Testimony 

Before the Committee on Foreign 

Relations, U.S. Senate

United States Government Accountability Office

GAO 

For Release on Delivery 

Expected at 9:30 a.m. EDT 

Tuesday, April 26, 2005 MILLENNIUM 

CHALLENGE 

CORPORATION 

Progress Made on Key 

Challenges in First Year of 

Operations 

Statement of David B. Gootnick, Director 

International Affairs and Trade 

Jeanette M. Franzel, Director 

Financial Management and Assurance 

GAO-05-455T 
www.gao.gov/cgi-bin/getrpt?GAO-05-455T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David B. 

Gootnick at (202) 512-4128 or 

gootnickd@gao.gov. 

Highlights of GAO-05-455T, testimony 

before the Senate Committee on Foreign 

Relations 

April 26, 2005

MILLENNIUM CHALLENGE 

CORPORATION 

Progress Made on Key Challenges in 

First Year of Operations 

For fiscal years 2004 and 2005, the MCC board used the quantitative criteria 

as well as judgment in determining 17 countries to be eligible for MCA 

compacts. Although MCC chose the indicators based in part on their public 

availability, our analysis showed that not all of the source data for the 

indicators were readily accessible. In addition, we found that reliance on the 

indicators carried certain inherent limitations, such as measurement 

uncertainty. 

 

Between August 2004 and March 2005, MCC received compact proposals, 

concept papers, or both, from 16 eligible countries. It signed a compact with 

Madagascar in April 2005 and is negotiating compacts with four countries. 

MCC’s 4-year compact with Madagascar for $110 million would make it the 

country’s fifth largest donor. MCC is continuing to refine its compact 

development process. In addition, MCC has identified elements of program 

implementation and fiscal accountability that can be adapted to eligible 

countries’ compact objectives and institutional capacities. 

MCC is taking steps to coordinate with key stakeholders to use existing 

expertise and conduct outreach. The U.S. agencies on the MCC Board of 

Directors—USAID, the Departments of State and Treasury, and the Office of 

the U.S. Trade Representative—have provided resources and other 

assistance to MCC, and five U.S. agencies have agreed to provide technical 

assistance. Bilateral and multilateral donors are providing information and 

expertise. MCC is also consulting with nongovernmental organizations in the 

United States and abroad as part of its outreach activities. 

MCC has made progress in developing key administrative infrastructures 

that support its mission and operations. MCC has also made progress in 

establishing corporatewide structures for accountability, governance, 

internal control, and human capital management, including establishing an 

audit capability through its Inspector General, adopting bylaws, providing 

ethics training to employees, and expanding its permanent full-time staff. 

However, MCC has not yet completed comprehensive plans, strategies, and 

related time frames for establishing these essential management structures 

and accountability mechanisms on a corporatewide basis. 

Selected Elements of MCC Progress as of April 2005 

Source: GAO.

Resources

Number of employees 

Funds appropriated 

Compact-related

activities

Eligible countries 

• Submitted proposals

• In compact negotiations

• Compact signed

$1

billion

$1.5

billion

22

16 for 

FY04

Feb.

2004 2005 Total

as of

May Aug. Nov. Feb. Apr. '05

16 for

FY05

43 64 94 107

4

16 received

$2.5

billion

1 1

17

107

4

16

In January 2004, Congress established 

the Millennium Challenge Corporation 

(MCC) to administer the Millennium 

Challenge Account. MCC’s mission is to 

promote economic growth and reduce 

extreme poverty in developing 

countries. The act requires MCC to rely 

to the maximum extent possible on 

quantitative criteria in determining 

countries’ eligibility for assistance. 

MCC will provide assistance primarily 

through compacts—agreements with 

country governments. MCC aims to be 

one of the top donors in countries with 

which it signs compacts. 

For fiscal years 2004 and 2005, 

Congress appropriated nearly $2.5 

billion for the Millennium Challenge 

Corporation; for fiscal year 2006, the 

President is requesting $3 billion. GAO 

was asked to monitor MCC’s (1) 

process for determining country 

eligibility, (2) progress in developing 

compacts, (3) coordination with key 

stakeholders, and (4) establishment of 

management structures and 

accountability mechanisms.

What GAO Recommends

GAO recommends that MCC’s Chief

Executive Officer continue to develop 

and implement overall plans and 

related time frames to establish 

corporatewide accountability, internal 

control, and human capital 

management. In addition, GAO 

recommends that MCC’s Board of 

Directors consider, in addition to its 

statutory responsibilities, other 

responsibilities associated with sound 

and effective governance. 
Page 1 GAO-05-455T 

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to discuss GAO’s findings and observations 

regarding the Millennium Challenge Corporation’s (MCC) first year of 

operations. 

In January 2004, Congress established MCC,1

 a government corporation, to 

administer the Millennium Challenge Account (MCA). MCC’s mission is to 

provide development assistance that reduces extreme poverty through 

economic growth and strengthens good governance, economic freedom, 

and investments in people. MCC is to carry out its mission by funding 

projects or activities in developing countries that demonstrate a 

commitment to MCA objectives. MCC assistance is intended to 

supplement existing development assistance provided by the United States 

or other donors; to provide incentive, MCC aims to be among countries’ 

largest donors. The Millennium Challenge Act of 2003 authorizes 

assistance in the form of grants, cooperative agreements, and contracts, 

which MCC will administer through compacts—agreements between the 

U.S. government and recipient countries’ governments. Candidate 

countries are expected to develop compact proposals to secure MCA 

funding and manage MCC-funded projects. 

The act requires the MCC Board of Directors to determine a country’s 

eligibility for assistance, based, to the maximum extent possible, on 

objective and quantifiable indicators of the country’s commitment to 

specific criteria set out in the act.2

 MCC is also required to provide to 

Congress justifications for the board’s eligibility determinations and to 

coordinate its activities with those of the U.S. Agency for International 

Development (USAID). The act also authorizes MCC to help certain 

candidate countries achieve eligibility, which MCC does through its 

 1

Millennium Challenge Act of 2003, Public Law 108-199, Division D, Title VI of the 

Consolidated Appropriations Act, 2004. Also, Title II, Division D of this act established the 

Millennium Challenge Account for MCC appropriations. 

2

For fiscal years 2004 and 2005, MCC established an eligibility methodology that rates 

countries on 16 indicators, which are selected in part based on their objectivity and public 

availability. The indicators are arranged under the three policy categories—Ruling Justly, 

Investing in People, and Encouraging Economic Freedom. To be eligible, countries must 

score above the median on at least half of the indicators in each category and above the 

median on an indicator for combating corruption. 
Page 2 GAO-05-455T 

Threshold Program.3 For fiscal years 2004 and 2005, Congress 

appropriated nearly $1 billion and $1.5 billion, respectively, for MCC; for 

fiscal year 2006, the President is requesting $3 billion. 

Today I will discuss MCC’s activities during its first 15 months, 

specifically, its (1) process for determining country eligibility for fiscal 

years 2004-2005, (2) progress in developing compacts, (3) coordination 

with key stakeholders, and (4) establishment of management structures 

and accountability mechanisms. 

To address these objectives, GAO analyzed MCC’s process for determining 

country eligibility, including countries’ scores for the quantitative 

indicators and the scores’ source data for fiscal years 2004 and 2005; we 

also examined the selection criteria for the Threshold Program. We 

determined that these and other data that we used were sufficiently 

reliable for our analysis. In addition, we reviewed MCC documents, 

countries’ compact proposals and an MCC compact, and reports by USAID 

and GAO. We conducted interviews with, among others, officials from 

MCC, U.S. government agencies, and nongovernmental organizations 

(NGOs), and we attended MCC public outreach meetings in Washington, 

D.C. In January 2005, we visited Honduras, one of four countries with 

which MCC was negotiating at that time, where we met with officials from 

the Department of State, USAID, MCC, and the Honduran government, as 

well as donor representatives and local NGOs. We performed our work 

between April 2004 and April 2005 in accordance with generally accepted 

government auditing standards. (See app. I for further details of our scope 

and methodology.) 

The MCC Board of Directors based its determinations of countries’ 

eligibility for MCA assistance on a quantitative indicator methodology, as 

required by the Millennium Challenge Act; at the same time, the process 

involved certain challenges. Applying its 16 quantitative indicators and 

exercising the discretion implicit in the act, the board selected a total of 17 

countries as eligible for compact assistance for fiscal years 2004 and 2005. 

MCC did not provide Congress its justifications for the 13 countries that 

met the indicator criteria but were not deemed eligible; the Millennium 

 3

The Threshold Program provides assistance to improve scores on the 16 indicators for 

candidate countries that are not deemed eligible but demonstrate a significant commitment 

to meeting MCC eligibility requirements. 

Summary 
Page 3 GAO-05-455T 

Challenge Act does not require MCC to provide justifications for not 

selecting countries. In addition, although MCC published country scores 

for the 16 indicators at its Web site, some of the source data used to 

generate these scores were not readily available to the public. Our analysis 

of the results of MCC’s eligibility determinations also revealed some 

inherent limitations of MCC’s indicator methodology. For instance, 

measurement uncertainty may have affected the eligibility determination 

for 17 countries, and missing data for two indicators may have reduced the 

number of countries that passed the Economic Freedom category. 

MCC is refining the compact development process and has taken steps to 

identify country-level program implementation and fiscal accountability 

elements. Between August 2004 and March 2005, MCC received compact 

proposals, concept papers, or both, from 16 eligible countries. It signed a 

4-year compact with Madagascar for $110 million in April 2005 and is 

negotiating compacts with 4 other countries. MCC’s compact with 

Madagascar would make it the country’s fifth largest donor. MCC’s 

compact development process currently involves the following steps: 

(1) proposal development, (2) proposal submission and initial assessment, 

(3) detailed proposal assessment and negotiation, and (4) board review 

and compact signing. In addition, MCC has identified elements of a 

program implementation and fiscal accountability framework that can be 

adapted to eligible countries’ compact objectives and institutional 

capacities. 

MCC has initiated coordination of program activities with U.S. agencies, 

other donors, and U.S.-based NGOs. U.S. agencies represented on the MCC 

Board of Directors—USAID, the Departments of State and Treasury, and 

the Office of the U.S. Trade Representative (USTR)—have provided 

advice, resources, and assistance to MCC. In addition, MCC has signed 

agreements with five U.S. agencies for programmatic and technical 

assistance. Key bilateral and multilateral donors are providing information 

and expertise, such as country briefings and assessments, to MCC. In 

addition, MCC is consulting with some U.S.-based NGOs and has met with 

country-based NGOs. However, several U.S.-based NGOs have raised 

questions about the involvement of U.S.-based NGOs and country-based 

civil society groups. 

MCC has made progress in establishing key management structures and 

elements of accountability mechanisms, but it has not yet developed 

essential corporatewide plans, strategies, and time frames. MCC’s 

accomplishments in its first 15 months included setting up key 

administrative infrastructures to support its initial and ongoing program 
Page 4 GAO-05-455T 

implementation, establishing an audit and review capability through its 

Inspector General (IG), adopting bylaws for its Board of Directors, 

providing ethics training to employees, and expanding its permanent fulltime staff. However, MCC has not yet completed the plans, strategies, and 

time frames needed to establish corporatewide structures for 

accountability, governance, internal control, and human capital 

management. For example, the MCC board has not fully defined its 

responsibilities for overseeing corporate management, and MCC 

management has not yet completed its institutional infrastructure that 

aligns human capital planning and performance management with the 

corporation’s goals and mission. 

We recommend that MCC’s Chief Executive Officer continue to develop 

and complete overall plans and related time frames to address 

corporatewide accountability, establish comprehensive internal control 

over program and administrative operations, and institute an effective 

human capital infrastructure. In addition, we recommend that the 

Secretary of State, in her capacity as Chair of the MCC Board of Directors, 

ensure that the board considers and defines the scope of its 

responsibilities with respect to corporate governance and oversight and 

develops an overall plan or strategy, with related time frames, for carrying 

out these responsibilities. In doing so, the board should consider, in 

addition to its statutory responsibilities, other corporate governance and 

oversight responsibilities commonly associated with sound and effective 

corporate governance practices. MCC provided technical comments on a 

draft of this report and agreed to take our recommendations under 

consideration. 

