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POLICY November 2008

BRIEF

Millennium Challenge Corporation

RECOMMENDATIONS
PROBLEM
Congress should approve the House Appropriations Committee FY09 funding level
The Millennium for the MCC of $1.54 billion. The new Administration should set the FY10 level at
Challenge $2 billion in its budget request. If Congress does not appropriate for FY09 a level of
Corporation’s (MCC)
funding similar to last year ($1.55 billion), the MCC will not be able to sign any new
multi-year funding
makes it vulnerable Compacts until FY 2010.
to Congressional
cuts. For FY09 the ACTIONS
President requested
$2.225 billion, • After a development agency director is named, in consultation with that person, ap-
but the Senate point a dynamic individual to lead the MCC who meets the following criteria: strong
Appropriations background in poverty-focused development; experience managing field programs;
Committee allocated
track record on gender integration and participatory approaches; strong manage-
$254 million.
Without continuity ment and communications abilities; and experience working with Congress;
of funding the • Work with Congress to maintain support for the MCC through the budget and ap-
United States will propriations processes;
lose credibility with • Support the program and maintain its integrity in terms of key principles: country
potential Compact ownership, civil society participation, non-political decisions, poverty reduction
countries, which are
through economic growth, rewarding best performers, gender integration, multi-
improving policies
and establishing year funding, no tied or earmarked funds, transparency and accountability;
programs in • Ensure the MCC’s principles are maintained and that it has the structures and
anticipation of capacity to implement programs according to those principles in any major reform
signing a Compact. or restructuring of foreign aid; and
• Fully fund the MCC budget request level.

RESULTS
The MCC model has been a catalyst of policy reforms around the world that improve
transparency, fight corruption and promote women’s rights. Maintaining one of the
more innovative U.S. foreign aid programs will encourage a continuation of policy
1400 16th Street, NW changes in governments interested in a relationship with MCC and the United States
Suite 210 government.
Washington, DC 20036
202-667-8227
reform@interaction.org

www.interaction.org
BACKGROUND
ESTABLISHED BY CONGRESS IN 2004, THE MILLENNIUM
Challenge Corporation (MCC) has developed into a highly in-
novative foreign aid program with a focus on reducing pover-
ty through economic growth. The MCC has institutionalized a
number of operating principles the development commu-
nity has long advocated: country ownership, consultation
with all elements of civil society, sustainability, multi-year
funding, and transparent selection based on performance.
To be eligible to participate in the program, low and
moderate income countries are required to meet and pass
a majority of 17 independent and publically available per-
formance criteria in the MCC-defined areas of ruling justly,
investing in people, and economic freedom. This require-
ment has created an “MCC effect” through which countries
change polices in the three areas in order to be eligible to
apply to the MCC.
The MCC has signed 18 five-year Compacts for a total of
$6.3 billion. To ensure the funding is available for each Com-
pact the MCC sets aside the total Compact funding at the
time of signing.
However, Congress has not accepted the principle of le-
gally committing, and therefore setting aside, funding for
each signed compact.