Notice2022-21453
Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance for Fiscal Year 2023
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Published
October 4, 2022
Issuing agencies
Millennium Challenge Corporation
Abstract
This report to Congress is provided in accordance with the Millennium Challenge Act of 2003. The Millennium Challenge Act of 2003 requires the Millennium Challenge Corporation to publish a report that identifies the criteria and methodology that MCC intends to use to determine which candidate countries may be eligible to be considered for assistance under the Millennium Challenge Act for fiscal year 2023. The report is set forth in full below.
Full Text
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[Federal Register Volume 87, Number 191 (Tuesday, October 4, 2022)]
[Notices]
[Pages 60204-60210]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-21453]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 22-13]
Report on the Criteria and Methodology for Determining the
Eligibility of Candidate Countries for Millennium Challenge Account
Assistance for Fiscal Year 2023
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: This report to Congress is provided in accordance with the
Millennium Challenge Act of 2003. The Millennium Challenge Act of 2003
requires the Millennium Challenge Corporation to publish a report that
identifies the criteria and methodology that MCC intends to use to
determine which candidate countries may be eligible to be considered
for assistance under the Millennium Challenge Act for fiscal year 2023.
The report is set forth in full below.
(Authority: 22 U.S.C. 7707(b)(2))
Dated: September 28, 2022.
Thomas G. Hohenthaner,
Acting VP/General Counsel and Corporate Secretary.
Report on the Criteria and Methodology for Determining the Eligibility
of Candidate Countries for Millennium Challenge Account Assistance for
Fiscal Year 2023
This document explains how the Board of Directors (the Board) of
the Millennium Challenge Corporation (MCC) will identify, evaluate, and
select eligible countries for fiscal year (FY) 2023. Specifically, this
document discusses the following:
(I) Which countries MCC will evaluate
(II) How the Board evaluates these countries
A. Overall evaluation
B. For selection of an eligible country for a first compact
C. For selection of an eligible country for a subsequent compact
D. For selection of an eligible country for a concurrent compact
E. For threshold program assistance
F. A note on potential transition to upper middle income country
status after initial selection
This report is provided in accordance with section 608(b) of the
Millennium Challenge Act of 2003, as amended (the Act), as more fully
described in Appendix A.
(I) Which countries are evaluated?
MCC evaluates the policy performance of all candidate countries and
statutorily-prohibited countries by dividing them into two income
categories for the purposes of creating ``scorecards.'' 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. In FY 2023, those scorecard evaluation income categories
\1\ are:
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\1\ These income groups correspond to the definitions of low
income countries and lower middle countries using the historical
International Development Association (IDA) threshold published by
the World Bank. MCC has used these categories to evaluate country
performance since FY 2004. Our amended statute no longer uses those
definitions for funding purposes, but we continue to use them for
evaluation purposes.
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<bullet> Countries whose gross national income (GNI) per capita is
$2,045 or less; and
<bullet> Countries whose GNI per capita is between $2,046 and
$4,255.
Appendix B lists all candidate countries and statutorily-prohibited
countries for scorecard evaluation purposes.
(II) How does the Board evaluate these countries?
A. Overall Evaluation
The Board looks at three legislatively-mandated factors when it
evaluates 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
Appendix C describes all 20 indicators, their definitions, what is
required to ``pass,'' their source, and their relationship to the
legislative criteria. Because of the importance of evaluating a
country's policy performance in a comparable, cross-country way, the
Board relies to the maximum extent possible upon the best-available
objective and quantifiable policy performance indicators. These
indicators act as proxies for a country's commitment to just and
democratic governance, economic freedom, and investing in its people,
per MCC's founding legislation. Comprised of 20 third-party indicators
in the categories of ruling justly, encouraging economic freedom, and
investing in people, MCC scorecards are created for all candidate
countries and statutorily-prohibited countries. To ``pass'' most
indicators on its scorecard, a country's score on each indicator must
be above the median score in its income group (as defined above for
scorecard evaluation purposes). For the inflation, political rights,
civil liberties, and immunization rates \2\ indicators, however,
minimum or maximum scores for ``passing'' have been established. In
particular, the Board considers whether a country
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\2\ A minimum score required to pass has been established for
the immunization rates indicator only when the median score is above
a 90 percent immunization rate. Countries must score above 90
percent or the median for their scorecard income pool, whichever is
lower, in order to pass the indicator.
