[Federal Register Volume 77, Number 249 (Friday, December 28, 2012)]
[Notices]
[Pages 76535-76537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-31278]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 12-13]


Report on the Selection of Eligible Countries for Fiscal Year 
2013

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 21, 2012.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Report on the Selection of Eligible Countries for Fiscal Year 2013

Summary

    This report is provided in accordance with section 608(d)(1) of the 
Millennium Challenge Act of 2003, Public Law 108-199, Division D, (the 
``Act'') (22 U.S.C. 7707(d)(1)).
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance under section 605 of the Act (22 U.S.C. 7704) to 
countries that enter into compacts with the United States to support 
policies and programs that advance the progress of such countries in 
achieving lasting economic growth and poverty reduction, and are in 
furtherance of the Act. The Act requires the Millennium Challenge 
Corporation (``MCC'') to determine the countries that will be eligible 
to receive MCA assistance during the fiscal year, based on their 
demonstrated commitment to just and democratic governance, economic 
freedom, and investing in their people, as well as on the opportunity 
to reduce poverty and generate economic growth in the country. The Act 
also requires the submission of reports to appropriate congressional 
committees and the publication of notices in the Federal Register that 
identify, among other things:
    The countries that are ``candidate countries'' for MCA assistance 
during fiscal year 2013 (``FY13'') 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 FY13, 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 FY13. 
It identifies countries determined by the Board to be eligible under 
section 607 of the Act (22 U.S.C. 7706) for FY13 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 19, 2012, to select countries that will 
be eligible for MCA compact assistance under section 607 of the Act (22 
U.S.C. 7706) for FY13. The Board selected the following countries as 
eligible for such assistance for FY13: Liberia, Morocco, Niger, Sierra 
Leone, and Tanzania. The Board also reselected the following countries 
as eligible for MCA compact assistance: Benin, El Salvador, Georgia, 
and Ghana.

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 2013'' 
formally submitted to Congress on September 14, 2012, selection was 
based primarily on a country's overall performance in three broad 
policy

[[Page 76536]]

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 Eligbility of Candidate Countries for Millennium 
Challenge Account Assistance in Fiscal Year 2013.'' 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. 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 fourth 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 where the country is on its growth path, 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 particularly selective 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 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. For the first time, 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 FY13. FY13 
was a particularly competitive year: five countries were within the 
window of consideration for subsequent compacts, multiple other 
countries passed the scorecard (some for the first time), and funding 
was limited due to budget constraints. As a result, not every country 
that passed the scorecard was selected for MCC eligibility.

Countries Newly Selected for Compact Eligibility

    Using the criteria described above, Morocco, Liberia, Niger, Sierra 
Leone, and Tanzania are candidate countries under section 606(a) of the 
Act (22 U.S.C. 7705(a)) that were selected as eligible for MCA 
assistance for a compact under section 607 of the Act (22 U.S.C. 7706).
    Liberia passed the MCC scorecard for the first time in FY13, after 
several years of improving economic governance and strengthening 
democratic institutions. Scorecards for Liberia can be found here: 
www.mcc.gov/scorecards. Liberia is a post-conflict country that has 
held two democratic elections since the end of its civil war, electing 
the first female president in sub-Saharan Africa. Liberia's efforts to 
combat corruption have been recognized in numerous assessments, 
including on the Control of Corruption indicator, and it has made 
significant improvements to macroeconomic management in recent years. 
Liberia's threshold program, focused on expanding girls' access to 
education, land rights and access, and trade opportunities, is 
scheduled to conclude September 2013. Capacity constraints may impact 
the timeline of the compact development process.
    Morocco is a consistently strong performer on the MCC scorecard. 
Scorecards for Morocco can be found here: www.mcc.gov/scorecards. In 
the wake of the Arab Spring, the Government of Morocco has reacted in a 
relatively peaceful and responsive manner, including expanding 
democratic rights through the adoption of new powers for the prime 
minister and the parliament. A second compact can help to solidify 
economic reforms and growth necessary for long-term regional stability. 
Morocco is scheduled to conclude its first compact in September 2013. 
The initial MCC compact has invested in expansion of fruit tree 
agriculture, support for small-scale fisheries and fish-markets, 
enhancement of the artisanal sector in the Fez Medina, and training for 
small-scale businesses across all these sectors, with an emphasis on 
training for women and youth including literacy training. In the 
current compact, Morocco's government established a high-capacity team, 
which is currently completing one of the largest and most complex 
compacts in MCC's history.
    Niger is one of the poorest countries in the world but has 
relatively strong policy performance, as indicated by two consecutive 
years passing the MCC indicators. Scorecards for Niger can be found 
here: www.mcc.gov/scorecards. In 2011, Niger was the first country to 
demonstrate that with sufficient political will, countries can restore 
their MCC eligibility. Niger's constitutional reform, clean and 
competitive elections, and peaceful transfer of power to civilian 
government prompted MCC to reinstate Niger's threshold eligibility last 
year. Since that time, Niger has pursued reforms related to democratic 
and economic governance and contributed to efforts to promote stability 
in the region. Niger has been a strong MCC partner in its threshold 
program, operating a dedicated program and policy analysis unit through 
both elected governments and even during its period of suspension. 
Niger is currently finalizing its constraints to growth analysis, an 
exercise that forms the basis of MCC's compact development process, and 
this will now shift from a threshold program assessment tool to part of 
the