Each fiscal year, the Millennium Challenge Act requires MCC to select 

countries as eligible for MCA assistance by identifying candidate 

countries, establishing an eligibility methodology, and making eligibility 

determinations. MCC evaluates eligible countries’ proposals and 

negotiates compacts, which must be approved by the MCC board. The 

Threshold Program assists countries that are not deemed eligible but show 

a commitment to MCA objectives. MCC is governed by a board of directors 

consisting of U.S. government and other representatives. 

Background 
Page 5 GAO-05-455T 

For fiscal year 2004, the Millennium Challenge Act limited candidates to 

low-income countries—those with per capita incomes less than or equal to 

the International Development Association (IDA) cutoff for that year 

($1,415)—that also were eligible for IDA assistance.4

 This provision limited 

candidacy in the MCA’s first year to the poorest low-income countries. For 

fiscal year 2005, candidates were required only to have incomes less than 

or equal to the IDA ceiling for that year ($1,465).5

 Additionally, for fiscal 

years 2004 and 2005, candidates could not be ineligible for U.S. economic 

assistance under the Foreign Assistance Act of 1961. (See app. II for a list 

of candidate countries for fiscal years 2004 and 2005.) 

The Millennium Challenge Act requires that the MCC board base its 

eligibility decisions, “to the maximum extent possible,” on objective and 

quantifiable indicators of a country’s demonstrated commitment to the 

criteria enumerated in the act. MCC selected its indicators based on their 

relationship to growth and poverty reduction, the number of countries 

they cover, their transparency and public availability, and their relative 

soundness and objectivity.6

For fiscal years 2004 and 2005, MCC’s process for determining country 

eligibility for MCA assistance had both a quantitative and a discretionary 

component (see fig. 1). MCC first identified candidate countries that 

performed above the median in relation to their peers on at least half of 

the quantitative indicators in each of the three policy categories—Ruling 

Justly, Investing in People, and Encouraging Economic Freedom—and 

above the median on the indicator for control of corruption. (See app. III 

for a table describing the indicators, listing their sources, and summarizing 

the methodologies on which they are based.) In addition, MCC considered 

 4

The IDA, an arm of the World Bank Group, provides long-term interest-free loans and 

grants to the poorest developing countries with limited access to private sources of capital. 

5

For fiscal year 2006 and beyond, the Millennium Challenge Act requires that candidates for 

MCA assistance (1) be either low-income or lower-middle-income countries and (2) not be 

ineligible for U.S. economic assistance under the Foreign Assistance Act of 1961. The act 

defines lower-middle-income countries as those classified as such by the World Bank with 

incomes above the IDA ceiling. MCA assistance to the lower-middle-income countries may 

not exceed 25 percent of the total amount of assistance to all countries for that year. 

6

See Millennium Challenge Corporation, “Report on the Criteria and Methodology for 

Determining the Eligibility of Candidate Countries for Millennium Challenge Account 

Assistance in FY 2004, Annex A: Indicator Definitions” (available at: 

http://www.mca.gov/about_us/congressional_reports/index.shtml). 

Candidate Countries 

Eligibility Determinations 
Page 6 GAO-05-455T 

other relevant information—in particular, whether countries that scored 

substantially below the median (at the 25th percentile or lower) on an 

indicator were addressing any shortcomings related to that indicator. MCC 

also considered supplemental information to address gaps, lags, or other 

data weaknesses as well as additional material information.7

 7

MCC’s fiscal year 2004 and 2005 methodology reports state that, where the act stipulates 

criteria for which there is limited quantitative information (e.g., rights of people with 

disabilities) or no well-developed performance indicator (e.g., sustainable management of 

natural resources), the MCC board relies on supplemental data and qualitative information 

such as State Department Human Rights reports, access to sanitation, deforestation, and 

trade in endangered species. 
Page 7 GAO-05-455T 

Figure 1: MCC’s Process for Determining Country Eligibility 

a

The fiscal year 2004 and 2005 medians for the 16 indicators were based on the scores of all 

countries meeting the income criteria, including those countries that are ineligible to receive U.S. 

economic assistance under the Foreign Assistance Act. 

b

For fiscal year 2004, MCC used the Primary Education Completion Rate. 

c

Average of immunization rates for DPT3—diphtheria, pertussis and tetanus—and measles. 

d

For the consumer price inflation indicator, countries are not required to score higher than the median; 

instead, inflation rates must not exceed 20 percent for fiscal year 2004 or 15 percent for fiscal year 

2005. 

Source: GAO analysis of MCC selection process.

63 candidate countries in FY 2004:

• were eligible for assistance from the International Development 

Association (IDA)

• had a per capita income equal to or less than $1,415 

(the historical ceiling [IDA] for 2004)

68 candidate countries in FY 2005:

• had a per capita income equal to or less than $1,465 

(the historical ceiling [IDA] for 2005)

Countries that would be 

considered candidates but 

are subject to legal provisions 

that prohibit them from 

receiving U.S. economic 

assistance

• 12 countries in FY 2004

• 14 countries in FY 2005

MCA-eligibility 

determination by 

MCC board 

based on 

indicator 

methodology 

resulted 

in

17 

eligible 

countries for 

FY 2004 and 

FY 2005

Quantitative component

MCC board considers whether countries score:

• higher than the mediana

 on at least half the indicators in each of three policy 

categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom

• above the median on the corruption indicator

Indicators

Discretionary component

In addition, the MCC board considers:

• whether countries performing substantially below the median (at the 25th percentile 

or lower) on any indicator are taking measures to address the shortcoming

• supplemental information to address any gaps, lags, or other weaknesses in the data

• other material information

Ruling Justly

1. Political rights

2. Civil liberties

3. Voice and accountability

4. Government effectiveness

5. Rule of law

6. Control of corruption

Investing in People

7. Girls' primary education 

completion rateb

8. Public primary education 

spending (as a percent of GDP)

9. Public expenditure on health 

(as a percent of GDP)

10. Immunization ratec

Encouraging Economic Freedom

11. Country credit rating

12. One-year consumer 

price inflationd

13. Fiscal policy

14. Trade policy

15. Regulatory quality

16. Days to start a business
Page 8 GAO-05-455T 

The Millennium Challenge Act requires that, within 5 days of the board’s 

eligibility determinations, the MCC Chief Executive Officer submit a report 

to congressional committees containing a list of the eligible countries and 

“a justification for such eligibility determination” and publish the report in 

the Federal Register. 

Eligible countries are invited to submit compact proposals, which are to 

be developed in consultation with members of civil society, including the 

private sector and NGOs. However, a country’s eligibility does not 

guarantee that MCC will sign and then fund a compact with that country. 

MCC is to sign compacts only with national governments.8

 Under the act, 

the duration of compacts is limited to a maximum of 5 years; MCC expects 

to approve compacts with durations of 3 to 5 years. MCA funds are not 

earmarked for specific projects or countries, and money not obligated in 

the fiscal year for which it was appropriated can be used in subsequent 

fiscal years. For fiscal years 2004 and 2005, Congress has directed that 

MCC use its existing appropriations to fully fund a compact—that is, 

obligate the entire amount anticipated for the compact’s duration.9

Funding for compacts and the Threshold Program must be drawn from the 

appropriation for the fiscal year in which the country was eligible. MCC 

aims to be among the largest donors in recipient countries, which, 

according to MCC officials, creates incentive for eligible countries to “buy 

into” MCC’s principles of policy reform, sustainable economic growth, 

country partnership, and results. 

The Millennium Challenge Act authorizes a limited amount of assistance to 

certain candidate countries to help them become eligible for MCA 

assistance. These candidate countries must (1) meet the fiscal year 2004 or 

2005 requirements for MCA candidacy and (2) demonstrate a significant 

commitment to meeting the act’s eligibility criteria but fail to meet those 

 8

The Millennium Challenge Act authorizes assistance to the national government of an 

eligible country, regional or local governmental units of the country, or a nongovernmental 

organization or private entity. 

9

The Consolidated Appropriations Act, 2005, provides that funds appropriated for MCC for 

fiscal years 2004 and 2005 are available for compacts only if the compacts obligate, or 

commit to obligate (subject to availability of funds and agreement of the parties), the entire 

amount anticipated for the compact’s duration. See Public Law 108-447, Division D, Title II, 

118 Stat. 2809, 2980. 

MCA Compacts 

Threshold Program 
Page 9 GAO-05-455T 

requirements.10 MCC has implemented these legislative provisions as its 

Threshold Program. Figure 2 compares features of MCC compact and 

Threshold Program assistance; appendix IV describes the Threshold 

Program. 

Figure 2: Comparison of MCC Compact Assistance and Threshold Program 

a

According to MCC, participation in the Threshold Program does not guarantee future eligibility for 

compact assistance. 

b

Includes funds for administrative expenses but excludes $40 million set aside for fiscal year 2004 

and $150 million (up to 10 percent of total MCC appropriations) in fiscal year 2005 for the Threshold 

Program. As of April 2005, MCC had not determined the amount of funding set aside for the fiscal 

year 2005 Threshold Program. 

c

The MCC board could authorize additional Threshold Program funding of up to 10 percent ($99.4 

million) of fiscal year 2004 MCC appropriations. 

 10The act limited this type of assistance to 10 percent of MCA’s fiscal year 2004 

appropriations. The Foreign Operations, Export Financing, and Related Programs 

Appropriations Act, 2005, limited this type of assistance to 10 percent of fiscal year 2005 

appropriations. Future funding for this type of assistance will be determined by legislation 

in subsequent years. 

MCC compact assistance Threshold Program

Improvement in eligibility indicators that are 

central to MCC's selection methodology.a

Program goal Poverty reduction through economic growth.

$40 million in FY 2004 and up to $150 million 

in FY 2005.c

Total funding available $954 million in FY 2004 and $1.35 billion in 

FY 2005.b

Concept papers due by January 31, 2005 for FY 

2004 and March 15, 2005 for 

FY 2005; no deadline for detailed plan.

Application deadline No deadline for concept paper or proposal 

submission.

Proposal development Consultative process involving civil society No consultative process required.

organizations, private sector, etc., is required.

Approved threshold plans will be funded for up 

to 2 years, though exceptions may be made.

Program duration Approved compacts to be funded for up to 

5 years.

USAID will manage Threshold Program with 

MCC oversight.

Program management Country oversight entity will be accountable 

to MCC.

Countries are expected to propose programs 

that address weaknesses that may have 

caused them to fail the eligibility indicators.

Country role Countries propose economic development 

and poverty reduction priorities and 

negotiate compacts with MCC.

Source: GAO synthesis of MCC information.
Page 10 GAO-05-455T 

MCC has broad authority under the Millennium Challenge Act to enter into 

contracts and business relationships. The act establishes the MCC Board 

of Directors and assigns it a key decision-making role in the corporation’s 

activities, including those related to implementing the compact program. 

The act also makes provisions for the board to consult with Congress and 

provide general supervision of MCC’s IG.11 The board consists of the 

Secretary of State (Board Chair), the Secretary of the Treasury (Vice 

Chair), the USAID Administrator, and the U.S. Trade Representative, in 

addition to MCC’s Chief Executive Officer. The board has four other 

positions filled by Presidential appointment with the approval of the 

Senate. Two of these positions have been filled. (For a timeline of key 

events and milestones since MCC’s launch, see app. V.) 

For fiscal years 2004 and 2005, the MCC board based its determinations of 

countries’ eligibility on its quantitative indicator methodology as well on 

discretion. Although MCC published the countries’ indicator scores at its 

Web site, some of the indicator source data used to generate the scores 

were not readily available. Finally, we found that reliance on the indicators 

carried certain inherent limitations. 

