Round Six of the MCA: Which Countries Are Most Likely to Be Selected for FY2009?

On December 11th, the Millennium Challenge Corporation (MCC) Board will select the countries eligible to apply for funding in 2009. With funding tight, few new countries passing the eligibility indicators test, twelve of eighteen countries with signed MCC compacts failing the indicators test, and an uncertain future in the new administration, this year's selection round will both test the MCC's adherence to its principles and perhaps set new precedents.

In "Round Six of the MCA," CGD's MCA Monitor team takes a hard look at tough choices and predicts which countries the MCC Board is likely to choose.

The paper explores key questions that should guide the Board deliberations this year and offers recommendations for the FY09 and future selection rounds:

• To what extent should the uncertain FY09 budget allocation limit country selection? The Continuing Resolution signed in September means that the MCC has approximately $600 million in funding for compact, threshold, and due-diligence until Congress and the new Administration finalize the FY2009 budget.

• What are the principles that should guide decisions about reselection in the cases of the twelve countries with signed compacts that do not pass the indicators test, as well as currently eligible countries that are not demonstrating the requisite effort to develop a compact?

• To what extent will the MCC further transparency? This year will be an opportunity for the MCC to boldly and clearly defend its selection, re-selection and de-selection choices and explain in each case how the data supports those choices.

• How can the guidelines for Threshold Program country selection be made more precise? While the MCC established certain criteria for eligibility for the Threshold Program this year, the criteria remain vague. The current set of Threshold countries is a broad assortment of countries ranging from those that had already passed the indicators test, were legitimately “on the threshold” of passing the indicators test, are far from passing the indicators test, or are “rewards” for committed reformers. It is time to explicitly define the Threshold Program criterion.