Page 58308]]

Criteria and Methodology for FY 2016

    This document explains how the Board of Directors (Board) of the 
Millennium Challenge Corporation (MCC) will identify, evaluate, and 
determine eligibility of countries for Millennium Challenge Account 
(MCA) assistance for fiscal year (FY) 2016. The statutory basis for 
this report is set forth in Appendix A. Specifically, this document 
discusses:

I. Which Countries MCC Will Evaluate
II. How the Board Evaluates These Countries
    A. Overall
    B. For Selection for First Compact Eligibility
    C. For Selection for Second/Subsequent Compact Eligibility
    D. For Selection for the Threshold Program
    E. A Note on Potential Regional Investments

I. Which countries are evaluated?

    As discussed in the August 2015 Report on Countries that are 
Candidates for Millennium Challenge Account Eligibility for Fiscal Year 
2016 and Countries that Would be Candidates but for Legal Prohibitions 
(the ``Candidate Country Report''), MCC evaluates all low-income 
countries (LICs) and lower-middle income countries (LMICs) countries as 
follows:
     For scorecard evaluation purposes for FY 2016, MCC defines 
LICs as those countries between $0 and $1985 GNI per capita, and LMICs 
as those countries between $1986 and $4125 GNI per capita.\1\
---------------------------------------------------------------------------

    \1\ This corresponds to LIC and LMIC definitions using the 
historic International Development Association (IDA) thresholds 
published by the World Bank.
---------------------------------------------------------------------------

     For funding purposes for FY 2016, MCC defines the poorest 
75 countries as LICs, and the remaining countries up to the upper-
middle income (UMIC) threshold of $4125 as LMICs.\2\
---------------------------------------------------------------------------

    \2\ By law, no more than 25 percent of all compact funds for a 
given fiscal year may be provided to LMIC countries (using this 
``funding'' definition).
---------------------------------------------------------------------------

    Under Appendix B, lists of all LICS, LMICS and statutorily 
prohibited countries for evaluation purposes are provided. The list 
using the ``funding'' definition was outlined in the FY 2016 Candidate 
Country Report and describes how funding categories work.

II. How does the Board evaluate these countries?

A. Overall Evaluation

    The Board looks at three legislatively-mandated factors in its 
evaluation of any candidate country for compact eligibility: (1) Policy 
performance; (2) the opportunity to reduce poverty and generate 
economic growth; and (3) the availability of MCC funds.
1. Policy Performance
    Because of the importance of needing to evaluate a country's policy 
performance--and needing to do so in a comparable, cross-country way--
the Board relies to the maximum extent possible upon the best-available 
objective and quantifiable indicators of policy performance. These 
indicators act as proxies of the country's commitment to good 
governance, as laid out in MCC's founding legislation. Comprised of 20 
third-party indicators in the categories of ``encouraging economic 
freedom,'' ``investing in people,'' and ``ruling justly,'' MCC 
``scorecards'' are created for all LICs and LMICs. To ``pass'' the 
indicators on the scorecard, the country must perform above the median 
among its income group (as defined above), except in the cases of 
inflation, political rights, civil liberties, and immunization rates 
(LMICs only), where threshold scores have been established. In 
particular, the Board considers whether the country:
     Passed at least 10 of the 20 indicators, with at least one 
in each category,
     Passed the ``Control of Corruption'' indicator, and
     Passed either the ``Political Rights'' or ``Civil 
Liberties'' indicator.
    While satisfaction of all three aspects means a country is termed 
to have ``passed'' the scorecard, the Board also considers whether the 
country performed ``substantially worse'' in any one policy category 
than it does on the scorecard overall. Appendix C describes all 20 
indicators, their definitions, what is required to ``pass,'' their 
source, and their relationship to the legislative criteria.
    The 20 policy performance indicators are the predominant basis for 
determining which countries will be eligible for MCC assistance, and 
the Board expects a country to be passing its scorecard at the point 
the Board decides to select the country for either a first or second/
subsequent compact. However, the Board also recognizes that even the 
best-available data has inherent challenges. For example, data gaps, 
real-time events versus data lags, the absence of narratives and 
nuanced detail, and other similar weaknesses affect each of these 
indicators. In such instances, the Board uses its judgment to interpret 
policy performance as measured by the scorecards. The Board may also 
consult other sources of information to further enhance its 
understanding of a given country's policy performance beyond the issues 
on the scorecard, which is especially useful given the unique 
perspective of each Board member (e.g., specific policy issues related 
to trade, civil society, other U.S. aid programs, financial sector 
performance, and security/foreign policy issues). The Board uses its 
judgment on how best to weigh such information in assessing overall 
policy performance.
2. The Opportunity To Reduce Poverty and Generate Economic Growth
    The Board also consults other sources of qualitative and 
quantitative information to have a more detailed view of the 
opportunity to reduce poverty and generate economic growth in a 
country.
    While the Board considers a range of other information sources 
depending on the country, specific areas of attention typically include 
better understanding the issues on, trends in, and trajectory of:
     The control of corruption and rule of law;
     The state of democratic and human rights (especially of 
vulnerable groups \3\);
---------------------------------------------------------------------------