 11Public Law 108-199 designated the USAID Office of the Inspector General as MCC’s IG. 

MCC Governance 

MCC Used 

Quantitative 

Indicators and 

Judgment to 

Determine Country 

Eligibility; Process 

Involves Ongoing 

Challenges 
Page 11 GAO-05-455T 

MCC used the 16 quantitative indicators, as well as the discretion implicit 

in the Millennium Challenge Act, to select 17 countries as eligible for MCA 

compact assistance for fiscal years 2004 and 2005 (see fig. 3). 

Figure 3: MCA Eligibility Determinations for Fiscal Years 2004 and 2005 

• Fiscal year 2004: In May 2004, the MCC board selected 16 countries 

as eligible for fiscal year 2004 funding. The countries deemed eligible 

include 13 that met the quantitative indicator criteria and 3 that did not 

(Bolivia, Georgia, and Mozambique). Another 6 countries met the 

criteria but were not deemed eligible. 

• Fiscal year 2005: In October 2004, the MCC board selected 16 

countries as eligible for fiscal year 2005 funding. The countries deemed 

eligible included 14 countries that met the indicator criteria and 2 

countries that did not (Georgia and Mozambique). Ten countries met 

the criteria but were not deemed eligible. Fifteen of the 16 countries 

MCC Used Quantitative 

Indicators and Judgment 

to Determine Eligibility 

Armenia

Benin

Bolivia*

Bhutan

Guyana

Kiribati

Mauritania

Tonga

Vietnam

Bhutan

Burkina Faso

Chinab

Djibouti

Egyptb

Guyana

Nepal

Philippinesb

Swazilandb

Vietnam

Cape Verdea

Georgia*

Ghana

Honduras

Lesotho

Madagascar

Mali

Mongolia

Moroccob

Mozambique*

Nicaragua

Senegal

Sri Lanka

Vanuatu

19 passed

16 deemed eligible

FY 2004

24 passed

16 deemed eligiblec

FY 2005

FY 2004 FY 2005

Countries that passed quantitative criteria but were not deemed eligible

17 countries deemed eligible for compact assistance 

for FY 2004 and FY 2005

b Became candidate country for the first time in FY 2005.

* Deemed eligible but did not meet quantitative criteria. Bolivia met quantitative criteria in FY 2005.

a Not eligible in FY 2005 because per capita income rose above IDA ceiling.

c Includes 15 countries deemed eligible in FY 2004.

Source: GAO analysis of MCC data.
Page 12 GAO-05-455T 

also had been deemed eligible for fiscal year 2004;12 the only new 

country was Morocco. 

MCC did not provide Congress its justifications for the 13 countries that 

met the indicator criteria but were not deemed eligible for fiscal years 

2004 and 2005 (one of these countries, Tonga, did not score substantially 

below the median on any indicator).13 The act does not explicitly require 

MCC to include a justification to Congress for why these countries were 

not deemed eligible. 

In addition, our analysis of countries that met the indicator criteria but 

were not deemed eligible suggests that, besides requiring that a country 

score above the median on the indicator for control of corruption, MCC 

placed particular emphasis on three Ruling Justly indicators (political 

rights, civil liberties, and voice and accountability) in making its eligibility 

determinations. In fiscal years 2004 and 2005, 6 of the 13 countries that 

met the indicator criteria but were not deemed eligible had scores equal to 

or below the median on these three indicators.14 On the other hand, the 13 

countries that were not deemed eligible performed similarly to the eligible 

countries on the other three Ruling Justly indicators—government 

effectiveness, rule of law, and control of corruption—as well as on the 

indicators for Investing in People and Encouraging Economic Freedom. 

 12Cape Verde, eligible in fiscal year 2004, was not a candidate in fiscal year 2005. 

13According to GAO analysis, 12 of the countries deemed eligible in fiscal years 2004 and 

2005 met the indicator criteria but scored substantially below the median (25th percentile 

or lower) on one or two indicators. MCC’s reports to Congress listed 4 countries that 

scored substantially below the median (Cape Verde, Lesotho, Morocco, and Sri Lanka). 

MCC provided justification for selecting as eligible these 4 countries, but it did not provide 

justification for selecting the remaining 8 countries. 

14The 6 countries that scored low on the three governance indicators are Bhutan, China, 

Djibouti, Egypt, Swaziland, and Vietnam. The 13 countries that passed the indicators but 

were not selected are Bhutan (2004 and 2005), Burkina Faso (2005), China (2005), Djibouti 

(2005), Egypt (2005), Guyana (2004 and 2005), Kiribati (2004), Mauritania (2004), Nepal 

(2005), Philippines (2005), Swaziland (2005), Tonga (2004), and Vietnam (2004 and 2005). 

Six of these countries—China, Djibouti, Egypt, Nepal, Swaziland, and Vietnam—also 

scored low on trade policy relative to the MCA-eligible countries. 
Page 13 GAO-05-455T 

Although MCC published its country scores for all of the indicators at its 

Web site,15 some of the indicator source data used to generate the scores 

were not readily available to the public. We found that source data for nine 

of the indicators16 were accessible via hyperlinks from MCC’s Web site, 

making it possible to compare those data with MCC’s published country 

scores. However, for the remaining seven indicators, we encountered 

obstacles to locating the source data, without which candidate countries 

and other interested parties would be unable to reproduce and verify 

MCC’s results. 

• Primary education completion rates: The published indicators were 

created with data from several sources and years, and not all of these 

data were available on line. 

• Primary education and health spending (percentage of gross 

domestic product): When national government data were unavailable, 

MCC used either country historical data or data from the World Bank 

to estimate current expenditures. 

• Diphtheria and measles immunization rate: The general hyperlink 

at the MCC Web site did not link to the data files used to create the 

published indicators.17

• One-year consumer price inflation: The published indicators were 

created with a mix of data from several data sources and different 

years. 

• Fiscal policy: The published indicators were created with 

International Monetary Fund (IMF) data that are not publicly available. 

 15MCC officials told us that, owing to staffing constraints, MCC did not post updated 

indicator data before the board’s fiscal year 2004 eligibility decisions. Having added more 

staff, MCC posted the updated data prior to the board’s fiscal year 2005 decisions. 

16Source data for voice and accountability, government effectiveness, rule of law, control of 

corruption, and regulatory quality were from the World Bank Institute; for trade policy, 

from the Heritage Foundation; for civil liberties and for political rights, from Freedom 

House; and for country credit rating, from Institutional Investor. 

17MCC officials told us that they use general hyperlinks to prevent users from linking to 

outdated Web addresses. 

Not All Source Data for 

Quantitative Indicators 

Were Publicly Accessible 
Page 14 GAO-05-455T 

• Days to start a business: Updated indicators were not published 

until after the board had made its fiscal year 2004 eligibility decisions. 

MCC’s use of the quantitative indicator criteria in the country selection 

process for fiscal years 2004 and 2005 involved the following inherent 

difficulties: 

• Owing to measurement uncertainty, the scores of 17 countries may 

have been misclassified as above or below the median.18 In fiscal years 

2004 and 2005, 7 countries did not meet the quantitative indicator 

criteria because of corruption scores below the median, but given 

measurement uncertainty their true scores may have been above the 

median. Likewise, 10 countries met the indicator criteria with 

corruption scores above the median, but their true scores may have 

been below the median.19

• Missing data for the days to start a business and trade policy indicators 

reduced the number of countries that could achieve above-median 

scores for those indicators. For fiscal years 2004 and 2005, 20 and 22 

countries, respectively, lacked data for the indicator for days to start a 

business, and 18 and 13 countries, respectively, lacked data for the 

trade policy indicator. Our analysis suggests that missing data for these 

two indicators may have reduced the number of countries that passed 

the Encouraging Economic Freedom category. 

• The narrow and undifferentiated range of possible scores for the 

political rights, civil liberties, and trade policy indicators led to 

clustering—“bunching”—of scores around the median, making the 

scores less useful in distinguishing among countries’ performances. In 

fiscal year 2005, for example, 46 countries, or two-thirds of the 

 18Measurement uncertainty, or margin of error, makes it difficult in many cases to say with 

accuracy where a country’s true score lies. Measurement uncertainty applies to virtually all 

indicators, including the World Bank Institute’s governance indicators. The World Bank 

team that created the corruption and other governance indicators cautioned that special 

scrutiny should be given to borderline cases, saying that “for one-third of the potentially 

MCA-eligible countries, there is at least a 25 percent chance they will be mistakenly 

classified as below the median when they should be above, and vice versa.” See Daniel 

Kaufmann and Aart Kraay, Governance Indicators, Aid Allocation, and the Millennium 

Challenge Account: A Summary (Washington, D.C.: The World Bank, December 2002). 

19According to MCC officials, the board also used Transparency International’s (TI) 

Corruption Perceptions Index as a secondary corruption source. However, TI scores were 

not available for all the fiscal years 2004 and 2005 candidate countries. 

Use of Quantitative 

Indicators Had Some 

Inherent Limitations 
Page 15 GAO-05-455T 

countries with trade policy data, received a score of 4 (the median) or 5 

(the lowest score possible) for trade policy. Our analysis suggests that 

bunching potentially reduced the number of countries that passed the 

Ruling Justly and Economic Freedom categories and limited MCC’s 

ability to determine whether countries performed substantially below 

their peers in affected indicators. 

With respect to the indicator for control of corruption, countries deemed 

eligible for MCA compact assistance represent the best performers among 

their peers; at the same time, studies have found that, in general, countries 

with low per capita income also score low on corruption indexes. Of the 

17 MCA compact eligible countries, 11 ranked below the 50th percentile 

among the 195 countries rated by the World Bank Institute for control of 

corruption; none scored in the top third. 

MCC has received compact proposals, concept papers, or both, from 16 

countries; of these, it has approved a compact with one country and is 

negotiating with four others. At the same time, MCC continues to refine its 

process for reviewing and assessing compact proposals. As part of this 

process, MCC has identified elements of country program implementation 

and fiscal accountability that can be adapted to eligible countries’ compact 

objectives and institutional capacities. 

MCC Is Refining Its 

Compact 

Development Process 
Page 16 GAO-05-455T 

Between August 2004 and March 2005, MCC received compact proposals, 

concept papers, or both, from 16 MCA compact-eligible countries, more 

than half of which submitted revised proposal drafts in response to MCC’s 

assessments.20 In March 2005, MCC approved a 4-year compact with 

Madagascar for $110 million to fund rural projects aimed at enhancing 

land titling and security, increasing financial sector competition, and 

improving agricultural production technologies and market capacity; MCC 

and Madagascar signed the compact on April 18, 2005. MCC is negotiating 

compacts with Cape Verde, Georgia, Honduras, and Nicaragua21 and is 

conducting in-depth assessments of proposals from two additional 

countries. Figure 4 summarizes the types of projects that eligible countries 

have proposed and that MCC is currently reviewing. 

 20MCC encourages countries to submit concept papers, outlines, or other documentation 

for guidance and feedback before submitting initial proposals. 

21MCC has notified appropriate congressional committees of its intent to enter into 

negotiations with these countries. 

MCC Has Received a 

Number of Proposals and 

Is Negotiating Several 

Compacts 
Page 17 GAO-05-455T 

Figure 4: Types of Proposed Projects under MCC Review 

Note: Dots indicate that one or more projects may be categorized as shown and are not intended to 

quantify the number of projects a country has proposed or the number of projects in a category. 

a

“Agribusiness” includes agricultural production, processing, marketing, and other projects. 

b

“Business” includes projects related to nonagricultural business development (e.g., tourism and 

industrial parks). 

c

“Policy reform” also includes assistance for public sector capacity-building. According to MCC 

officials, all compacts will contain project-related policy reform elements, some of which may receive 

funding. 

d

“Transportation infrastructure” includes road, port, and airport planning, construction, and upgrading. 

e

“Water management” includes construction and upgrading of dams, irrigation systems, and water 

reservoirs, among other things. 

f

MCC approved Madagascar’s compact in March 2005; MCC and Madagascar signed the compact on 

April 18, 2005. 

