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Monday, December 19, 2011

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; 
       an emphasis on public transparency in every aspect of agency operations. 

In February 2011, the Obama Administration issued its FY2012 budget, requesting $1.125 billion for the MCC, a 2% increase from the enacted FY2010 appropriation and a 25% increase over the final FY2011 appropriation. On July 27, 2011, the State, Foreign Operations subcommittee of the House Committee on Appropriations marked up an FY2012 bill, providing $898.2 million for the MCC, equal to the FY2011 level. The bill has not yet been approved by the full Committee on Appropriations. On September 22, 2011, the Senate Appropriations Committee reported S. 1601 (S.Rept. 112-85), the FY2012 State, Foreign Operations Appropriations, providing $898.2 million, equal to the FY2012 level.

Congress authorized the MCC in P.L. 108-199 (January 23, 2004). Since that time, the MCC’s Board of Directors has approved 24 grant agreements, known as compacts: with Madagascar (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), and Indonesia (2011).

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: December 8, 2011
Number of Pages: 46
Order Number: RL32427
Price: $29.95

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