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<bullet> passed at least 10 of the 20 indicators, with at least one
pass in each of the three categories,
<bullet> passed either the Political Rights or Civil Liberties
indicator; and
<bullet> passed the Control of Corruption indicator.
While satisfaction of all three aspects means a country is termed
to have ``passed'' the scorecard, the Board also considers whether the
country performs ``substantially worse'' in any one policy category
than it does on the scorecard overall.
The mandatory passing of either the Political Rights or Civil
Liberties indicators is called the Democratic
[[Page 60205]]
Rights ``hard hurdle'' on the scorecard, while the mandatory passing of
the Control of Corruption indicator is called the Control of Corruption
``hard hurdle.'' Not passing either ``hard hurdle'' results in not
passing the scorecard overall, regardless of whether at least 10 of the
20 other indicators are passed.
<bullet> Democratic Rights ``hard hurdle:'' This hurdle sets a
minimum bar for democratic rights below which the Board will not
consider a country for eligibility. Requiring that a country pass
either the Political Rights or Civil Liberties indicator creates a
democratic incentive for countries, recognizes the importance democracy
plays in driving poverty-reducing economic growth, and holds MCC
accountable to working with the best governed, poorest countries. When
a candidate country is only passing one of the two indicators
comprising the hurdle (instead of both), the Board will also closely
examine why it is not passing the other indicator to understand what
the score implies for the broader democratic environment and trajectory
of the country. This examination will include consultation with both
local and international civil society experts, among others. The hurdle
is an important signal of the importance MCC places on democratic
governance and the role of MCC programs in helping democracies deliver
development results for their citizens--a democratic dividend.
<bullet> Control of Corruption ``hard hurdle:'' Corruption in any
country is an unacceptable tax on economic growth and an obstacle to
the private sector investment needed to reduce poverty. Accordingly,
MCC seeks out partner countries that are committed to combatting
corruption. It is for this reason that MCC also has the Control of
Corruption ``hard hurdle,'' which helps ensure that MCC is working with
countries where there is relatively strong performance in controlling
corruption. Requiring the passage of the indicator provides an
incentive for countries to demonstrate a clear commitment to
controlling corruption, and allows MCC to better understand the issue
by seeing how the country performs relative to its peers and over time.
Together, the 20 policy performance indicators are the predominant
basis for determining which eligible countries will be selected 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 a compact. The
Board, however, also recognizes that even the best-available data has
inherent challenges. Data gaps, real-time events versus data lags, the
absence of narratives and nuanced detail, and other similar weaknesses
affect each of these indicators. As such, the Board uses its judgment
to interpret policy performance as measured by the scorecards. The
Board may also consult other sources of information to enhance its
understanding of the context underpinning a country's policy
performance beyond scorecard issues (e.g., specific policy issues
related to trade, the treatment of civil society, other U.S. aid
programs, financial sector performance, and security/foreign policy
concerns). The Board uses its judgment on how best to weigh such
information in assessing overall policy performance and making a final
determination.
(2) The Opportunity To Reduce Poverty and Generate Economic Growth
While the Board considers a range of other information sources
depending on the country, specific areas of attention typically include
better understanding issues and trends in, and trajectory of:
<bullet> the state of democratic and human rights (especially
vulnerable groups \3\);
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\3\ For example: women; children; LGBTQI+ individuals; people
with disabilities; and workers.
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<bullet> civil society's perspective on salient governance issues;
<bullet> the control of corruption and rule of law;
<bullet> the potential for the private sector (both local and
foreign) to lead investment and growth;
<bullet> poverty levels within a country; and
<bullet> 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 areas of expertise and skills
versus a country's needs, and MCC's capacity to work with a country.