    \3\ For example, women; children; lesbian, gay, bisexual, and 
transgender individuals; people with disabilities; and workers.
---------------------------------------------------------------------------

     The perspective of civil society on salient governance 
issues;
     The potential for the private sector (both local and 
foreign) to lead investment and growth;
     The levels of poverty within a country; and
     The country's institutional capacity.
    Where applicable, the Board also considers MCC's own experience and 
ability to reduce poverty and generate economic growth in a given 
country--such as considering MCC's core skills versus the country's 
needs, capacity within MCC to work with a country, and the likelihood 
that MCC is seen by the country as a credible partner.
    This information provides greater clarity on the likelihood that 
MCC investments will have an appreciable impact on reducing poverty and 
generating economic growth in a given country. The Board has used such 
information both to not select countries that are otherwise passing 
their scorecards, as well as to better understand when a country's 
performance on a particular indicator may not be up to date or is about 
to change. More details on this subject (sometimes referred to as 
``supplemental information'') can be found on MCC's Web site at https://www.mcc.gov/pages/docs/doc/pub-guide-to-supplemental-information-fy15.
3. The Availability of MCC Funds
    The final factor that the Board must consider when evaluating 
countries is

[[Page 58309]]

the funding available. The agency's allocation of its budget is 
constrained, and often specifically limited, by provisions in the 
authorizing legislation and appropriations acts. MCC has a continuous 
pipeline of countries in compact development, compact implementation, 
and compact closeout, as well as threshold programs. Consequently, the 
Board factors in the overall portfolio picture when making its 
selection decisions given the funding available for each of the 
agency's planned or existing programs.
    The following sub-sections describe how each of these three 
legislatively-mandated factors are applied with regard to the selection 
situations the Board encounters each December: Selection of countries 
for first compact eligibility, selection of countries for second/
subsequent compact eligibility, and selection of countries for the 
threshold program. Thereafter, a note is included on consideration of 
countries for potential regional investments.

B. Evaluation for Selection of Countries for First Compact Eligibility

    When selecting countries for compact eligibility, the Board looks 
at all three legislatively-mandated aspects described in the previous 
section: (1) Policy performance, first and foremost as measured by the 
scorecards and bolstered through additional information (as described 
in the previous section); (2) the opportunity to reduce poverty and 
generate economic growth, examined through the use of other supporting 
information (as described in the previous section); and (3) the funding 
available.
    At a minimum, the Board looks to see that the country passes its 
scorecard. It also examines supporting evidence that the country's 
commitment to good governance is on a sound footing and performance is 
on a positive trajectory, and that MCC has funding to support a 
meaningful compact with that country. Where applicable, previous 
threshold program information is also considered. The Board then weighs 
the information described above across each of the three dimensions.
    The approach described above is then applied in any additional 
years of selection of a country to continue to develop a first compact, 
with the added benefit of having cumulative scorecards, cumulative 
records of policy performance, and other accumulated supporting 
information to determine the overall pattern of performance over the 
emerging multi-year trajectory.