Source: GAO summary and analysis of MCC data as of April 20, 2005.

Armenia

Benin

Bolivia

Cape Verde

Georgia

Ghana

Honduras

Lesotho

Mali

Madagascarf

Mongolia

Mozambique

Nicaragua

Senegal

Sri Lanka

Vanuatu

AgribusinessaBusinessbEducation and health

Energy

Finance and credit

Land titling

Water managementePolicy reformcTransportation infrastructuredWater sanitation
Page 18 GAO-05-455T 

The countries’ initial proposals and concept papers requested about 

$4.8 billion; those that MCC is currently reviewing (see fig. 4) and 

negotiating request approximately $3 billion over 3 to 5 years. Our 

analysis—based on MCC’s goal of being a top donor as well as Congress’s 

requirement that the corporation fund compacts in full—shows that the 

$2.4 billion available from fiscal year 2004 and 2005 appropriations will 

allow MCC to fund between 4 and 14 compacts, including Madagascar’s 

compact, for those years.22 MCC’s $110 million compact with Madagascar, 

averaging $27.5 million per year, would make it the country’s fifth largest 

donor (see app. VI for a list of the largest donors to MCA compact-eligible 

countries in fiscal years 2002-2003).23

As of April 2005, MCC is continuing to refine its process for developing 

compacts. According to MCC officials, the compact development process 

is open ended and characterized by ongoing discussions with eligible 

countries. According to a recent IG report, MCC’s negotiating a compact 

with Madagascar has served as a prototype for completing compacts with 

other countries.24 At present, the compact proposal development and 

assessment process follows four steps (see fig. 5). 

 22The lower estimated number of compacts assumes that MCC funds 5-year compacts at a 

level equal to the average annual assistance provided by the largest donor in the 17 

countries that were eligible in fiscal years 2004 and 2005 (about $109 million). The higher 

estimate assumes that MCC funds 3-year compacts at a level equal to the average annual 

assistance provided by the third largest donor in these countries (about $60 million). 

23Based on OECD net official development assistance (ODA) data. OECD defines ODA as 

grants or loans to developing countries undertaken by the official sector (a) with the 

promotion of economic development and welfare as the main objective and (b) if a loan, 

having a grant element of at least 25 percent. 

24Office of Inspector General, Review of Millennium Challenge Corporation’s Progress in 

Achieving Its Planned Organizational Structure and Beginning Its Assistance Programs 

As of February 28, 2005 (Washington, D.C.: March 2005). 

MCC Continues to Refine 

Its Compact Development 

Process 
Page 19 GAO-05-455T 

Figure 5: MCC’s Compact Development Process 

Step 1: Proposal development. MCC expects eligible countries to 

propose projects and program implementation structures, building on 

existing national economic development strategies. For instance, the 

Eligible country develops proposals for compact assistance.

MCC consults with country officials abroad and via diplomatic representation in Washington.

Eligible country submits compact proposal or concept paper. MCC begins preliminary assessment.

MCC has not specified deadlines for submitting compact proposals or concept papers.

1 Proposal development

A compact is an agreement between the U.S. government, acting through MCC, 

and the government of an eligible country.

MCC anticipates that a compact will outline MCA compact program objectives, related 

projects, funding, and a program implementation framework, among other things. 

A compact will require adoption and MCC approval of additional implementation plans 

and agreements before funds can be disbursed.

MCC must notify appropriate congressional committees and publish compact 

summary and text within 10 days after entering into a compact.

(a) MCC begins "due-diligence" assessment of 

compact proposal.

MCC conducts in-country visits during this time.

(b) MCC and eligible country enter compact 

negotiations.

MCC must consult with and report to appropriate 

congressional committees 15 days prior to start 

of compact negotiations.

3 Detailed proposal assessment and negotiation

(a) MCC board reviews draft compact and 

decides whether to approve it.

MCC must notify congressional appropriations 

committees 15 days prior to obligating funds.

(b) MCC and eligible country sign compact; 

MCC obligates funds when or after compact 

is signed.

4 MCC board review and compact signing

2 Proposal submission and initial assessment

Compact

Source: GAO analysis and synthesis of MCC's compact development process.

The process outline is subject to continuing development and consideration by MCC management.
Page 20 GAO-05-455T 

Honduran government’s proposal is based on its Poverty Reduction 

Strategy Paper (PRSP)25 and a subsequent June 2004 implementation 

plan.26 MCC also requires that eligible countries use a broad-based 

consultative process to develop their proposals.27 MCC staff discuss the 

proposal with country officials during this phase of compact development. 

Although MCC does not intend to provide funding to countries for 

proposal development,28 some countries have received grants from 

regional organizations for proposal development.29

Step 2: Proposal submission and initial assessment. Eligible 

countries submit compact proposals or concept papers. MCC has not 

specified deadlines for proposal submission or publicly declared the limits 

or range of available funding for individual compacts. According to MCC 

officials, the absence of deadlines and funding parameters permits 

countries to take initiative in developing proposals. However, according to 

U.S.-based NGOs, the lack of deadlines has caused some uncertainty and 

confusion among eligible country officials. Honduran officials told us that 

knowing a range of potential funding would have enhanced their ability to 

develop a more focused proposal. 

During this stage, MCC conducts a preliminary assessment of the proposal, 

drawing on its staff, contractors, and employees of other U.S. government 

agencies. This assessment examines the potential impact of the proposal’s 

 25The World Bank and IMF require countries to develop participatory poverty reduction 

strategies as a condition for receiving assistance. These strategies, which are outlined in 

countries’ PRSPs, provide the basis for World Bank and IMF concessional lending and debt 

relief. 

26Republic of Honduras, Attaining the Goals of the Poverty Reduction Strategy: 

Implementation Plan for 2004-2006, Consultative Group Meeting for Honduras, 

Tegucigalpa M.D.C., June 10-11, 2004 (Tegucigalpa: 2004). 

27The Millennium Challenge Act, Sec. 609(d), requires the United States, in entering into a 

compact, to ensure that eligible countries consider the perspectives of rural and urban 

poor, including women, and consult with private and voluntary organizations, the business 

community, and other donors. 

28The Millennium Challenge Act, Sec. 609(g), authorizes MCC to enter into contracts with, 

or make grants to, eligible countries to facilitate compact development and 

implementation. 

29For example, Mongolia has received assistance from The Asia Foundation to develop its 

proposal. In addition, Honduras and Nicaragua have received separate grants from the 

Central American Bank for Economic Integration (CABEI) and Inter-American 

Development Bank (IDB). 
Page 21 GAO-05-455T 

strategy for economic growth and poverty reduction, the consultative 

process used to develop the proposal, and the indicators for measuring 

progress toward the proposed goals. According to MCC, some eligible 

countries have moved quickly to develop their MCC programs. Others 

initially were unfamiliar with MCC’s approach and some faced institutional 

constraints. MCC works with these countries to develop programs that it 

can support. In addition, MCC is exploring ways—such as providing 

grants—to facilitate compact development and implementation. Once 

MCC staff determine that they have collected sufficient preliminary 

information, they seek the approval of MCC’s Investment Committee30 to 

conduct a more detailed analysis, known as due diligence. 

Step 3: Detailed proposal assessment and negotiation. MCC’s due 

diligence review includes an analysis of the proposed program’s objectives 

and its costs relative to potential economic benefits.31 Among other things, 

the review also examines the proposal’s plans for program 

implementation, including monitoring and evaluation; for fiscal 

accountability; and for coordination with USAID and other donors. In 

addition, the review considers the country’s commitment to MCC 

eligibility criteria and legal considerations pertaining to the program’s 

implementation.32 During their review, MCC staff seek the approval of the 

Investment Committee to notify Congress that the corporation intends to 

initiate compact negotiations; following completion of the review, MCC 

staff request the committee’s approval to enter compact negotiations. 

When the negotiations have been concluded, the Investment Committee 

decides whether to approve submission of the compact text to the MCC 

board. 

 30The Investment Committee comprises MCC’s CEO and vice presidents. 

31MCC’s cost-benefit analysis identifies, among other things, potential economic benefits 

and intended beneficiaries, as well as financial and nonfinancial (e.g., environmental 

impact) project costs. Previous GAO work on the Global Fund to Fight AIDS, TB and 

Malaria identified technical review of grant proposals as a challenging aspect of its 

operations. See U.S. Government Accountability Office, Global Health: Global Fund to 

Fight AIDS, TB and Malaria Has Advanced in Key Areas, but Difficult Challenges 

Remain, GAO-03-601 (Washington, D.C.: May 7, 2003). 

32According to MCC documents, the legal considerations include the country’s statutory 

requirements for compact approval and enforcement; Millennium Challenge Act section 

605 prohibitions (i.e., military assistance and training; assistance relating to U.S. job loss or 

production displacement; assistance relating to environmental, health, or safety hazards; 

and use of funds for abortions and involuntary sterilizations); and exemption MCA 

assistance from taxation or reimbursement of such taxation. 
Page 22 GAO-05-455T 

Step 4: Board review and compact signing. The MCC board reviews 

the compact draft. Before the compact can be signed and funds obligated, 

the board must approve the draft and MCC must notify appropriate 

congressional committees of its intention to obligate funds. 

MCC has identified several broadly defined elements of program 

implementation and fiscal accountability that it considers essential to 

ensuring achievement of compact goals and proper use of MCC funds. As 

signatories to the compact, MCC and the country government will be 

fundamental elements of this framework. However, MCC and eligible 

countries can adapt other elements (see fig. 6) by assigning roles and 

responsibilities to governmental and other entities according to the 

countries’ compact objectives and institutional capacities.33 Madagascar’s 

compact incorporates these elements in addition to an advisory council 

composed of private sector and civil society representatives, as well as 

local and regional government officials. The compact also requires that 

MCA-Madagascar, the oversight entity, adopt additional plans and 

agreements before funds can be disbursed, including plans for fiscal 

accountability and procurement. In addition, the compact requires the 

adoption of a monitoring and evaluation plan; provides a description of the 

plan’s required elements; and establishes performance indicators for each 

of Madagascar’s three program objectives, which are linked to measures of 

the program’s expected overall impact on economic growth and poverty 

reduction. MCC expects to disburse funds in tranches as it approves 

Madagascar’s completed plans and agreements. According to the IG, MCC 

officials expect to make the initial disbursements within 2 months after 

signing the compact.34

 33Many poor countries have weak, inefficient, and sometimes corrupt institutions that resist 

reform. See, for example, U.S. Government Accountability Office, Developing Countries: 

Debt Relief Initiative for Poor Countries Faces Challenges, GAO/NSIAD-00-161

(Washington, D.C.: June 2000). Also see C.I.C.E./Deloitte, Senegal “MCA Jumpstart”: 

Strengthening Planning and Management Systems to Support Accelerated Development 

in Senegal, “MCA Jumpstart” Summary Report, Phase 1 (Dakar, Senegal: USAID, January 

2004) and C.I.C.E./Deloitte, Senegal MCA Jumpstart Phase 2: Overcoming Absorptive 

Capacity Constraints (Dakar, Senegal: USAID, November 2004). 

34Previous GAO work suggests that countries’ effective use of development assistance may 

depend on their abilities to establish the necessary institutions for identifying projects and 

distributing funds. See, for example, our 2003 report on the Global Fund to Fight AIDS, TB 

and Malaria (GAO-03-601). 

