81 FR 93965 - Report on the Selection of Eligible Countries for Fiscal Year 2017

MILLENNIUM CHALLENGE CORPORATION

Federal Register Volume 81, Issue 246 (December 22, 2016)

[Federal Register Volume 81, Number 246 (Thursday, December 22, 2016)]
[Notices]
[Pages 93965-93967]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30805]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 16-08]


Report on the Selection of Eligible Countries for Fiscal Year 
2017

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUPPLEMENTARY INFORMATION: This report is provided in accordance with 
section 608(d)(1) of the Millennium Challenge Act of 2003, Pub. L. 108-
199, Division D, (the ``Act''), 22 U.S.C. 7708(d)(1).

    Dated: December 16, 2016.
Sarah E. Fandell,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Report on the Selection of Eligible Countries for Fiscal Year 2017

Summary

    This report is provided in accordance with section 608(d)(1) of the 
Millennium Challenge Act of 2003, as amended, Pub. L. 108-199, Division 
D, (the ``Act'') (22 U.S.C. 7707(d)(1)).
    The Act authorizes the provision of 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 assistance for 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:
    1. The countries that are ``candidate countries'' for assistance 
for fiscal year (``FY'') 2017 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)));
    2. 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 ``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 2017, with justification for eligibility 
determination and selection for compact negotiation, including with 
which of the eligible countries the Board will seek to enter into 
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 FY 
2017. It identifies countries determined by the Board to be eligible 
under section 607 of the Act (22 U.S.C. 7706) for FY 2017 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 selected by the Board to receive 
assistance under MCC's threshold program pursuant to section 616 of the 
Act (22 U.S.C. 7715).

Eligible Countries

    The Board met on December 13, 2016 to select those eligible 
countries with which the United States, through MCC, will seek to enter 
into a Millennium Challenge Compact pursuant to section 607 of the Act 
(22 U.S.C. 7706) for FY 2017. The Board selected the following eligible 
countries for such assistance for FY 2017: Burkina Faso, Sri Lanka, and 
Tunisia. The Board also reselected the following countries for compact 
assistance for FY 2017: Cote d'Ivoire, Mongolia, Nepal, and Senegal.

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 2017'' 
formally submitted to Congress on September 20, 2016, 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 countries (``LIC'') or the group of 
lower middle income countries (``LMIC'').
    The criteria and methodology used to assess countries on the annual 
scorecards are outlined in the ``Report on the Criteria and Methodology 
for Determining the Eligibility of Candidate Countries for Millennium 
Challenge Account Assistance in Fiscal Year 2017.'' \1\ Scorecards 
reflecting each country's performance on the indicators are available 
on MCC's Web site at www.mcc.gov/scorecards.
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    \1\ Available at https://www.mcc.gov/resources/doc/report-selection-criteria-and-methodology-fy17.
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    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 also took 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 eighth 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)). As in previous years, they considered the 
higher bar expected of subsequent compact countries, including 
examining the implementation of the first compact, and evidence of both 
improved scorecard policy performance and a commitment to reform. 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

[[Page 93966]]

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. In addition, this is the first year where the Board 
considered an explicit higher bar for those countries close to the 
upper end of the candidate pool, looking closely in such cases at a 
country's access to development financing, the nature of poverty in the 
country, and its policy performance.
    As with previous years, a number of countries that performed well 
on the quantitative elements of the eligibility criteria (i.e., on the 
policy indicators) were not chosen as eligible countries for FY 2017. 
FY 2017 was a particularly competitive year: Several countries were 
already working to develop compacts, multiple countries passed the 
scorecard (some for the first time), and funding was limited due to 
budget constraints. As a result, only three countries that passed the 
scorecard and met the higher bars described above were newly selected 
for MCC compacts, and only two countries for the threshold program.
    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 \2\ and a Guide 
to the Compact Survey Summary \3\ 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. 
The Board also considered a country's commitment to further sector 
reform, as well as evidence of improved scorecard policy performance.
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    \2\ Available at https://www.mcc.gov/resources/doc/guide-to-supplemental-information-fy17.
    \3\ Available at https://www.mcc.gov/resources/doc/guide-to-the-compact-survey-summary-fy15.
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Countries Newly Selected for Compact Assistance