C. Evaluation for Selection of Countries for Second/Subsequent Compact 
Eligibility

    Section 609(k) of the Millennium Challenge Act of 2003, as amended, 
specifically authorizes MCC to enter into ``one or more subsequent 
Compacts.'' MCC does not consider subsequent compact eligibility, 
however, before countries have completed their compact, or are within 
18 months of completion, (e.g., a second compact if they have completed 
or are within 18 months of completing their first compact).
    Selection for subsequent compacts is not automatic and is intended 
only for countries that (1) exhibit successful performance on their 
previous compact; (2) exhibit improved scorecard policy performance 
during the partnership; and (3) exhibit a continued commitment to 
further their sector reform efforts in any subsequent partnership. As a 
result, the Board has an even higher standard when selecting countries 
for subsequent compacts.
1. Successful Implementation of the Previous Compact
    To evaluate the degree of success of the previous compact, the 
Board looks to see if there is a clear evidence base of success within 
the budget and time limits of the compact, in particular by looking at 
three aspects:
     The degree to which there is evidence of strong political 
will and management capacity: Is the partnership characterized by the 
country ensuring that both policy reforms and the compact program 
itself are being implemented to the best ability that the country can 
deliver;
     The degree to which the country has exhibited commitment 
and capacity to achieve program results: Are the financial and project 
results being achieved; to what degree is the country committing its 
own resources to ensure the compact is a success; to what extent is the 
private sector engaged (if relevant); and other compact-specific 
issues; and
     The degree to which the country has implemented the 
compact in accordance with MCC's core policies and standards: That is, 
is the country adhering to MCC's policies and procedures, including in 
critical areas such as remediating unresolved fraud and corruption and 
abuse or misuse of funds issues; procurement; and monitoring and 
evaluation.
    Details on the specific types of information examined (and sources 
used) in each of the three areas are provided in Appendix D. Overall, 
the Board is looking for evidence that the previous compact will be 
completed or has been completed successfully, on time and on budget, 
and that there is a commitment to continued, robust reform going 
forward.
2. Improved Scorecard Policy Performance
    Beyond successful implementation of the previous compact, the Board 
expects the country to have improved its overall scorecard policy 
performance during the partnership, and to pass the scorecard in the 
year of selection for the subsequent compact. The Board focuses on:
     The overall scorecard pass/fail rate over time, what this 
suggests about underlying policy performance, as well as an examination 
of the underlying reasons;
     The progress over time on policy areas measured by both 
hard-hurdle indicators--Control of Corruption, and Democratic Rights--
including an examination of the underlying reasons; and
     Other indicator trajectories as deemed relevant by the 
Board.
    In all cases, while the Board expects the country to be passing its 
scorecard, other sources of information are examined to understand the 
nuance and reasons behind scorecard or indicator performance over time, 
including any real-time updates, methodological changes within the 
indicators themselves, shifts in the relevant candidate pool, or 
alternative policy performance perspectives (such as gleaned through 
consultations with civil society and related stakeholders). Other 
sources of information are also consulted to look at policy performance 
over time in areas not covered by the scorecard, but that are deemed 
important by the Board (such as trade, foreign policy concerns, etc.).
3. A Commitment to Further Sector Reform
    The Board expects that subsequent compacts will endeavor to tackle 
deeper policy reforms necessary to unlock an identified constraint to 
growth. Consequently, the Board considers its own experience during the 
previous compact in considering how committed the country is to 
reducing poverty and increasing economic growth, and therefore tries to 
gauge the country's commitment for further sector reform should it be 
selected for a subsequent compact. This includes:
     Assessing the country's delivery of policy reform during 
the previous compact (as described above);
     Assessing expectations of the country's ability and 
willingness to