MCC Has Identified 

Elements of Program 

Implementation and Fiscal 

Accountability Framework 
Page 23 GAO-05-455T 

Figure 6: Adaptable Elements of MCC’s Framework for Program Implementation and Fiscal Accountability 

MCC has received advice and support from USAID, State, Treasury, and 

USTR and has signed agreements with five U.S. agencies for program 

implementation and technical assistance. In addition, MCC is consulting 

with other donors in Washington, D.C., and in the field to use existing 

donor expertise. MCC is also consulting with U.S.-based NGOs as part of 

its domestic outreach effort; however, some NGOs raised questions about 

the involvement of civil society groups. (See app. VII for more details of 

MCC’s coordination efforts.) 

MCC Is Taking Steps 

to Coordinate with 

Key Stakeholders 

Country 

oversight entity 

• Oversees and manages program and projects

• Contracts with fiscal and procurement agents, 

project implementers, and auditors and reviewers

• Approves contract actions and requests for 

payment 

• Prime minister's office 

• Ministry 

• Separate legal entity 

(e.g., council or committee) 

with government, civil 

society, and private sector 

representation

• Private company

Fiscal agent • Bank account signatory 

• Documents transactions and authorizes 

redisbursement requests 

• Provides accounting and financial reports 

• Finance ministry • Donor agency

• Accounting firm

• Commercial bank

• NGO

Procurement 

agent 

• Administers and/or certifies procurement 

process 

• Ministries • Donor unit

• Accounting firm

• Private company 

• NGO

Bank account • Dedicated to MCC funds • Central bank • Commercial bank 

Entity Key roles/responsibilities Governmental examples Other examples

Project 

implementer(s)

• Implements projects specified in the country’s 

compact 

• Requests payments from the oversight entity 

• Certifies delivery and receipt of goods and 

services 

• Ministries • Donor unit 

• Private company

• NGO 

Auditors and 

reviewers 

• Conducts financial audits, performance and 

compliance reviews, and data quality 

assessments

• Supreme Audit 

Institution 

• Statistics institute

• Accounting firm

• Consulting firm

• Academic institution

• NGO 

Source: GAO synthesis of MCC information.
Page 24 GAO-05-455T 

MCC initially coordinated primarily with U.S. agencies on its board and is 

expanding its coordination efforts to leverage the expertise of other 

agencies. USAID and the Department of State in Washington, D.C., and in 

compact-eligible countries, have facilitated meetings between MCC 

officials and donors and representatives of the private sector and NGOs in 

eligible countries. In addition, several of the six USAID missions contacted 

by GAO reported that their staff had provided country-specific 

information, had observed MCC-related meetings between civil society 

organizations and governments, or had informed other donors about MCC. 

MCC has also coordinated with the Department of the Treasury and USTR. 

For example, according to MCC officials, MCC has regularly briefed these 

agencies on specific elements of compact proposals and established an 

interagency working group to discuss compact-related legal issues. 

Since October 2004, MCC has expanded its coordination through formal 

agreements with five U.S. agencies, including the Census Bureau, Army 

Corps of Engineers, and Department of Agriculture, that are not on the 

MCC board. MCC has obligated more than $6 million for programmatic 

and technical assistance through these agreements, as shown in figure 7. 

U.S. Agencies Are 

Contributing Resources 

and Technical Assistance 
Page 25 GAO-05-455T 

Figure 7: Agreements between MCC and U.S. Agencies 

a

For fiscal year 2004 Threshold Program. All funds under this agreement must be obligated by 

September 30, 2005, unless MCC notifies USAID otherwise. 

b

Funding is for a 1-year period. 

Source: GAO synthesis of MCC information as of April 2005.

U.S. Agency for 

International 

Development 

U.S. Department of the 

Treasury’s Office of 

Technical Assistance 

U.S. Army Corps of 

Engineers

U.S. Census Bureau

U.S. Department of 

Agriculture’s Foreign 

Agricultural Service

Implement the Threshold Program, with 

MCC maintaining oversight and ultimate 

decision-making authority. (See app. IV for 

a detailed description of the program.) 

Provide grant or enter into an agreement with 

Government of Madagascar for the 

performance, completion and delivery of 

baseline statistical data that will be used to 

assess the impact of the Madagascar Compact.

U.S. agency Purpose Funds obligated to agency

Agreement date 

and duration 

Assist in evaluating fiscal and financial aspects 

of MCC funded programs including ongoing 

oversight, monitoring and technical assitance in 

the areas of financial management as may be 

required for the execution of MCC Compacts.

Assist with evaluations of infrastructure 

projects proposed by MCC-eligible countries. 

Evaluate roads project in Honduras. 

Evaluate roads project in Cape Verde. 

Assess monitoring and evaluation 

methodologies proposed by eligible countries 

and assist eligible countries in implementing 

the methodologies. 

Assist in evaluating agricultural sector 

projects proposed by MCC-eligible countries. 

USAID will charge MCC a flat 

administrative fee of 7 percent 

of funding that USAID obligates 

for the Threshold Program. 

$1,200,000b

$1,300,000

$1,500,000b

$192,753 

$100,000 

$750,000b 

$1,000,000 

October 2004

Inderterminate 

durationa

March 2005

1-year duration

February 2005 

5-year duration

February 2005 

5-year duration 

November 2004 

6-week duration 

February 2005 

5- to 6-week duration 

March 2005 

3-year duration 

March 2005 

3-year duration 
Page 26 GAO-05-455T 

MCC has received information and expertise from key multilateral and 

bilateral donors in the United States and eligible countries. For example, 

World Bank staff have briefed MCC regarding eligible countries, and 

officials from the Inter-American Development Bank said that they have 

provided MCC with infrastructure assessments in Honduras. According to 

MCC, most donor coordination is expected to occur in eligible countries 

rather than at the headquarters level. In some cases, MCC is directly 

coordinating its efforts with other donors through existing mechanisms, 

such as a G-17 donor group in Honduras. 

In addition to soliciting donor input, MCC officials have encouraged 

donors not to displace assistance to countries that receive MCA funding.35

Donors in Honduras told us that MCA funding to that country is unlikely to 

reduce their investment, because sectors included in the country’s 

proposal have additional needs that would not be met by MCA. 

According to MCC officials, MCC is holding monthly meetings with a U.S.-

based NGO working group36 and hosted five public meetings in 2004 in 

Washington, D.C, as part of its domestic outreach efforts. The NGOs have 

shared expertise in monitoring and evaluation and have offered 

suggestions that contributed to the modification of 1 of MCC’s 16 

quantitative indicators. In addition, MCC has met with local NGOs during 

country visits. 

Some U.S-based NGOs have raised questions about the involvement of 

NGOs in this country and of civil society groups in compact-eligible 

countries. Environmental NGOs told us in January 2005 that MCC had not 

engaged with them since initial outreach meetings; however, MCC 

subsequently invited NGOs and other interested entities to submit 

proposals for a quantitative indicator of a country’s natural resources 

management. Representatives of several NGOs commented that MCC 

lacks in-house expertise and staff to monitor and assess civil society 

participation in compact development. In addition, U.S.-based NGOs 

 35Previous GAO work on the Global Fund to fight AIDS, TB and Malaria indicates that it can 

be difficult to monitor donor spending on specific programs and to ensure that new grants 

augment spending at the country level (see GAO-03-601). 

36The NGO Implementation Working Group on the Millennium Challenge Account includes 

InterAction, an alliance of more than 160 U.S.-based international development and 

humanitarian organizations. 

MCC Is Consulting with 

Other Donors and Using 

Donor Expertise 

MCC Has Met with NGOs 
Page 27 GAO-05-455T 

expressed concern that their peers in MCA countries have not received 

complete information about the proposal development process. 

Since starting up operations, MCC has made progress in developing key 

administrative infrastructures that support its program implementation. 

MCC has also made progress in establishing corporatewide structures for 

accountability, governance, internal control, and human capital 

management, including establishing an audit and review capability through 

its IG, adopting bylaws, providing ethics training to employees, and 

expanding its permanent full-time staff. However, MCC has not yet 

completed plans, strategies, and time frames needed to establish these 

essential management structures on a corporatewide basis. (See fig. 8 for a 

detailed summary of MCC’s progress.) 

MCC Has Made 

Progress in 

Developing 

Management 

Structures but Has 

Not Completed 

Corporatewide Plans, 

Strategies, and Time 

Frames 
Page 28 GAO-05-455T 

Figure 8: MCC’s Progress on Key Management Structures 

a’Schedule A refers to positions specifically excepted from federal competitive service requirements. 

Administrative 

infrastructure

• Acquired temporary offices 

• Outsourced administrative aspects of accounting and human resource 

functions to Department of the Interior's National Business Center

• Hired initial staff 

• Developed and implemented computer network

• Move to new location in Washington, D.C. (May 2005)

• Develop records management policy 

Accountability • Issued statements of mission and goals in various documents; 

began strategic planning

• Completed initial audits of MCC's financial statements and 

related internal control, ethics program, and efforts to achieve 

intended organizational structure, under the direciton of MCC's 

statutorily-designated IG

• Issued consolidated report to satisfy annual reporting 

requirements of Millennium Challenge Act and Government 

Corporation Control Act

• Complete strategic planning process; issue strategic plan

• Issue annual performance plan (required under the Government 

Performance and Results Act)b

• Conduct several follow-on IG audits (e.g., financial statements, 

ethics, internal control, achieving organizational structure)

• Complete development of methodology for monitoring and 

evaluating compacts, including metrics that will be incorporated 

into compacts and used to evaluate a country's progress

Corporate governance MCC Board

• Adopted bylaws

• Approved selection criteria and methodology for eligible counties

• Selected initial round of countries eligible to enter into compacts

• Approved MCC officers

• Board established a compensation committee in March 2005, and 

a charter for the committee is being drafted

• MCC is drafting a policy related to the board's corporate governance

• Develop an approved board policy on corporate governance

Internal control • Adopted accounting principles 

• Documented the compact development process (including role 

and composition of Investment Committee)

• Performed due diligence reviews of proposed compact programs

• Established Ethics Program and conducted related training

• Established Investment Committee to oversee compact 

development process

• Established procedures detailing actions that require legal review 

and clearance

• MCC established an internal controls strategy group to formalize 

the assessment of the corporation's internal control environment, 

identify risks, assign priorities and responsibility, and establish 

time frames

• Implemented various policies (e.g., government vehicle use, 

security, use of information technology resources)

• Using federal travel regulation and federal acquisition regulation

• Developed policies for work hours/overtime and leave

• Established interagency legal working group that meets with board 

agency attorneys to discuss pending international legal issues

• Complete development of additional management tools 

(e.g., compact development pipeline) to assist staff, 

management, and MCC board in monitoring the compact 

development process

• Provide Contracting Officer Technical Representative (COTR) 

training

• Develop financial management policies and procedures

• Supplement federal travel and acquisition regulations with 

policies applicable to MCC

• Work with IG to develop compact audit provision

Human capital 

management

• Established organizational structure 

• Obtained Schedule A hiring authority from the Office of 

Personnel Management (OPM)a

• Planned initial staffing projections

• Contracted with international recruiting firm to expand hiring 

efforts

• Contracted with human capital consultant

• Develop strategic human capital plans

• Continue recruitment 

• Issue competitive hiring plans and procedures by March 31, 2006 

(required by OPM)

• Complete compensation study by summer 2005

• Adopt employee Performance Management Program

Key management 

structures

Actions completed Actions under way or planned

Source: GAO; items under "Actions completed" and "Actions under way or planned" represent GAO's synthesis of MCC information.

Basic infrastructure needed to 

support program operations.

Effectively demonstrating to 

both internal and external 

parties (e.g., Congress, public) 

that resources are managed 

properly; programs are 

achieving intended goals and 

outcomes; and programs are 

provided efficiently and 

effectively. 

Collective policies and 

mechanisms used by the Board 

to effectively oversee 

management efforts to establish 

and maintain a sustainable and 

accountable organization.

Integral component of 

organization management 

that provides reasonable 

assurance that key objectivesefficiency and effectiveness of 

operations, reliability of 

financial reporting, and 

compliance with applicable 

laws and regulations-are 

being achieved.

