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US Development Policy


The Board of the Millennium Challenge Corporation (MCC) will meet on November 8th to select countries that will be eligible to apply for the FY2006 funding. The MCC will use the selection methodology and the list of candidate countries eligible for selection posted on its website. On Wednesday of this week, the MCC publicly unveiled its individual country data for the 16 indicators that are to be used to determine country qualification, as well as the FY 2006 data rules used in determining country eligibility, where certain modest changes have been made for this selection process from previous years.
On Monday, we will release a comprehensive technical note on the MCC's FY2006 selection process, data and data rules, and explore which countries the Board is most likely to select for the third round of funding. Here are some headlines:

What's New in FY2006:
• The list of candidate countries for the first time will include lower middle-income countries (countries with per capita income between $1,575 and $3,255).
• A new indicator – cost of starting a new business – has replaced the country credit rating indicator.
Many Countries Pass the Tests:
• 25 low-income countries meet the indictors test for FY 2006. Many of these passed the indicators last year, but there are several new countries that did not meet the indicators test in previous years do so for FY 2006.
• 8 lower-middle income countries meet the test. It is not clear how many of these countries, if any at all, the Board will choose, especially since MCC budget resources are much more limited than originally envisaged.
Some Key Issues:
• The Board needs to do a much better job in being transparent in making --either selecting or rejecting -- discretionary calls.
• The MCC will need to think very strategically about how to square the circle of a lower-than-planned MCC budget, an increased number of eligible countries, and the goal of having larger, transformational compacts in funded countries.
Visit the MCA Monitor page on CGD's website on Monday to see our analysis predictions for which countries pass the indicators test, which countries will likely be selected for FY2006 funding, and which countries should be selected using Board discretion.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.