[[Page 58310]]

continue embarking on sector policy reform in a subsequent compact;
     Examining both other sources of information that describe 
the nature of the opportunity to reduce poverty and generate growth (as 
outlined in A.2 above), and the relative success of the previous 
compact overall, as already discussed; and
     Finally, considering how well funding can be leveraged for 
impact, given its experience in the previous compact.
    Through this overall approach to subsequent compact selection, the 
Board applies the three legislatively mandated evaluation criteria 
(policy performance, the opportunity to reduce poverty and generate 
economic growth, and the funding available) in a way that rests 
critically on deeply assessing the previous partnership: From a compact 
success standpoint, a commitment to improved scorecard policy 
performance standpoint, and a commitment to continued sector policy 
reform standpoint. The Board then weighs all of the information 
described above in making its decision.
    The approach described above is then applied in any additional 
years of selection necessary as the country continues to develop the 
subsequent compact, with the added benefit of having even further 
detail on previous compact implementation, cumulative scorecards, 
records of policy performance, and other accumulated supporting 
information to determine the overall pattern of performance over the 
resulting multi-year trajectory.

D. Evaluation for Eligibility for Threshold Programs

    The Board may also select countries to participate in the Threshold 
Program. The Threshold Program provides assistance to candidate 
countries that exhibit a significant commitment to meeting the 
eligibility criteria described in the previous sub-sections, but fail 
to meet such requirements. Specifically, in examining the policy 
performance, the opportunity to reduce poverty and generate economic 
growth, and the funding available, the Board will consider whether a 
country potentially eligible for threshold program assistance appears 
to be on a trajectory to becoming a viable contender for compact 
eligibility in the medium term.

E. A Note on Potential Regional Investments

    FY 2016 marks the first year that the Board may consider selecting 
countries where potential regional investments (i.e., cross-border 
investments) may be developed.
    With respect to regional investments, the fundamental criteria and 
process for selection will remain unchanged: Countries will continue to 
be evaluated and selected individually, as described in sections A, B, 
and C above. However, for countries where regional investments might be 
contemplated, the Board will also examine additional supplemental 
information looking at the policy environment from a regional 
dimension.
    Specifically, the Board will examine additional data and 
information related to:
     The current state of the country's political and economic 
integration with its region and neighbors;
     Impediments to further integration with its region and 
neighbors; and
     The potential gains from investing at a regional level, 
including illustrative potential sector opportunities.
    The Board will weigh this additional regional information in tandem 
with the other supplemental factors described earlier in sections A, B, 
and C. The Board will then decide whether or not it will direct MCC to 
explore some form of a regional investment with the country.

Appendix A: Statutory Basis for This Report

    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).
    Section 605 of the Act authorizes the provision of assistance to 
countries that enter into a Millennium Challenge Compact with the 
United States to support policies and programs that advance the 
progress of such countries in achieving lasting economic growth and 
poverty reduction. The Act requires MCC to take a number of steps in 
selecting countries for compact assistance for FY 2016 based on the 
countries' demonstrated commitment to just and democratic governance, 
economic freedom, and investing in their people, MCC's opportunity to 
reduce poverty and generate economic growth in the country, and the 
availability of funds. These steps include the submission of reports to 
the congressional committees specified in the Act and publication of 
information in the Federal Register that identify:
    1. The countries that are ``candidate countries'' for MCA 
assistance for FY 2016 based on per capita income levels and 
eligibility to receive assistance under U.S. law. (section 608(a) of 
the Act; 22 U.S.C. 7707(a));
    2. The criteria and methodology that MCC's Board of Directors 
(Board) will use to measure and evaluate 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 ``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 ``eligible 
countries'' for FY 2016, with justification for eligibility 
determination and selection for compact negotiation, including those 
eligible countries with which MCC will seek to enter into compacts 
(section 608(d) of the Act; 22 U.S.C. 7707(d)).
    This report reflects the satisfaction of item #2 above.