Leadership, strategic human 

capital planning, developing and 

retaining talent, and a resultsoriented culture are the 

cornerstones of strategic 

human capital management.
Page 29 GAO-05-455T 

b

According to MCC officials, MCC and OMB have agreed that MCC may submit a modified report to 

satisfy the Government Performance and Results Act requirement of a performance plan and report 

by March 31, 2005. MCC expects to submit the report by the end of fiscal year 2005. 

During its first 15 months, MCC management focused its efforts on 

establishing essential administrative infrastructures—the basic systems 

and resources needed to set up and support its operations—which also 

contribute to developing a culture of accountability and control. In 

February 2004, MCC acquired temporary offices in Arlington, Virginia, and 

began working to acquire a permanent location. In addition, consistent 

with its goal of a lean corporate structure with a limited number of fulltime employees, MCC outsourced administrative aspects of its accounting, 

information technology, travel, and human resource functions. Further, 

MCC implemented various other administrative policies and procedures to 

provide operating guidance to staff and enhance MCC’s internal control. 

MCC management continues to develop other corporate policies and 

procedures, including policies that will supplement federal travel and 

acquisition regulations. 

Accountability requires that a government organization effectively 

demonstrate, internally and externally, that its resources are managed 

properly and used in compliance with laws and regulations and that its 

programs are achieving their intended goals and outcomes and are being 

provided efficiently and effectively. Important for organizational 

accountability are effective strategic and performance planning and 

reporting processes that establish, measure, and report an organization’s 

progress in fulfilling its mission and meeting its goals. External oversight 

and audit processes provide another key element of accountability. 

During its initial 15 months, MCC developed and communicated to the 

public its mission, the basic tenets of its corporate vision, and key 

program-related decisions by the MCC board. MCC began its strategic 

planning process when key staff met in January 2005 to begin setting 

strategic objectives and it expects to issue the completed plan in the 

coming months. In addition, MCC arranged with its IG for the audit of its 

initial year financial statements (completed by an independent public 

accounting firm) and for two program-related IG reviews. However, to 

date, MCC has not completed a strategic plan or established specific 

implementation time frames. In addition, MCC has not yet established 

annual performance plans, which would facilitate its monitoring of 

progress toward strategic and annual performance goals and outcomes 

Administrative 

Infrastructure 

Accountability 
Page 30 GAO-05-455T 

and its reporting on such progress internally and externally. According to 

MCC officials, MCC intends to complete its comprehensive strategic and 

performance plans by the end of fiscal year 2005. 

Corporate governance can be viewed as the formation and execution of 

collective policies and oversight mechanisms to establish and maintain a 

sustainable and accountable organization while achieving its mission and 

demonstrating stewardship over its resources. Generally, an organization’s 

board of directors has a key role in corporate governance through its 

oversight of executive management, corporate strategies, risk 

management and audit and assurance processes, and communications 

with corporate stakeholders. 

During its initial 15 months, the MCC board adopted bylaws regarding 

board composition and powers, meetings, voting, fiscal oversight, and the 

duties and responsibilities of corporate officers and oversaw 

management’s efforts to design and implement the compact program. 

According to MCC, during a recent meeting of the board to discuss 

corporate governance, the Chief Executive Officer solicited feedback from 

the board regarding defining and improving the governance process. 

MCC’s board established a compensation committee in March 2005, and a 

charter for the committee is being drafted. In addition, MCC is preparing, 

for board consideration, a policy on the board’s corporate governance. As 

drafted, the policy identifies the board’s statutory and other 

responsibilities, elements of board governance, rules and procedures for 

board decision-making, and guidelines for MCC’s communications with 

the board. With regard to MCC board membership, seven of the nine board 

members have been appointed and installed. Through board agency staff, 

MCC staff have regularly informed board members—four of whom are 

heads of other agencies or departments—about pending MCC matters. 

The board has not completed a comprehensive strategy or plan for 

carrying out its responsibility—specifically, it has not defined the board’s 

and management’s respective roles in formulating and executing of 

corporate strategies, developing risk management and audit and assurance 

processes, and communicating and coordinating with corporate 

stakeholders. Moreover, although the bylaws permit the board to establish 

an audit committee—to support the board in accounting and financial 

reporting matters; determine the adequacy of MCC’s administrative and 

financial controls; and direct the corporation’s audit function, which is 

provided by the IG and its external auditor—the board has not yet done 

Corporate Governance 
Page 31 GAO-05-455T 

so. Finally, two of the MCC board’s four other positions have not yet been 

filled. 

Internal control provides reasonable assurance that key management 

objectives—efficiency and effectiveness of operations, reliability of 

financial reporting, and compliance with applicable laws and regulations—

are being achieved. Generally, a corporatewide internal control strategy is 

designed to 

• create and maintain an environment that sets a positive and supportive 

attitude toward internal control and conscientious management; 

• assess, on an ongoing basis, the risks facing the corporation and its 

programs from both external and internal sources; 

• implement efficient control activities and procedures intended to 

effectively manage and mitigate areas of significant risk; 

• monitor and test control activities and procedures on an ongoing basis; 

and 

• assess the operating effectiveness of internal control and report and 

address any weaknesses. 

During its first 15 months, MCC took several actions that contributed to 

establishing effective internal control. Although it did not conduct its own 

assessment of internal control, MCC management relied on the results of 

the IG reviews and external financial audit to support its conclusion that 

key internal controls were valid and reliable. Further, MCC implemented 

processes for identifying eligible countries and internal controls through 

its due diligence reviews of proposed compacts, establishment of the 

Investment Committee to assist MCC staff in negotiating and reviewing 

compact proposals, and the board’s involvement in approving negotiated 

compacts. In addition, MCC instituted an Ethics Program, covering 

employees as well as outside board members, to provide initial ethics 

orientation training for new hires and regularly scheduled briefings for 

employees on standards of conduct and statutory rules. In April 2005, MCC 

officials informed us that they had recently established an internal 

controls strategy group to identify internal control activities to be 

implemented over the next year, reflecting their awareness of the need to 

focus MCC’s efforts on the highest-risk areas. 

Internal Control 
Page 32 GAO-05-455T 

However, MCC has not completed a comprehensive strategy and related 

time frames for ensuring the proper design and incorporation of internal 

control into MCC’s corporatewide program and administrative operations. 

For example, MCC intends to rely on contractors for a number of 

operational and administrative services; however, this strategy will require 

special consideration in its design and implementation of specific internal 

controls. 

Cornerstones of human capital management include leadership; strategic 

human capital planning; acquiring, developing, and retaining talent; and 

building a results-oriented culture. In its initial year, MCC human capital 

efforts focused primarily on establishing an organizational structure and 

recruiting employees necessary to support program design and 

implementation and corporate administrative operations (see app. VIII for 

a diagram of MCC’s organizational structure). MCC set short- and longerterm hiring targets, including assigning about 20 employees—depending 

on the number and types of compacts that have been signed—to work in 

MCA compact-eligible countries; it also identified needed positions and 

future staffing levels through December 2005 based on its initial 

operations. With the help of an international recruiting firm, MCC 

expanded its permanent full-time staff from 7 staff employees in April 2004 

to 107 employees in April 2005; it intends to employ no more than 200 

permanent full-time employees by December 2005 (see fig. 9).38 In addition, 

MCC hired 15 individuals on detail, under personal services contracts, or 

as temporary hires, as well as a number of consultants. Finally, in January 

2005, MCC hired a consultant to design a compensation program to 

provide employees with pay and performance incentives and competitive 

benefits, including performance awards and bonuses, retention incentives, 

and student loan repayments. MCC officials told us that they intend the 

program to be comparable with those of federal financial agencies, 

international financial institutions, and multilateral and private sector 

organizations. 

 37Fifteen of these positions are administratively determined; Congress authorized 30 such 

positions for MCC in the Millennium Challenge Act. 

Human Capital 

Management 
Page 33 GAO-05-455T 

Figure 9: Actual and Planned Staffing Levels as of April 1, 2005 

MCC has not completed an institutional infrastructure that includes (1) a 

thorough and systematic assessment of the staffing requirements and 

critical skills needed to carry out its mission; (2) a human capital planning 

process that integrates MCC’s human capital policies and strategies with 

its program goals and mission; and (3) a performance management system 

that links employees’ pay and incentive programs to individual knowledge, 

skills, performance, and contributions. MCC officials acknowledged the 

need to refine and systematize MCC’s workforce planning to ensure that 

the corporation has the human capital capability needed for a broad range 

of programs in a number of developing nations. 

Source: GAO analysis of unaudited MCC data as of April 2005.

0

25

50

75

100

125

150

175

200

Mar. Apr. May Jun. Jul. Aug.Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Dec.

Planned staffing level by 

December 2005

2004 2005 

Direct-hire employees

Month

Number of direct-hire employees hired each month

Cumulative number of direct-hire employees
Page 34 GAO-05-455T 

In its first 15 months, MCC took important actions to design and 

implement the compact program—making eligibility determinations, 

defining its compact development process, and coordinating and 

establishing working agreements with key stakeholders. MCC also acted to 

establish important elements of a corporatewide management structure 

needed to support its mission and operations, including some key internal 

controls. However, MCC has not yet fully developed plans that define the 

comprehensive actions needed to establish key components of an effective 

management structure. 

We believe that, to continue to grow into a viable and sustainable entity, 

MCC needs to approve plans with related time frames that identify the 

actions required to build a corporatewide foundation for accountability, 

internal control, and human capital management and begin implementing 

these plans. In addition, MCC’s board needs to define its responsibilities 

for corporate governance and oversight of MCC and develop plans or 

strategies for carrying them out. As MCC moves into its second year of 

operations, it recognizes the need to develop comprehensive plans and 

strategies in each of these areas. Implementation of such plans and 

strategies should enable MCC’s management and board to measure 

progress in achieving corporate goals and objectives and demonstrate its 

accountability and control to Congress and the public. As part of our 

ongoing work for your committee, we will continue to monitor MCC’s 

efforts in these areas. 

We recommend that the Chief Executive Officer of the Millennium 

Challenge Corporation complete the development and implementation of 

overall plans and related time frames for actions needed to establish 

1. Corporatewide accountability, including 

• implementing a strategic plan, 

• establishing annual performance plans and goals, 

• using performance measures to monitor progress in meeting both 

strategic and annual performance goals, and 

• reporting internally and externally on its progress in meeting its 

strategic and annual performance goals. 

2. Effective internal control over MCC’s program and administrative 

operations, including establishing 

Conclusions 

Recommendations for 

Executive Action 
Page 35 GAO-05-455T 

• a positive and supportive internal control environment; 

• a process for ongoing risk assessment; 

• control activities and procedures for reducing risk, such as measures to 

mitigate risk associated with contracted operational and administrative 

services; 

• ongoing monitoring and periodic testing of control activities; and 

• a process for assessing and reporting on the effectiveness of internal 

controls and addressing any weaknesses identified. 

3. An effective human capital infrastructure, including 

• a thorough and systematic assessment of the staffing requirements and 

critical skills needed to carry out MCC’s mission; 

• a plan to acquire, develop, and retain talent that is aligned with the 

corporation’s strategic goals; and 

• a performance management system linking compensation to employee 

contributions toward the achievement of MCC’s mission and goals. 

We recommend that the Secretary of State, in her capacity as Chair of the 

MCC Board of Directors, ensure that the board considers and defines the 

scope of its responsibilities with respect to corporate governance and 

oversight of MCC and develop an overall plan or strategy, with related 

time frames, for carrying out these responsibilities. In doing so, the board 

should consider, in addition to its statutory responsibilities, other 

corporate governance and oversight responsibilities commonly associated 

with sound and effective corporate governance practices, including 

oversight of 

• executive management, 

• the formulation and execution of corporate strategies, 

• risk management and audit and assurance processes, and 

• communication and coordination with corporate stakeholders. 
Page 36 GAO-05-455T 

MCC provided technical comments on a draft of this statement and agreed 

to take our recommendations under consideration; we addressed MCC’s 

comments in the text as appropriate. We also provided the Departments of 

State and Treasury, the U.S. Agency for International Development, and 

the Office of the U.S. Trade Representative an opportunity to review a 

draft of this statement for technical accuracy. State and USAID suggested 

no changes, and Treasury and USTR provided a few technical comments, 

which we incorporated as appropriate. 

