Next Tuesday the Millennium Challenge Corporation’s (MCC) board of directors will hold its final meeting of the year—and the last under the Obama administration. On the docket? Selecting which countries will be eligible for MCC assistance for fiscal year (FY) 2017. For the fourteenth year running, CGD’s MCC Monitor discusses overarching issues that will impact the decisions and offers predictions of which countries will be selected.
This year the board will face some particularly tough decisions. Members will have to pay particular attention to political risk in prospective partner countries and grapple with how best to use imperfect data on policy performance to inform whether to continue existing partnerships. In addition, MCC arguably faces an unusually uncertain budget environment in the wake of the recent US elections. The board must, as always, be judicious in its selection of new partners.
This year we predict that the board will newly select for compact eligibility Sri Lanka, Tunisia (for initial compacts), and Burkina Faso (for a second compact). In addition, because countries that are in the process of developing a compact with MCC are typically considered for “reselection” each year until they sign a compact, the board will likely reselect Cote d’Ivoire and Nepal (both working toward initial compacts), as well as Senegal (working toward a second compact). It will face more difficult decisions about whether to reselect Kosovo, Lesotho, Mongolia, and the Philippines. Kosovo and Mongolia both fall short on MCC’s “Control of Corruption” hurdle. A smart interpretation of the data will recognize that this reflects insignificant data “noise” rather than any actual deterioration in the anticorruption environment. However, the challenge is balancing a nuanced understanding of the data with the credibility of the selection system and the need to signal the importance of corruption. Of the two countries, Mongolia is a more consistent performer and more likely to be reselected. Lesotho and the Philippines present an opposite conundrum; they continue to pass the scorecard but do show signs of actual policy decline. We expect the board will likely defer reselection decisions for these two until more is known about the direction of their policy environments. For threshold program eligibility, the board may newly select Bangladesh and/or Timor-Leste, with Timor-Leste the more likely choice. Kosovo is another likely choice for the threshold program if, as we predict, the board doesn’t reselect them for continued compact eligibility. The board will also likely reselect Togo to continue developing its threshold program.
See the new MCC Monitor Analysis for broader discussion of these country predictions and the overarching issues that will influence the board’s decisions.