Appendix B: Lists of all LICs, LMICs, and Statutorily Prohibited 
Countries for Evaluation Purposes Income Classification for Scorecards

    Since MCC was created, it has relied on the World Bank's gross 
national income (GNI) per capita income data (Atlas method) and the 
historical ceiling for eligibility as set by the World Bank's 
International Development Association (IDA) to divide countries into 
two income categories for purposes of creating scorecards: LICs and 
LMICs. These categories are used to account for the income bias that 
occurs when countries with more per capita resources perform better 
than countries with fewer. Using the historical IDA eligibility ceiling 
for the scorecards ensures that the poorest countries compete with 
their income level peers and are not compared against countries with 
more resources to mobilize.
    MCC will continue to use the traditional income categories for 
eligibility to categorize countries in two groups for purposes of FY 
2016 scorecard comparisons:
     LICs are countries with GNI per capita below IDA's 
historical ceiling for eligibility ($1,985 for FY 2016); and
     LMICs are countries with GNI per capita above IDA's 
historical ceiling for eligibility but below the World Bank's upper 
middle income country threshold ($1,986--$4,125 for FY 2016).
    The list of countries categorized as LICs and LMICs for the purpose 
of FY 2016 scorecard assessments can be found below.\4\
---------------------------------------------------------------------------

    \4\ In December 2011, a statutory change requested by MCC 
altered the way MCC must group countries for the purposes of 
applying MCC's 25 percent LMIC funding cap. This change, designed to 
bring stability to the funding stream, affects how MCC funds 
countries selected for compacts and does not affect the way 
scorecards are created. For determining whether a country can be 
funded as an LMIC or LIC:
     The poorest 75 countries are now considered LICs for 
the purposes of MCC funding. They are not limited by the 25 percent 
funding cap on LMICs.
     Countries with a GNI per capita above the poorest 75 
but below the World Bank's upper middle income country threshold 
($4,125 for FY 2015) are considered LMICs for the purposes of MCC 
funding. By law, no more than 25 percent of all compact funds for a 
given fiscal year can be provided to these countries.
    The FY 2016 Candidate Country Report lists LICs and LMICs based 
on this new definition and outlines which countries are subject to 
the 25 percent funding cap.

---------------------------------------------------------------------------

[[Page 58311]]

Low Income Countries (FY 2016 Scorecard)

1. Afghanistan
2. Bangladesh
3. Benin
4. Burkina Faso
5. Burma
6. Burundi
7. Cambodia
8. Cameroon
9. Central African Republic
10. Chad
11. Comoros
12. Congo, the Democratic Republic of
13. Cote d'Ivoire
14. Djibouti
15. Eritrea
16. Ethiopia
17. Gambia
18. Ghana
19. Guinea
20. Guinea-Bissau
21. Haiti
22. India
23. Kenya
24. Korea, Democratic People's Republic of
25. Kyrgyz Republic
26. Laos
27. Lesotho
28. Liberia
29. Madagascar
30. Malawi
31. Mali
32. Mauritania
33. Mozambique
34. Nepal
35. Nicaragua
36. Niger
37. Pakistan
38. Rwanda
39. Sao Tome and Principe
40. Senegal
41. Sierra Leone
42. Solomon Islands
43. Somalia
44. South Sudan
45. Sudan
46. Tajikistan
47. Tanzania
48. Togo
49. Uganda
50. Vietnam
51. Yemen
52. Zambia
53. Zimbabwe

Lower Middle Income Countries (FY 2016 Scorecard)