This information provides greater clarity on the likelihood that
MCC programs will have an appreciable impact on reducing poverty by
generating economic growth in a given country. The Board has used such
information to better understand when a country's performance on a
particular indicator may not be up to date or is about to change. It
has also used supplemental information to decline to select countries
that are otherwise passing their scorecards. More details on this
subject (sometimes referred to as ``supplemental information'') can be
found on MCC's website: <a href="http://www.mcc.gov/who-we-select/indicators">www.mcc.gov/who-we-select/indicators</a>.
(3) The Availability of MCC Funds
The final factor that the Board must consider when evaluating
countries is the availability of funds. The agency's budget allocation
is constrained, and often specifically limited, by provisions in our
authorizing legislation and appropriations acts. MCC has a continuous
pipeline of countries in compact development, compact implementation,
threshold programs, and program closure. Consequently, the Board
factors in MCC's overall portfolio when making its selection decisions
given the funding available for each planned or existing program.
* * * * *
The following subsections describe how each of these three
legislatively-mandated factors are applied by the Board: selection of
countries for a compact, selection of countries for a subsequent
compact, selection of countries for the threshold program, and
selection of countries for a concurrent compact. A note follows on
considerations for countries that might transition to upper middle
income country status after initial selection.
B. Evaluation for Selection of Eligible Countries for a First Compact
When selecting eligible countries for a compact, 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 supplemental 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) available
funding.
At a minimum, the Board considers whether a country passes its
scorecard. It also examines supporting evidence that a country's
commitment to just and democratic governance, economic freedom, and
investing in its people is on a sound footing and performance is on a
positive trajectory (especially on the ``hard hurdles'' of Democratic
Rights and Control of Corruption), and that MCC has the funds to
support a meaningful compact with that country. Where applicable,
previous threshold program information is also considered. For those
countries that are currently developing or implementing a threshold
program, the Board will examine the progress the country has made
toward substantial implementation.
The Board then weighs the information described above across each
of the three dimensions. During the
[[Page 60206]]
compact development period following initial selection, the Board
reevaluates a selected country based on this same approach.
C. Evaluation for Selection of Eligible Countries for a Subsequent
Compact
Section 609(l) of the Act authorizes MCC to enter into ``one or
more subsequent Compacts.'' MCC does not consider the eligibility of a
country for a subsequent compact, however, before the country has
completed its compact or is within 18 months of compact completion.
Selection for a subsequent compact is not automatic and is intended for
countries that (1) exhibit successful performance on their previous
compact(s); (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(s)
To evaluate the previous compact's success, the Board examines
whether the compact succeeded within its budget and time limits, in
particular by looking at three aspects:
<bullet> 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 both being implemented to the best of that country's
ability?
<bullet> 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?
<bullet> The degree to which the country has implemented the
compact in accordance with MCC's core policies and standards: Is the
country adhering to MCC's policies and procedures, including in
critical areas such as: remediating unresolved claims of fraud,
corruption, or abuse of funds; procurement; and monitoring and
evaluation?
Details on the specific information types 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(s) will be or
has been completed on time and on budget, and that there is a
commitment to continued, robust reform going forward.
(2) Improved Scorecard Policy Performance
The Board also 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 following:
<bullet> The overall scorecard pass/fail rate over time, and what
this suggests about underlying policy performance, as well as an
examination of the underlying reasons;
<bullet> The progress over time on policy areas measured by both
hard-hurdle indicators--Democratic Rights and Control of Corruption--
including an examination of the underlying reasons; and
<bullet> Other indicator trajectories 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 those gleaned
through consultations with civil society and related stakeholders).
Other information sources 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 MCC's own experience during
the previous compact in considering how committed the country is to
reducing poverty and increasing economic growth, and tries to gauge the
country's commitment to further sector reform should it be selected for
a subsequent compact. This includes:
<bullet> Assessing the country's delivery of policy reform during
the previous compact (as described above);
<bullet> Assessing expectations of the country's ability and
willingness to continue embarking on sector policy reform in a
subsequent compact;
<bullet> Examining both other information sources describing the
opportunity to reduce poverty by generating growth (as outlined in A.2
above), and the prior compact's relative success overall, as already
discussed; and
<bullet> Finally, considering how well funding can be leveraged for
impact, given the country's experience in the previous compact.