Mr. Chairman and Members of the Committee, this concludes my prepared 

statement. I will be happy to answer any questions you may have. 

For questions regarding this testimony, please call David Gootnick at (202) 

512-4128 or Phillip Herr at (202) 512-8509. 

Other key contributors to this statement were Todd M. Anderson, Beverly 

Bendekgey, David Dornisch, Etana Finkler, Ernie Jackson, Debra Johnson, 

Joy Labez, Reid Lowe, David Merrill, John Reilly, Michael Rohrback, Mona 

Sehgal, and R.G. Steinman. 

Agency Comments 

and Our Evaluation 

Contacts and 

Acknowledgments 
Page 37 GAO-05-455T 

We reviewed MCC’s activities in its first 15 months of operations, 

specifically its (1) process for determining country eligibility for fiscal 

years 2004 and 2005, (2) progress in developing compacts, (3) 

coordination with key stakeholders, and (4) establishment of management 

structures and accountability mechanisms. 

To examine MCC’s country selection process, we analyzed candidate 

countries’ scores for the 16 quantitative indicators for fiscal years 2004 and 

2005, as well as the selection criteria for the fiscal year 2004 Threshold 

Program. We used these data to determine the characteristics of countries 

that met and did not meet the indicator criteria and to assess the extent to 

which MCC relied on country scores for eligibility determination. We also 

reviewed the source data for the indicator scores posted on MCC’s Web 

site to identify issues related to public access and to determine whether 

we could reproduce the country scores from the source data. Our review 

of the source data methodology, as well as the documents of other 

experts, allowed us to identify some limitations of the indicator criteria 

used in the country selection process. For these and other data we used in 

our analyses, we examined, as appropriate, the reliability of the data 

through interviews with MCC officials responsible for the data, document 

reviews, and reviews of data collection and methodology made available 

by the authors. We determined the data to be reliable for the purposes of 

this study. 

To describe MCC’s process for developing compacts, including plans for 

monitoring and evaluation, we reviewed MCC’s draft or finalized 

documents outlining compact proposal guidance, compact proposal 

assessment, and fiscal accountability elements. We reviewed eligible 

countries’ compact proposals and concept papers to identify proposed 

projects, funding, and institutional frameworks, among other things. To 

summarize the projects that countries have proposed and that MCC is 

currently assessing, we developed categories and conducted an analysis of 

countries’ proposal documents and MCC’s internal summaries. We also 

reviewed Madagascar’s draft compact to identify projects, funding, and 

framework for program implementation and fiscal accountability. We met 

with MCC officials to obtain updates on the compact development 

process. In addition, we interviewed representatives of nongovernmental 

organizations (NGOs) in Washington, D.C., and Honduras, as well as 

country officials in Honduras, to obtain their perspectives on MCC’s 

compact development process. 

To assess MCC’s coordination with key stakeholders, we reviewed 

interagency agreements to identify the types of formal assistance that 

Appendix I: Scope and Methodology 
Page 38 GAO-05-455T 

MCC is seeking from U.S. agencies and the funding that MCC has set aside 

for this purpose. We also reviewed MCC documents to identify the 

organizations, including other donors, with which MCC has consulted. In 

addition, we interviewed MCC officials regarding their coordination with 

various stakeholders. We met with officials from the U.S. agencies on the 

MCC board (Departments of State and Treasury, USAID, and USTR) to 

assess the types of assistance that these agencies have provided to MCC. 

We also contacted six USAID missions in compact-eligible countries to 

obtain information on MCC coordination with U.S. agencies in the field. To 

assess MCC’s coordination with NGOs and other donors, we met with 

several NGOs, including InterAction, the World Wildlife Fund, and the 

Women’s Edge Coalition in Washington, D.C., and local NGOs in 

Honduras; we also met with officials from the Inter-American 

Development Bank in Washington, D.C., and Honduras, as well as officials 

from the World Bank, Central American Bank for Economic Integration, 

and several bilateral donors in Honduras. Finally, we attended several 

MCC public outreach meetings in Washington, D.C. 

To analyze MCC’s progress in establishing management structures and 

accountability mechanisms, we interviewed MCC senior management and 

reviewed available documents to identify the management and 

accountability plans that MCC had developed or was planning to develop. 

We reviewed audit reports by the USAID Office of the Inspector General to 

avoid duplication of efforts. We used relevant GAO reports and widely 

used standards and best practices, as applicable, to determine criteria for 

assessing MCC’s progress on management issues as well as to suggest best 

practices to MCC in relevant areas. Although our analysis included gaining 

an understanding of MCC’s actions related to establishing internal control, 

we did not evaluate the design and operating effectiveness of internal 

control at MCC. 

In January 2005, we conducted fieldwork in Honduras, one of four 

countries with which MCC had entered into negotiations at that time, to 

assess MCC’s procedures for conducting compact proposal due diligence 

and its coordination with U.S. agencies, local NGOs, Honduran 

government officials, and other donors. In conducting our field work, we 

met with U.S. mission officials, Honduran government officials, donor 

representatives, and local NGOs. We also visited some existing USAID 

projects in the agricultural sector that were similar to projects that 

Honduras proposed. 

We provided a draft of this statement to MCC, and we have incorporated 

technical comments where appropriate. We also provided a draft of this 
Page 39 GAO-05-455T 

statement to the Departments of State and Treasury, USAID, and USTR; 

State and USAID suggested no changes, and Treasury and USTR provided 

technical comments, which we addressed as appropriate. We conducted 

our work between April 2004 and April 2005, in accordance with generally 

accepted government auditing standards. 
Page 40 GAO-05-455T 

Note: The countries listed do not include the 12 and 14 countries that were not candidates because of 

legal prohibitions in fiscal years 2004 and 2005, respectively. 

Appendix II: Candidate and Eligible 

Countries for MCA and Threshold Programs, 

Fiscal Years 2004-2005 

2004

MCC compact-eligible

countries

MCC compact-eligible

countries

Threshold Program

countries

Threshold Program

countries

2005 2004 2005

Candidate 

countries

(continued) 2004

Candidate 

countries

2005 2004 2005

Afghanistan

*Albania

Angola

Armenia

Azerbaijan

Bangladesh

Benin

Bhutan

Bolivia

*Bosnia and Herzegovina

Burkina Faso

Cameroon

*Cape Verde

Chad

China

Comoros

Congo Democratic Republic 

Congo, Rep. 

Djibouti

East Timor

Egypt. Arab Rep. of

Eritrea

Ethiopia

Gambia

Georgia

Ghana

Guinea

Guinea-Bissau**

Guyana

Haiti

Honduras

India

Indonesia

Kenya

Kiribati

Kyrgyz Republic

Lao PDR

Armenia

Benin

Bolivia

Georgia

Ghana

Honduras

*Albania

East Timor

Kenya

Burkina Faso

East Timor

Guyana

Kenya

Armenia

Benin

Bolivia

*Cape Verde

Georgia

Ghana

Honduras

Lesotho

Madagascar

Malawi

Mali

Mauritania

Moldova

Mongolia

Morocco

Mozambique

Nepal

Nicaragua

Niger

Nigeria

Pakistan

Papua New Guinea 

Paraguay

Philippines 

Rwanda

São Tomé and Principe

Senegal

Sierra Leone

Solomon Islands

Sri Lanka

Swaziland

Tajikistan

Tanzania

Togo

*Tonga

Turkmenistan

Uganda

Ukraine

Vanuatu

Vietnam

Yemen Republic

Zambia

Lesotho

Madagascar

Mali

Mongolia

Morocco

Mozambique

Nicaragua

Senegal

Sri Lanka

Vanuatu

São Tomé and 

Principe

Tanzania

Uganda

Yemen Republic

Malawi

Paraguay

Philippines 

São Tomé and 

Principe

Tanzania

Uganda

Yemen Republic

Zambia

Lesotho

Madagascar

Mali

Mongolia

Mozambique

Nicaragua

Senegal

Sri Lanka

Vanuatu

Source: GAO analysis and synthesis of MCC data.

* Candidate for FY 2004 only. 

** Prohibited under Foreign Assistance Act in FY 2004 but not in FY 2005.

Candidate for FY 2005 only. 
Page 41 GAO-05-455T 

Table 1 lists each of the indicators used in the MCA compact and threshold 

country selection process, along with its source and a brief description of 

the indicator and the methodology on which it is based. 

Table 1: Quantitative Indicators Used to Determine MCA Country Eligibility 

RULING JUSTLY 

Indicator/Source Description Methodology 

Political rights 

Freedom House, Freedom in the World 2003 

Measures the ability of citizens to 

participate freely in the political 

process. This includes the right to 

vote, elect representatives who 

have real power, and compete for 

public office. 

Civil liberties 

Freedom House, Freedom in the World 2003 

Measures citizen’s freedom to 

develop opinions, institutions, and 

personal autonomy without 

interference from the state. 

A survey providing an annual evaluation 

of the state of global freedom. A panel of 

experts uses a broad range of sources 

of information, including foreign and 

domestic news reports, 

nongovernmental organization 

publications, think tank and academic 

analyses, individual professional 

contacts, and visits to the region. The 

panel rates countries on the prevalence 

of free and fair elections of officials with 

real power; the ability of citizens to form 

political parties that may compete fairly 

in elections; freedom from domination by 

the military, foreign powers, totalitarian 

parties, religious hierarchies, and 

economic oligarchies; and the political 

rights of minority groups. Countries 

receive numerical ratings from 1 to 7, 

with 1 being the most free. 

Voice and accountability 

Governance Matters III: Governance Indicators for 

1996–2002, D. Kaufmann, A. Kraay, and M. Mastruzzi, 

The World Bank, 2003 

Measures the ability of institutions 

to protect civil liberties, the extent 

to which citizens of a country are 

able to participate in the selection 

of governments, and the 

independence of the media. 

Government effectiveness 

Governance Matters III: Governance Indicators for 

1996–2002, D. Kaufmann, A. Kraay, and M. Mastruzzi, 

The World Bank, 2003 

Measures the ability of the 

government to formulate and 

implement sound policies, including 

quality of public service provision, 

quality of bureaucracy, competency 

of civil servants, independence of 

civil service from political 

pressures, credibility of the 

government’s commitment to 

policies. 

An index of surveys based on several 

hundred individual variables measuring 

perceptions of governance, drawn from 

25 separate data sources constructed by 

18 different organizations. The 

governance indicators are measured in 

units ranging from –2.5 to 2.5, with 

higher values corresponding to better 

governance outcomes. 

Appendix III: Indicators Used in the 

Selection Process 
Page 42 GAO-05-455T 

Rule of law 

Governance Matters III: Governance Indicators for 

1996–2002, D. Kaufmann, A. Kraay, and M. Mastruzzi , 

The World Bank, 2003 

Measures the extent to which the 

public has confidence in, and 

abides by, rules of society. 

Includes perception of the 

incidence of crime, the 

effectiveness and predictability of 

the judiciary, and the enforceability 

of contracts. 

Control of corruption 

Governance Matters III: Governance Indicators for 

1996–2002, D. Kaufmann, A. Kraay, and M. Mastruzzi , 

The World Bank, 2003 

Rates countries on the frequency 

of “additional payments to get 

things done,” the effects of 

corruption on the business 

environment, “grand corruption” in 

the political arena, and the 

tendency of elites to engage in 

“state capture.” 

