The Millennium Challenge Corporation (MCC) recently released its FY2012 Candidate Country Report, officially kicking off this year’s selection process. The report identifies low income country (LIC) and lower middle income country (LMIC) groups as well as countries that are legally prohibited from receiving MCC funds. In addition to key MCC country income category transitions, the list of prohibited countries has increased this year as countries with poor human trafficking records are also disqualified.The per capita income cut-off for the LIC group this year is $1915. Four countries surpassed this level and graduated out of the LIC group into LMIC status: the Republic of the Congo, Guyana, Kiribati, and the Philippines. Six countries graduated out of the LMIC group and MCC candidacy: China, Ecuador, Jordan, Maldives, Thailand, and Tunisia. The LMIC group includes countries with per capita incomes between $1916-$3975. Two countries transitioned into lower income groups: Timor-Leste moved from the LMIC to the LIC group, and Fiji moved from the upper middle income group into the LMIC group.There is a similar level of country volatility this year compared to FY2011 with a net two fewer candidate countries in FY2012. Two MCC compact countries – the Philippines and Jordan – transition income groups. The Philippines’ $434 million compact entered-into-force on May 26, 2011. While its indicator outcomes will be affected by tougher medians in a new peer group, compact implementation should be unaffected by the Philippines’ transition to the LMIC group.Jordan’s transition out of the LMIC group and out of MCC candidacy poses a dilemma. Jordan and the MCC signed a $275 million compact in October 2010. The compact has not yet entered into force, but compact implementation should be unaffected by the income group transition. However because Jordan is no longer an MCC candidate country, it will no longer be subjected to the indicators test or have a scorecard. This means that the MCC will have two compact countries – Jordan and Namibia – that don’t receive annual scorecards on the MCC indicators. The MCC should consider producing scorecards for these compact countries even though they have risen above the LMIC category. (Both countries have incomes close enough to the upper LMIC level that it would make sense to simply use LMIC medians to determine indicator passing.)Another big change this year is the number of countries that are legally prohibited from receiving MCC funds. The MCC has added countries ranked as Tier III in the 2010 Trafficking in Persons Report. This has led to an increase from 11 prohibitions in FY2011 to 16 in FY2012. For a complete list of statutorily prohibited countries (and the reasons for their prohibitions), see the Candidate Country Report.The Candidate Country Report is only the first step in the MCC’s selection process. The MCC will soon release its Report on Selection Criteria and Methodology as well as indicator data on individual country performance through MCC scorecards. Stay tuned here for more analysis as the FY2012 MCC selection process unfolds!