* * * * *
Through this overall approach to selection for a subsequent
compact, the Board applies the three legislatively mandated evaluation
criteria (policy performance, the opportunity to reduce poverty and
generate economic growth, and available funds) in a way that assesses
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 a decision.
During the compact development period following initial selection,
the Board reevaluates a selected country based on this same approach.
D. Evaluation for Concurrent Compacts
Section 609(k) of the Act authorizes MCC to enter into one
additional concurrent compact with a country if one or both of the
compacts with the country is for the purpose of regional economic
integration, increased regional trade, or cross-border collaborations.
The fundamental criteria and process for the selection of countries
for such compacts remains the same as those for the selection of
countries for non-concurrent compacts: countries continue to be
evaluated and selected individually, as described in sections II.A,
II.B, II.C, and II.F.
Section 609(k) also requires as a precondition for a concurrent
compact that the Board determine that the country is making
``considerable and demonstrable progress in implementing the terms of
the existing Compact and supplementary agreements thereto.'' This
statutory requirement is fully consistent with prior Board practice
regarding the selection of a country for a non-concurrent compact. For
a country where a concurrent compact is contemplated, the Board will
take into account whether there is clear evidence of success, as
relevant to the phase of the current compact. Among other information,
the Board will examine the evaluation criteria described in Section
II.C.1 above, notably:
<bullet> The degree to which there is evidence of strong political
will and management capacity;
[[Page 60207]]
<bullet> The degree to which the country has exhibited commitment
and capacity to achieve program results; and
<bullet> The degree to which the country has implemented the
compact in accordance with MCC's core policies and standards.
In addition to providing information to the Board so it can make
its determination regarding the country's progress in implementing its
current compact, MCC will provide the Board with additional information
relating to the potential for regional economic integration, increased
regional trade, or cross-border collaborations for any country being
considered for a concurrent compact. This information may include items
such as:
<bullet> The current state of a country's regional integration,
such as common financial and political dialogue frameworks, integration
of productive value chains, and cross-border flows of people, goods,
and services.
<bullet> The current and potential level of trade between a country
and its neighbors, including analysis of trade flows and unexploited
potential for trade, and an assessment of the extent and significance
of tariff and non-tariff barriers, including information regarding the
patterns of trade.
<bullet> The potential gains from cross-border cooperation between
a country and its neighbors to alleviate bilateral and regional
bottlenecks to economic growth and poverty reduction, such as through
physical infrastructure or coordinated policy and institutional
reforms.
The Board can then weigh all information as a whole--the
fundamental selection factors described in sections II.A, II.B, II.C,
and II.F, the information regarding implementation of the current
compact, and any additional relevant information regarding potential
regional integration--to determine whether or not to direct MCC to seek
to enter into a concurrent compact with a country.
E. Evaluation for Threshold Program Assistance
The Board may also evaluate countries for participation in the
threshold program. Threshold programs provide assistance to candidate
countries exhibiting a significant commitment to meeting the criteria
described in the previous subsections, but failing to meet such
requirements. Specifically, in examining a candidate country's policy
performance, the opportunity to reduce poverty and generate economic
growth, and available funds, the Board will consider whether a country
appears to be on a trajectory to becoming viable for compact
eligibility in the medium or short term.
F. A Note on Potential Transition to Upper Middle Income Country (UMIC)
Status After Initial Selection
Some candidate countries may have a high per capita income or a
high growth rate that implies there is a chance they could transition
to UMIC status during the life of an MCC partnership. It is not
possible to accurately predict if or when such a transition may occur.
Nonetheless, such countries may have more resources at their
disposal for funding their own growth and poverty reduction strategies.
As a result, in addition to using the regular selection criteria
described in the previous sections, the Board will use its discretion
to assess both the need and the opportunity presented by partnering
with such a country, in order to ensure that MCC's scarce grant funds
are directed appropriately.