1. Armenia
2. Bhutan
3. Bolivia
4. Cabo Verde
5. Congo, Republic of
6. Egypt
7. El Salvador
8. Georgia
9. Guatemala
10. Guyana
11. Honduras
12. Indonesia
13. Kiribati
14. Kosovo
15. Micronesia
16. Moldova
17. Morocco
18. Nigeria
19. Papua New Guinea
20. Philippines
21. Samoa
22. Sri Lanka
23. Swaziland
24. Syria
25. Timor-Leste
26. Ukraine
27. Uzbekistan
28. Vanuatu

Statutorily Prohibited Countries for FY16 \5\
---------------------------------------------------------------------------

    \5\ This list is current as of July 21, 2015. Between such date 
and the December 2015 selection Board meeting, other countries may 
also be the subject of future statutory restrictions or 
determinations, or changed country circumstances, that affect their 
legal eligibility for assistance under part I of the Foreign 
Assistance Act by reason of application of the Foreign Assistance 
Act or any other provision of law for FY 2016. Even though these 
countries are prohibited from receiving assistance, scorecards are 
still created for them to ensure all countries are included in an 
income group in order to determine the global medians/scores for 
that income group.
---------------------------------------------------------------------------

1. Bolivia
2. Burma
3. Eritrea
4. North Korea
5. South Sudan
6. Sudan
7. Syria
8. Zimbabwe

Appendix C: Indicator Definitions

    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 (i) their 
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.\6\ Listed below is a brief summary of 
the indicators (a detailed rationale for the adoption of these 
indicators can be found in the Public Guide to the Indicators on MCC's 
public Web site at www.mcc.gov).
---------------------------------------------------------------------------

    \6\ Special note on Kosovo: Since UN agencies do not currently 
publish data for Kosovo due to non-recognition status, MCC is unable 
to source data directly from the UN for the six indicators that are 
constructed in all or in part from this data: Land Rights and 
Access, Health Expenditures, Primary Education Expenditures, 
Immunization Rates, Girls' Secondary Education Enrollment Rate, and 
Child Health. As result, MCC publishes data from UNKT (the UN Kosovo 
Team) in cases where UNKT uses comparable methodologies to their UN 
sister organizations. See http://www.unkt.org/ for more information.
---------------------------------------------------------------------------

Ruling Justly

    1. 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. Pass: 
Score must be above the minimum score of 17 out of 40. Source: Freedom 
House
    2. 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. Pass: Score must be above the minimum score of 25 out of 60. 
Source: Freedom House
    3. Freedom of Information: 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. Pass: Score must be above the 
median score for the income group. Source: Freedom House/Centre for Law 
and Democracy/Access Info Europe
    4. 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. Pass: Score must be above the

[[Page 58312]]

median score for the income group. Source: Worldwide Governance 
Indicators (World Bank/Brookings)
    5. 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. Pass: Score must be 
above the median score for the income group. Source: Worldwide 
Governance Indicators (World Bank/Brookings)
    6. 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. Pass: Score must be 
above the median score for the income group. Source: Worldwide 
Governance Indicators (World Bank/Brookings)

Encouraging Economic Freedom

    1. Fiscal Policy: The overall budget balance divided by gross 
domestic product (GDP), averaged over a three-year period. The data for 
this measure comes 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. Pass: Score must be above the median score for the 
income group. Source: International Monetary Fund Country Reports, 
National Governments, and the International Monetary Fund's World 
Economic Outlook Database
    2. Inflation: The most recent average annual change in consumer 
prices. Pass: Score must be 15 percent or less. Source: The 
International Monetary Fund's World Economic Outlook Database
    3. 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. Pass: Score must be above the median 
score for the income group. Source: Worldwide Governance Indicators 
(World Bank/Brookings)
    4. Trade Policy: A measure of a country's openness to international 
trade based on weighted average tariff rates and non-tariff barriers to 
trade. Pass: Score must be above the median score for the income group. 
Source: The Heritage Foundation
    5. Gender in the Economy: 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 to travel freely. Pass: Score 
must be above the median score for the income group. Source: 
International Finance Corporation
    6. 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. 
Pass: Score must be above the median score for the income group. 
Source: The International Fund for Agricultural Development and the 
International Finance Corporation
    7. Access to Credit: 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. Pass: Score must be above the median score for the 
income group. Source: International Finance Corporation
    8. 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. Pass: Score must be above the median score for the 
income group. Source: International Finance Corporation