    Using the criteria described above, Burkina Faso, Sri Lanka, and 
Tunisia are the only candidate countries under section 606(a) of the 
Act (22 U.S.C. 7705(a)) that were newly selected for assistance under 
section 607 of the Act (22 U.S.C. 7706).
    Burkina Faso: With an ambitious reform agenda focused on poverty 
reduction, a clearly improved scorecard, and the completion of its 
first compact in July 2014, Burkina Faso exemplifies the higher bar MCC 
has for second compact countries. Its continued policy improvement is 
clear: Despite being one of the poorest countries in Africa, the 
country passes 13 of 20 indicators, has shown strong improvement on 
democratic rights, and has a consistently strong score on the Control 
of Corruption indicator. In addition, the country has taken important 
steps to ensure the sustainability of the first compact investments.
    Sri Lanka: On the back of a successful election in 2015, Sri Lanka 
now passes the MCC scorecard with 13 of 20 indicators met, including 
the hard hurdles on both democratic rights and Control of Corruption. 
In addition MCC has found Sri Lanka to be a high-capacity and committed 
partner during development of the threshold program over the past year. 
As a result, MCC feels Sri Lanka is now solidly exemplifying the 
profile of compact partner, and has decided to move Sri Lanka from the 
threshold program into the compact program. Work done to date in 
developing the threshold program will now contribute to the compact 
development process.
    Tunisia: Tunisia meets the higher bar expected of candidate 
countries that sit towards the upper end of the Lower Middle Income 
Country pool (LMIC). It passes MCC's scorecard with 13 of 20 indicators 
met, including very strong performance on democratic rights, as well as 
Control of Corruption. The country also continues to confront major 
development challenges, with significant inequality, large pockets of 
poverty, and vulnerability undermining the recent strong democratic 
gains. Together with a significant policy reform agenda, a compact with 
Tunisia would provide MCC with a unique opportunity to partner with a 
high-capacity partner in a critically important region.

Countries Reselected To Continue Compact Development

    Three of the countries selected for compact assistance for FY 2017 
were previously selected for FY 2016. These countries are Cote 
d'Ivoire, Nepal and Senegal. The Board reselected these countries based 
on their continued or improved policy performance since their prior 
selection. Mongolia, which had originally been selected for compact 
assistance for FY 2015, temporarily left the candidate pool in FY 2016 
when it graduated to UMIC status. It has returned to the candidate pool 
as a LMIC in FY 2017, and so the Board has once again selected the 
country for compact assistance for FY 2017.

Countries Selected To Receive Threshold Program Assistance

    The Board selected Kosovo and Timor-Leste to receive threshold 
program assistance.
    Kosovo: Kosovo is committed to reform and is a strong partner of 
MCC--taking numerous steps to improve its scorecard performance since 
2012, and ultimately being selected for compact assistance for FY 2016. 
However, given Kosovo's trajectory on the Control of Corruption 
indicator, the Board decided that threshold program assistance is a 
more appropriate tool. By selecting Kosovo to receive threshold program 
assistance, MCC will support the government in its efforts on continued 
institutional and policy reform.
    Timor-Leste: Timor-Leste offers MCC the opportunity to support the 
government with its significant policy and institutional reform needs 
as it confronts substantial poverty and capacity challenges, especially 
in the face of a difficult macroeconomic environment. While it has 
historically struggled to pass the MCC scorecard as an LMIC, Timor-
Leste has fallen into the LIC category, where it does pass MCC's 
scorecard with 12 out of 20 indicators met, including both democratic 
rights indicators and the Control of Corruption indicator.

Countries Reselected To Continue Developing Threshold Programs

    This year the Board reselected Togo to continue developing a 
threshold program. Togo continues to improve on MCC's scorecard, 
passing more than half of the scorecard overall by meeting 12 of 20 
indicators this year. It also continues to meet the democratic rights

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hurdle and passed the Control of Corruption indicator for the first 
time.

Ongoing Review of Partner Countries' Policy Performance

    The Board emphasized the need for all partner countries to maintain 
or improve their policy performance. If it is determined during compact 
implementation that a country has demonstrated a significant policy 
reversal, MCC can hold it accountable by applying MCC's Suspension and 
Termination Policy.\4\
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    \4\ Available at https://www.mcc.gov/resources/doc/policy-on-suspension-and-termination.
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[FR Doc. 2016-30805 Filed 12-21-16; 8:45 am]
BILLING CODE 9211-03-P