Specifically, if a candidate country with a high probability of
transitioning to UMIC status is under consideration for selection, the
Board will examine additional data and information related to the
following:
<bullet> Whether the country faces significant challenges accessing
other sources of development financing (such as international capital,
domestic resources, and other donor assistance) and, if so, whether MCC
grant financing would be an appropriate tool;
<bullet> Whether the nature of poverty in the country (for example,
high inequality or poverty headcount ratios relative to peer countries)
presents a clear and strategic opportunity for MCC to assist the
country in reducing such poverty through projects that spur economic
growth;
<bullet> Whether the country demonstrates particularly strong
policy performance, including policies and actions that demonstrate a
clear priority on poverty reduction; and
<bullet> Whether MCC can reasonably expect that the country would
contribute a significant amount of funding to the compact.
These additional criteria would then be applied in any additional
years of selection as the country continues to develop its compact.
Should a country eventually transition to UMIC status during compact
development, a country would no longer be a candidate for selection for
that fiscal year. Continuing compact development beyond that point
would then be at the Board's discretion.
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 (the
Act), 22 U.S.C. 7707(b).
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 2023 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
assistance for FY 2023 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 2023, 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 satisfies item 2 above.
Appendix B: Lists of All Candidate Countries and Statutorily-Prohibited
Countries for Evaluation Purposes
Income Groups 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. 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 scorecard evaluation groups 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 historical IDA classifications for
eligibility to categorize countries in two groups for purposes of FY
2023 scorecard comparisons:
[[Page 60208]]
<bullet> Countries with GNI per capita equal to or less than
IDA's historical ceiling for eligibility (i.e., $2,045 for FY 2023);
and
<bullet> Countries with GNI per capita above IDA's historical
ceiling for eligibility but below the World Bank's upper middle
income country threshold (i.e., $2,046 and $4,255 for FY 2023).
The list of countries for FY 2023 scorecard assessments is set
forth below:
Countries With GNI per Capita of $2,045 or Less
1. Afghanistan
2. Angola
3. Benin
4. Burkina Faso
5. Burundi
6. Cambodia
7. Cameroon
8. Central African Republic
9. Chad
10. Comoros
11. Congo, Democratic Republic of the
12. Congo, Republic of
13. Eritrea
14. Ethiopia
15. Gambia, The
16. Guinea
17. Guinea-Bissau
18. Haiti
19. Kenya
20. Korea, North
21. Kyrgyzstan
22. Lesotho
23. Liberia
24. Madagascar
25. Malawi
26. Mali
27. Mauritania
28. Mozambique
29. Myanmar
30. Nepal
31. Nicaragua
32. Niger
33. Pakistan
34. Rwanda
35. Senegal
36. Sierra Leone
37. Somalia
38. South Sudan
39. Sudan
40. Syria
41. Tajikistan
42. Tanzania
43. Timor-Leste
44. Togo
45. Uganda
46. Uzbekistan
47. Yemen
48. Zambia
49. Zimbabwe
Countries With GNI per Capita Between $2,046 and $4,255
1. Algeria
2. Bangladesh
3. Bhutan
4. Bolivia
5. Cabo Verde
6. Cote d'Ivoire
7. Djibouti
8. Egypt
9. El Salvador
10. Eswatini
11. Ghana
12. Honduras
13. India
14. Indonesia
15. Iran
16. Kiribati
17. Laos
18. Lebanon
19. Micronesia, Federated States of
20. Mongolia
21. Morocco
22. Nigeria
23. Papua New Guinea
24. Philippines
25. Samoa
26. Sao Tome and Principe
27. Solomon Islands
28. Sri Lanka
29. Tunisia
30. Ukraine
31. Vanuatu
32. Vietnam
Statutorily-Prohibited Countries
1. Burkina Faso
2. Burma
3. Cambodia
4. Eritrea
5. Ethiopia
6. Haiti
7. Iran
8. Korea, North
9. Mali
10. Nicaragua
11. South Sudan
12. Sri Lanka
13. Sudan
14. Syria
15. 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 MCC
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.
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 website at <a href="http://www.mcc.gov/who-we-select/indicators">www.mcc.gov/who-we-select/indicators</a>).