Investing in People

    1. Public Expenditure on Health: Total expenditures on health by 
government at all levels divided by GDP. Pass: Score must be above the 
median score for the income group. Source: The World Health 
Organization
    2. Total Public Expenditure on Primary Education: Total 
expenditures on primary education by government at all levels divided 
by GDP. Pass: Score must be above the median score for the income 
group. Source: The United Nations Educational, Scientific and Cultural 
Organization and National Governments
    3. Natural Resource Protection: Assesses whether countries are 
protecting up to 17 percent of all their biomes (e.g., deserts, 
tropical rainforests, grasslands, savannas and tundra). Pass: Score 
must be above the median score for the income group. Source: The Center 
for International Earth Science Information Network and the Yale Center 
for Environmental Law and Policy
    4. Immunization Rates: The average of DPT3 and measles immunization 
coverage rates for the most recent year available. Pass: Score must be 
above the median score for LICs, and 90 percent or higher for LMICs. 
Source: The World Health Organization and the United Nations Children's 
Fund
    5. Girls Education:
    a. 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). LICs are assessed on this indicator. Pass: 
Score must be above the median score for the income group. Source: 
United Nations Educational, Scientific and Cultural Organization
    b. Girls Secondary Enrollment Education: 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. LMICs will be assessed on this 
indicator instead of Girls Primary Completion Rates. Pass: Score must 
be above the median score for the income group. Source: United Nations 
Educational, Scientific and Cultural Organization
    6. Child Health: An index made up of three indicators: (i) Access 
to improved water, (ii) access to improved sanitation, and (iii) child 
(ages 1-4) mortality. Pass: Score must be above the median score for 
the income group. Source: The Center for International Earth Science 
Information Network and the Yale Center for Environmental Law and 
Policy

Relationship to Legislative Criteria

    Within each policy category, the Act sets out a number of specific 
selection criteria. A set of objective and quantifiable policy 
indicators is used to inform eligibility decisions for MCA assistance 
and to 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.

[[Page 58313]]

    Section 607(b)(1): Just and democratic governance, including a 
demonstrated commitment to--
    (A) promote political pluralism, equality and the rule of law 
(Political Rights, Civil Liberties, Rule of Law, and Gender in the 
Economy);
    (B) respect human and civil rights, including the rights of people 
with disabilities (Political Rights, Civil Liberties, and Freedom of 
Information);
    (C) protect private property rights (Civil Liberties, Regulatory 
Quality, Rule of Law, and Land Rights and Access);
    (D) encourage transparency and accountability of government 
(Political Rights, Civil Liberties, Freedom of Information, Control of 
Corruption, Rule of Law, and Government Effectiveness); and
    (E) 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--
    (A) encourage citizens and firms to participate in global trade and 
international capital markets (Fiscal Policy, Inflation, Trade Policy, 
and Regulatory Quality);
    (B) promote private sector growth (Inflation, Business Start-Up, 
Fiscal Policy, Land Rights and Access, Access to Credit, Gender in the 
Economy, and Regulatory Quality);
    (C) 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
    (D respect worker rights, including the right to form labor unions 
(Civil Liberties and Gender in the Economy); and
    Section 607(b)(3): Investments in the people of such country, 
particularly women and children, including programs that--
    (A) promote broad-based primary education (Girls' Primary 
Completion Rate, Girls' Secondary Education Enrollment Rate, and Total 
Public Expenditure on Primary Education);
    (B) strengthen and build capacity to provide quality public health 
and reduce child mortality (Immunization Rates, Public Expenditure on 
Health, and Child Health); and
    (C) promote the protection of biodiversity and the transparent and 
sustainable management and use of natural resources (Natural Resource 
Protection).