[[Page 76537]]

compact development process. Capacity constraints may impact the 
timeline for the compact development process.
    Sierra Leone is a post-conflict country that has undergone dramatic 
reforms over the past several years. Many of these reforms are 
reflected in the FY13 scorecard, which Sierra Leone passes for the 
first time, after notable improvements in all scorecard categories. 
Sierra Leone recently held its third democratic election since the end 
of its civil war, which was widely recognized as peaceful, transparent, 
and participatory. It has strengthened its anti-corruption commission, 
provided free health care to children under five and pregnant and 
lactating women, expanded vaccine coverage, improved access to credit, 
and lowered trade barriers. The Government of Sierra Leone's policy 
reforms, direct engagement with MCC's indicator institutions and now 
passing scorecard illustrate the strength of the MCC's incentive 
effect. Scorecards for Sierra Leone can be found here: www.mcc.gov/scorecards. Capacity constraints may result in a longer compact 
development process.
    Tanzania is a democratic nation experiencing economic growth and 
working to reduce one of the highest poverty rates in the world. In 
FY13, Tanzania passed the indicator criteria for the eighth consecutive 
year. Scorecards for Tanzania can be found here: www.mcc.gov/scorecards. Tanzania is one of only four countries to be included as a 
pilot country for the U.S. Partnership for Growth (PFG) initiative. 
Tanzania's role as a pilot PFG country makes it uniquely situated to 
utilize compact resources effectively. In 2011, under the PFG 
initiative, Tanzania completed a constraints to growth analysis. There 
is an engaged MCA team already in operation, and the Government of 
Tanzania and U.S. Government have, through the PFG, both committed to 
focusing efforts towards combating specifically-identified constraints 
to growth. Tanzania's current compact, which will close in September 
2013, is investing in roads, access to potable water, and improving the 
energy sector.
    With this selection decision, MCC looks forward to increased 
competition during compact development among those countries already 
selected. The agency believes that a deeper pool of qualified 
contenders competing for scarce budget resources will reinforce the 
importance of maintaining strong performance on the policy indicators 
and can inspire a more efficient, high-quality compact development 
process.

Countries Re-Selected To Continue Compact Development

    Four of the countries selected as eligible for MCA compact 
assistance in FY13 were previously selected as eligible. Reselection 
allows them to continue compact development and access funding from 
FY2013. These countries include Benin, El Salvador, Georgia, and Ghana.
    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. All four countries pass the scorecards.

Countries Newly Selected for Threshold Program Eligibility

    For FY13, the Board selected Guatemala as eligible for threshold 
assistance. This selection is consistent with the recently re-designed 
threshold program. Under the re-designed concept, the new threshold 
country programs will no longer focus explicitly on trying to move 
indicator scores. Rather, the program will allow countries to diagnose 
binding constraints to economic growth and demonstrate the capacity and 
political will to make difficult policy reforms in partnership with 
MCC. This will contribute directly to the Board's understanding of a 
country's capacity to undertake the type of policy reforms typically 
required to enable a compact investment to have maximum sustainable 
impact.
    Guatemala passes 10 of 20 indicators on the scorecard, including 
both Democratic Rights indicators, and performs on the median on 
Control of Corruption. Guatemala's government has engaged on a series 
of reform to improve the fight against corruption and strengthen the 
rule of law.

Countries Re-Selected To Continue Developing Threshold Programs

    Two countries selected as eligible for threshold assistance in FY13 
were previously selected as eligible. Reselection allows them to 
continue developing threshold programs and access funding from FY2013. 
These countries are Honduras 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 indicates 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 re-
selected each year in order to continue implementation. Once MCC makes 
a commitment to a country through a compact agreement, 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 Liberia, Morocco, Niger, 
Sierra Leone, and Tanzania 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. 2012-31278 Filed 12-27-12; 8:45 am]
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