Ruling Justly
1. Political Rights: Independent experts rate countries on the
prevalence of free and fair electoral processes; political pluralism
and participation of all stakeholders; government accountability and
transparency; 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 and belief; 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 shutting down social media or the internet. Pass: Score
must be above the median score for the income group. Source:
Reporters Without Borders/Access Now/Centre for Law and Democracy.
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 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: General government net lending/borrowing as a
percent of gross domestic product (GDP), averaged over a three year
period. Net lending/borrowing is calculated as revenue minus total
expenditure. The data for this measure comes from the IMF's World
Economic Outlook. Pass: Score must be above the median score for the
income group. Source: 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
[[Page 60209]]
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 factors such as the
capacity to access institutions, get a job, register a business,
sign a contract, open a bank account, choose where to live, to
travel freely, property rights protections, protections against
domestic violence, and child marriage, among others. Pass: Score
must be above the median score for the income group. Source: Women,
Business, and the Law (World Bank) and the WORLD Policy Analysis
Center (UCLA).
6. Land Rights and Access: An index that rates countries on the
extent to which the institutional, legal, and market framework
provides secure land tenure and equitable access to land in rural
areas and the extent to which men and women have the right to
private property in practice and in law. Pass: Score must be above
the median score for the income group. Source: The International
Fund for Agricultural Development and Varieties of Democracy Index
7. Access to Credit: An index that ranks countries based on
access and use of formal and informal financial services as measured
by the number of bank branches and ATMs per 100,000 adults and the
share of adults that have an account at a formal or informal
financial institution. Pass: Score must be above the median score
for the income group. Source: Financial Development Index
(International Monetary Fund) and Findex (World Bank)
8. Employment Opportunity: Measures a country government's
commitment to ending slavery and forced labor, preventing employment
discrimination, and protecting the rights of workers and people with
disabilities. Pass: Score must be above the median score for the
income group. Sources: Varieties of Democracy Institute and WORLD
Policy Analysis Center (UCLA).
Investing in People
1. Public Expenditure on Health: Total current expenditures on
health by government (excluding funding sourced from external
donors) 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 a country government's
commitment to preserving biodiversity and natural habitats,
responsibly managing ecosystems and fisheries, and engaging in
sustainable agriculture. Pass: Score must be above the median score
for the income group. Source: 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 either the median score for the income
group or 90 percent, whichever is lower. 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). Countries with a GNI/capita of
$2,045 or less 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. Countries with
a GNI/capita between $2,045 and $4,255 are 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
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.
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,
Employment Opportunity, 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, Employment
Opportunity);
(E) combat corruption (Political Rights, Civil Liberties, Rule
of Law, Freedom of Information, and Control of Corruption); and
(F) the quality of the civil society enabling environment (Civil
Liberties, Freedom of Information, Employment Opportunity, and Rule
of Law)
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, 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, Land Rights and Access, Access to Credit,
and Regulatory Quality); and
(D) respect worker rights, including the right to form labor
unions (Employment Opportunity, Civil Liberties, and Gender in the
Economy)
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, Total
Public Expenditure on Primary Education, and Employment
Opportunity);
(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 and Concurrent Compact Considerations
MCC reporting and data in the following chart are used to assess
threshold program performance, compact performance of MCC compact
countries nearing the end of compact implementation (i.e., within 18
months of compact end date), or for current MCC compact countries
under consideration for a concurrent compact, where appropriate.
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 website under MCC country programs (<a href="http://www.mcc.gov/where-we-work">www.mcc.gov/where-we-work</a>) or monitoring and evaluation (<a href="http://www.mcc.gov/our-impact/m-and-e">www.mcc.gov/our-impact/m-and-e</a>)
web pages.
For completed compacts, additional information is used to assess
compact
[[Page 60210]]
performance and is found in a country's Star Report. The Star Report
and its associated quarterly business process capture key
information to provide a framework for results and improve the
ability to disseminate learning and evidence throughout the
lifecycle of an MCC investment from selection to final evaluation.
For each compact and threshold program, evidence is collected on
performance indicators, evaluation results, partnerships,
sustainability efforts, and learning, among other elements.