Appendix D: Subsequent Compact Considerations

    MCC reporting and data in the following chart are used to assess 
compact performance of MCC partners nearing the end of compact 
implementation (i.e., within 18-months of compact end date). Some 
reporting used for assessment may contain sensitive information and 
adversely affect implementation or MCC-partner country relations. This 
information is for MCC's internal use and is not made public. However, 
key implementation information is summarized in compact status and 
results reports that are published quarterly on MCC's Web site under 
MCC country programs (www.mcc.gov/pages/countries) or monitoring and 
evaluation (http://www.mcc.gov/pages/results/m-and-e) Web pages.

----------------------------------------------------------------------------------------------------------------
                Topic                       MCC Reporting/data source                Published documents
----------------------------------------------------------------------------------------------------------------
COUNRY PARTNERSHIP                     Quarterly implementation      Quarterly results published
Political Will                         reporting                             as ``Table of Key Performance
 Status of major conditions    Quarterly results reporting   Indicators'' (available by
 precedent                             Survey of MCC staff           country): http://go.usa.gov/jMcC.
 Program oversight/                                                  Survey questions to be
 implementation                                                              posted: http://1.usa.gov/PE0xCX.
[cir] project restructures
[cir] partner response to MCA
 capacity issues
 Political independence of
 MCA
Management Capacity                   ....................................  ....................................
 Project management capacity  ....................................  ....................................
 Project performance          ....................................  ....................................
 Level of MCC intervention/   ....................................  ....................................
 oversight
 Relative level of resources  ....................................  ....................................
 required
PROGRAM RESULTS                        Indicator tracking tables     Monitoring and Evaluation
Financial Results                      Quarterly financial           Plans (available by country): http:/
 Commitments--including        reporting                             /go.usa.gov/jMcC.
 contributions to compact funding      Quarterly implementation      Quarterly Status Reports
 Disbursements                 reporting                             (available by country): http://1.usa.gov/NfEbcI.
Project Results                        Quarterly results reporting   Quarterly results published
 Output, outcome, objective    Survey of MCC staff           as ``Table of Key Performance
 targets                               Impact evaluations            Indicators'' (available by
 MCA commitment to `focus on                                         country): http://1.usa.gov/QoduNl.
 results'                                                                    Survey questions to be
 MCA cooperation on impact                                           posted: http://1.usa.gov/PE0xCX.
 evaluation
 Percent complete for         ....................................  ....................................
 process/outputs
 Relevant outcome data        ....................................  ....................................
 Details behind target        ....................................  ....................................
 delays
Target Achievements                   ....................................  ....................................
ADHERENCE TO STANDARDS                 Audits (GAO and OIG)          Published OIG and GAO
 Procurement                   Quarterly implementation      Audits
 Environmental and social      reporting                             Survey questions to be
 Fraud and corruption          Survey of MCC staff           posted: http://1.usa.gov/PE0xCX.
 Program closure
 Monitoring and evaluation    ....................................  ....................................
 All other legal provisions   ....................................  ....................................
COUNTRY SPECIFIC                       Quarterly implementation      Quarterly results published
Sustainability                         reporting                             as ``Table of Key Performance
 Implementation entity         Quarterly results reporting   Indicators'' (available by
 MCC investments               Survey of MCC staff           country): http://1.usa.gov/QoduNl.
                                                                             Survey questions to be
                                                                             posted: http://1.usa.gov/PE0xCX.
Role of private sector or other       ....................................  ....................................
 donors

[[Page 58314]]

 
 Other relevant investors/    ....................................  ....................................
 investments
 Other donors/programming     ....................................  ....................................
 Status of related reforms    ....................................  ....................................
 Trajectory of private        ....................................  ....................................
 sector involvement going forward
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2015-24490 Filed 9-25-15; 8:45 am]
BILLING CODE 9211-03-P