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Thursday, October 25, 2012

Millennium Challenge Corporation

Curt Tarnoff
Specialist in Foreign Affairs

The Millennium Challenge Corporation (MCC) provides economic assistance through a competitive selection process to developing nations that demonstrate positive performance in three areas: ruling justly, investing in people, and fostering economic freedom.

Established in 2004, the MCC differs in several respects from past and current U.S. aid practices:

  • the competitive process that rewards countries for past actions measured by objective performance indicators; 
  • the pledge to segregate the funds from U.S. strategic foreign policy objectives that often strongly influence where U.S. aid is spent; 
  • its mandate to seek poverty reduction through economic growth, not encumbered with multiple sector objectives; 
  • the requirement to solicit program proposals developed solely by qualifying countries with broad-based civil society involvement; 
  • the responsibility of recipient countries to implement their own MCC-funded programs, known as compacts; 
  • a compact duration limited to five years, with funding committed up front; 
  • the expectation that compact projects will have measurable impact; and 
  • an emphasis on public transparency in every aspect of agency operations. 

On February 13, 2012, the Administration issued its FY2013 State, Foreign Operations budget, requesting $898.2 million for the MCC, the same amount it received in FY2012 and FY2011. In September 2012, the Continuing Appropriations Resolution, 2013 (H.J.Res. 117, P.L. 112-175), was approved by Congress, providing FY2013 funding for the MCC at the level in the FY2012 Consolidated Appropriations Act (P.L. 112-74) plus 0.612%—$904 million. The resolution expires on March 27, 2013.

Congress authorized the MCC in P.L. 108-199 (January 23, 2004). Since that time, the MCC’s Board of Directors has approved 26 grant agreements, known as compacts: with Madagascar (calendar year 2005), Honduras (2005), Cape Verde (2005), Nicaragua (2005), Georgia (2005), Benin (2006), Vanuatu (2006), Armenia (2006), Ghana (2006), Mali (2006), El Salvador (2006), Mozambique (2007), Lesotho (2007), Morocco (2007), Mongolia (2007), Tanzania (2007), Burkina Faso (2008), Namibia (2008), Senegal (2009), Moldova (2009), Philippines (2010), Jordan (2010), Malawi (2011), Indonesia (2011), Cape Verde II (2011), and Zambia (2012).

MCC issues include the level of funding to support MCC programs, the impact of budget reductions on MCC programs, the rate of program implementation, the results of MCC compacts, and procurement and corruption concerns.

Date of Report: October 16, 2012
Number of Pages: 44
Order Number: RL32427
Price: $29.95

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