----------------------------------------------------------------------------------------------------------------
Topic MCC reporting/data source Published documents
----------------------------------------------------------------------------------------------------------------
COUNTRY PARTNERSHIP
----------------------------------------------------------------------------------------------------------------
Political Will: <bullet> Quarterly <bullet> Quarterly results
<bullet> Status of major conditions precedent. implementation reporting. published as ``Table of Key
<bullet> Program oversight/implementation. <bullet> Quarterly results Performance Indicators''
[cir] project restructures. reporting. (available by country): https://
[cir] partner response to accountable entity <bullet> MCC Star Reports. <a href="http://www.mcc.gov/our-impact/m-and-e">www.mcc.gov/our-impact/m-and-e</a>.
capacity issues. <bullet> Star Reports (available
<bullet> Political independence of the by country): https://www.mcc.gov/
accountable entity. resources?fwp_resource_type=star-
report.
Management Capacity:
<bullet> Project management capacity.
<bullet> Project performance.
<bullet> Level of MCC intervention/oversight.
<bullet> Relative level of resources required.
----------------------------------------------------------------------------------------------------------------
PROGRAM RESULTS
----------------------------------------------------------------------------------------------------------------
Financial Results: <bullet> Indicator tracking <bullet<ls-thn-eq> Monitoring and
<bullet> Commitments--including contributions tables. Evaluation Plans (available by
to compact and threshold funding . <bullet> Quarterly financial country): https://www.mcc.gov/
<bullet> Disbursements. reporting. our-impact/m-and-e.
Project Results: <bullet> Quarterly <bullet> Quarterly results
<bullet> Output, outcome, objective targets. implementation reporting. published as ``Table of Key
<bullet> Accountable entity commitment to <bullet> Quarterly results Performance
`focus on results'. reporting. Indicators''(available by
<bullet> Accountable entity cooperation on <bullet> Impact evaluations. country): https://www.mcc.gov/
impact evaluation. <bullet> MCC Star Reports. our-impact/m-and-e.
<bullet> Percent complete for process/outputs. <bullet> Star Reports (available
<bullet> Relevant outcome data. by country): https://www.mcc.gov/
<bullet> Details behind target delays. resources?fwp_resource_type=star-
report.
Target Achievements
----------------------------------------------------------------------------------------------------------------
ADHERENCE TO STANDARDS
----------------------------------------------------------------------------------------------------------------
<bullet> Procurement <bullet> Audits (GAO and OIG) <bullet> Published OIG and GAO
<bullet> Environmental and social. <bullet> Quarterly audits
<bullet> Fraud and corruption. implementation reporting <bullet> Star Reports (available
<bullet> Program closure. <bullet> MCC Star Reports by country): https://www.mcc.gov/
<bullet> Monitoring and evaluation. resources?fwp_resource_type=star-
<bullet> All other legal provisions. report
----------------------------------------------------------------------------------------------------------------
COUNTRY SPECIFIC
----------------------------------------------------------------------------------------------------------------
Sustainability: <bullet> Quarterly <bullet> Quarterly results
<bullet> Implementation entity. implementation reporting. published as ``Table of Key
<bullet> MCC investments. <bullet> Quarterly results Performance Indicators''
reporting. (available by country): https://
<bullet> MCC Stars Reports. <a href="http://www.mcc.gov/our-impact/m-and-e">www.mcc.gov/our-impact/m-and-e</a>.
<bullet> Star Reports (available
by country): <a href="https://www.mcc.gov/resources?fwp_resource_type=star-report">https://www.mcc.gov/resources?fwp_resource_type=star-report</a> report.
----------------------------------------------------------------------------------------------------------------
Role of private sector or other donors:
<bullet> Other relevant investors/investments.
<bullet> Other donors/programming.
<bullet> Status of related reforms.
<bullet> Trajectory of private sector
involvement going forward.
----------------------------------------------------------------------------------------------------------------
[FR Doc. 2022-21453 Filed 10-3-22; 8:45 am]
BILLING CODE 9211-03-P
</pre></body>
</html>Indexed from Federal Register on October 4, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.