Danilovich Testifies on MCC Budget

Yesterday, MCC CEO Danilovich testified in front of the House Appropriations Subcommittee on Foreign Operations chaired by Jim Kolbe (R-AZ) and attended by reps Lowey, Kilpatrick, Sherwood, Fattah, Jackson, and Rothman -- a good turnout. A readout below from our friends at Interaction shows that Committee memberswere a well informed bunch, engaged on many of the same issues I had raised in my Tuesday blog.Here's Interaction's readout: I would love to hear from others in attendance.The House Foreign Operations Subcommittee hearing on the MCA took place on March 29th. In his opening remarks Chairman Kolbe welcomed Ambassador Danilovich and stressed that the MCC is at a critical year. No longer a startup organization, the MCC needs to prove itself to the public. The Chairman noted a range of emerging criticisms that the MCC is slow to act, that it is funding the wrong types of projects, that it is not transparent, and that it remains uncoordinated with other aid agencies. He added that he does not share all these criticisms, but noted that Ambassador Danilovich has a difficult job to convince the Subcommittee that the MCC needs an addition $3 billion in the context of a tight budget environment. Ranking member Lowey added that she is concerned that MCC increases have come at the expense of development assistance accounts and that the President's promise of additionality appears to be broken on the country level.In his opening statement, Ambassador Danilovich outlined the mission and the innovative aspects of the MCC, calling it "foreign aid with accountability." He reviewed the expected benefit of MCA funding to the poor in Georgia, Armenia, Madagascar, and Benin, among other countries. Ambassador Danilovich noted that he is seeking to accelerate the pace of compact approvals. At least 3 more compacts are expected to be signed in FY06 and 9-12 are expected in FY07. Ambassador Danilovich said that the MCC expects to run out of funds already appropriated in the second or third quarter of FY07. In light of the increasing size of country compacts, Ambassador Danilovich said he expects to be able to utilize the full $3 billion of the President's request. Without the assurance of a full appropriation, the incentive-driven policy reform effect of the MCC may be lost, he said.In the question and answer session, Ambassador Danilovich received many questions on the budget projections and the poverty impact of the MCC. In response to a question put forward by Chairman Kolbe, Ambassador Danilovich noted that the size of compacts and the speed with which they are signed are increasing as the MCC staff and the MCA leads in the eligible countries become more comfortable with the process. He admitted that given the previous pace of up to five country compacts per year, it is unlikely that the MCC will sign a full 12 compacts in FY07. Questioned by Rep. Jackson on the poverty impact of the MCC as well as its history of funding infrastructure and financial sector projects, Ambassador Danilovich said that the MCC is articulating its openness to health and education projects, citing the examples of Ghana, Burkina Faso, and Mongolia. He said that the MCC measures impact on poverty through the life cycle its compacts. Asked by Rep. Jackson about the additionali ty of MCC funding, Ambassador Danilovich said that MCC funds are 100% additional in 2 of the eight compact countries. Asked by Chairman Kolbe about the use of discretionary 609(g) funding for compact development, Ambassador Danilovich said that the MCC finds 609(g) funding to be very useful and has utilized $33 million. Asked by Ranking Member Lowey about donor coordination, Ambassador Danilovich said that the MCC is actively coordinating with British and German donor agencies and looks forward to doings this more effectively as the organization matures