INVESTING IN PEOPLE 

Indicator/Source Description Methodology 

Primary (girls’) education completion rate 

World Bank (EdStats and Education for All, World 

Development Indicators) and UNESCO Institute for 

Statistics, various years 

The number of students (girls) 

completing primary education, 

divided by the population in the 

relevant age cohort. 

EdStats compiles data from a variety of 

sources. The primary sources are the 

UNESCO Institute for Statistics (UIS), 

the Organization for Economic Cooperation and Development (OECD), the 

International Monetary Fund (IMF), and 

the World Bank and its client countries. 

Primary education spending (% OF GDP) 

National Governments and World Bank (Education For 

All), various years 

Total expenditures on primary 

education by government at all 

levels, divided by GDP. 

Data from national sources was 

gathered directly from the governments 

of both the candidate countries and the 

legally prohibited countries in March and 

April 2004 with the assistance of U.S. 

embassies. 

Public health spending (% OF GDP) 

National Governments, supplemented by World Bank 

(World Development Indicators), various years

Total expenditures on health by 

government at all levels, divided by 

GDP. 

Same methodology as Primary 

education spending (% of GDP). 

Diphtheria and measles immunization rate 

World Health Organization and UNICEF estimates of 

National Immunization Coverage, 2002 

The average of DPT3 and measles 

immunization rates for the most 

recent year available. 

Data officially reported to WHO and 

UNICEF by Member States in addition to 

data reported in the published and grey 

literature. WHO and UNICEF also 

consult with local experts - primarily 

national EPI managers and WHO 

regional office staff - for additional 

information regarding the performance 

of specific local immunization services. 

The true level of immunization is based 

on estimates of national immunization 

for various vaccines. 
Page 43 GAO-05-455T 

ECONOMIC FREEDOM 

Indicator/Source Description Methodology 

Country credit rating 

Institutional Investor, March 2004 

A semi-annual survey of bankers’ 

and fund managers’ perceptions of 

a country’s risk of default. 

Institutional Investor reports regularly 

and provides credit ratings, based on the 

perceived risk of government default, 

every 6 months for 145 countries, 

including 85 MCA countries. Countries 

are ranked on a scale from 1 to 100 

based on information provided by 

economists and sovereign risk analysts 

from banks and money management 

and securities firms. 

Fiscal policy 

IMF World Economic Outlook, 2003 or more recent 

data, if available 

Overall budget deficit (after receipt 

of grants but not concessional 

loans; includes interest on debt) 

divided by GDP, averaged over a 

3-year period. 

The IMF provided the MCC with the 

budget deficit data, which is otherwise 

not publicly available. We do not know 

what methodology the IMF used to 

obtain this data for all countries. 

However, WEO short-term fiscal policy 

assumptions for advanced economies 

are based on officially announced 

budgets adjusted for differences 

between the national authorities and the 

IMF staff regarding macroeconomic 

assumptions and projected fiscal 

outcomes. 

Trade policy 

Heritage Foundation/Wall Street Journal 2004 Index of 

Economic Freedom 

A country’s openness to 

international trade based on 

average tariff rates and nontariff 

barriers to trade, on a scale of 1 to 

5, with 1 being the most open. 

This is a subjective indicator. The 

countries are rated from 1 to 5, based 

primarily on tariff and quota rates, where 

available. 

Regulatory quality 

Governance Matters III: Governance Indicators for 

1996–2002, D. Kaufmann, A. Kraay, and M. Mastruzzi, 

The World Bank, 2003 

Measures of the incidence of 

market-unfriendly policies such as 

price controls or inadequate bank 

supervision, as well as perception 

of the burdens imposed by 

excessive regulation in areas such 

as foreign trade and business 

development. 

Same methodology as voice and 

accountability, above. 

Days to start a business 

May 2004, World Bank Doing Business

The number of days required for 

companies to complete all 

procedures necessary to legally 

start a business. 

Doing Business compiles a 

comprehensive list of entry regulations 

by recording all the procedures that are 

officially required for an entrepreneur to 

obtain all necessary permits, and to 

notify and file with all requisite 

authorities, in order to legally operate a 

business. The data are from January 

2003. 
Page 44 GAO-05-455T 

One-year consumer price inflation 

IMF International Financial Statistics (2002, 2003), 

supplemented by national government data, and IMF’s 

World Economic Outlook, various years 

The most recent 12-month change 

in consumer prices as reported in 

the IMF’s International Financial 

Statistics or in another public forum 

by the relevant national monetary 

authorities. 

Consumer price indexes (CPI) are used 

most frequently as an indicator of 

inflation. The CPI reflect changes in the 

cost of acquiring a fixed basket of goods 

and services by the average consumer. 

Weights are derived from household 

expenditure surveys, which may be 

conducted infrequently. 

Since announcing the 16 quantitative indicators that it used to determine 

country eligibility for fiscal year 2004, MCC made two changes for fiscal 

year 2005 and is exploring further changes for fiscal year 2006. To better 

capture the gender concerns specified in the Millennium Challenge Act, 

MCC substituted “girls’ primary education completion rate” for “primary 

education completion rate.” It also lowered the ceiling for the inflation 

rate indicator from 20 to 15 percent. In addition, to satisfy the act’s 

stipulation that MCC use objective and quantifiable indicators to evaluate 

a country’s commitment to economic policies that promote sustainable 

natural resource management, MCC held a public session on February 28, 

2005, to launch the process of identifying such an indicator. MCC expects 

to complete the process by May 2005. 
Page 45 GAO-05-455T 

The MCC board used objective criteria (a rules-based methodology) and 

exercised discretion to select the threshold countries (see fig. 10). For 

fiscal year 2004, the MCC board relied on objective criteria in selecting as 

Threshold Program candidates countries that needed to improve in 2 or 

fewer of the 16 quantitative indicators used to determine MCA eligibility. 

(That is, by improving in two or fewer indicators, the country would score 

above the median on half of the indicators in each policy category, would 

score above the median on the corruption indicator, and would not score 

substantially below the median on any indicator.) MCC identified 15 

countries that met its stated criteria and selected 7 countries to apply for 

Threshold Program assistance. Our analysis suggests that one of these 

seven countries did not meet MCC’s stated Threshold Program criteria.1

The MCC board also exercised discretion in assessing whether countries 

that passed this screen also demonstrated a commitment to undertake 

policy reforms to improve in deficient indicators. 

For fiscal year 2005, the MCC did not employ a rules-based methodology 

for selecting Threshold Program candidates. Instead, the board selected 

Threshold Program and MCA compact-eligible countries simultaneously. 

The board selected 12 countries to apply for Threshold Program 

assistance, including reconfirming the selection of 6 countries2

 that also 

had qualified for the fiscal year 2004 Threshold Program. 

 1

Yemen would have had to improve on at least three indicators to meet the fiscal year 2004 

Threshold Program criteria. 

2

Albania was not a candidate for fiscal year 2005 due to per capita income above the IDA 

ceiling. 

Appendix IV: Threshold Program Selection 

Process 
Page 46 GAO-05-455T 

Figure 10: MCC’s Threshold Program 

2

3

4

Concept

paper

Threshold

plan

Source: GAO synthesis of MCC's Threshold Program process.

1

• Policy, regulatory, 

 or institutional reforms

• Proposed projects

• Performance schedule

• Benchmarks to measure progress

• Evidence of political commitment

• Financial management mechanism

• Budget

3- to 5-page plan with: 

• USAID will manage implementation.

• USAID will charge MCC a flat administrative fee of 7 percent of the funding that USAID obligates for the Threshold Program.

• Countries are responsible for meeting benchmarks; program implementers can include NGOs, private corporations, local 

or regional organizations, etc.

Threshold plan development

Threshold plan implementation

• Short term: countries demonstrate progress toward meeting benchmarks specified in threshold plans.

• Long term: countries improve scores on quantitative indicators to be eligible for compact assistance. 

Expected program results

• FY 2004-selected countries competed for $40 million by submitting 

concept papers by January 31, 2005. Concept papers for FY 2005 

were due by March 15, 2005.

• USAID evaluates concept papers and makes recommendations to 

MCC on those proposals it believes merit further development.

• MCC reviews USAID recommendations and approves the 

development of threshold plans.

• MCC reviews threshold plans and makes funding recommendations 

to its board, which will make the final decision.

Selection methodology

• MCC’s selection methodology* for FY 2004 included countries that by improving on 2 or fewer indicators would 

 - score above the median on half of the indicators in each policy category,

 - score above the median on the corruption indicator, and

 - not score substantially below the median on any indicator.

* These rules were dropped for the selection of FY 2005 threshold countries

• The board also considered country commitment to undertake policy reforms.

• USAID and MCC proposed countries to the board based on management capacity and funding considerations.

• The MCC board selected 7 countries for the FY 2004 program:

• For FY 2005 the MCC board selected 12 countries, 6 of which also qualified in FY 2004:

Albania

East Timor

Kenya 

São Tomé and Principe

Tanzania

Uganda

Yemen

Burkina Faso

East Timor

Guyana

Kenya 

Malawi

Paraguay

Philippines

São Tomé and Principe

Tanzania

Uganda

Yemen

Zambia

Plan (for up to 2 years) that includes: 
Page 47 GAO-05-455T 

Figure 11 illustrates key events and defining actions relating to MCC since 

the passage of the Millennium Challenge Act in January 2004. 

Figure 11: Timeline of Key MCC-related Events and Actions, Fiscal Years 2004-2005 

Appendix V: Timeline of Key Events 

FY 2004

Jan. Feb. Mar. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.

FY 2005

First MCC board 

meeting: Bylaws 

approved, interim 

CEO named

MCC board 

meetings

Public 

meetings

Acts/

confirmations

Second 

MCC board 

meeting: FY 

2004 MCA 

eligible 

country 

selection

Third MCC 

board 

meeting: 

Update on 

MCC's 

operations

Fourth MCC 

board meeting: 

FY 2005 MCA 

eligible country 

and threshold 

country 

selection

Millennium Challenge 

Act passed as part of 

Consolidated 

Appropriations Act, 

2004

Source: GAO synthesis of MCA information through March 2005.

Public 

meeting: 

Selection 

criteria and 

methodology 

for FY 2004

Public 

meeting: 

MCC's 

progress 

update

Public 

meeting: 

FY 2005 MCA 

eligible 

countries and 

threshold 

countries

Fifth MCC 

board 

meeting: 

First 

compact 

approved

Public 

meeting: 

Discussions 

on natural 

resources 

indicator

Public 

meeting: 

Discuss 

Madagascar 

compact

MCC CEO 

confirmed by 

Senate

Two MCC 

board 

members 

comfirmed 

by Senate

Public 

meeting: 

Country 

visits

Public 

meeting: 

Selection 

criteria and 

methodology 

for FY 2005
Page 48 GAO-05-455T 

MCC plans to be among the top donors in MCA compact-eligible countries. 

Figure 12 shows the total official development assistance net (average for 

2002 and 2003) provided by the top three donors as well as the amount of 

total official development assistance net (average for 2002 and 2003) 

provided by all donors in each of the MCA compact-eligible countries. As 

the figure indicates, based on the average for the years 2002-2003, the 

United States was the top donor in Armenia, Bolivia, Georgia, and 

Honduras and was among the top five donors in nine additional countries. 

Appendix VI: Donors in MCA Compacteligible Countries 
Page 49 GAO-05-455T 

Figure 12: Top Donors in MCA Compact-eligible Countries, Total Annual ODA Net, Average for 2002 – 2003 

0 20 40 60 80 100

Percent

United States ($96) IDA ($73) EC ($23)

EC ($40) France ($39) U.S. ($28)

U.S. ($191) IDB ($138) IDA ($120)

Portugal ($26) IDA ($20) EC ($19)

United States ($107) IDA ($52) Ger. ($27)

IDA ($139) UK ($130) U.S. ($78)

EC ($18) Ireland ($12) IDA ($15)

IDA ($178) France ($90) EC ($70)

IDA ($91) France ($69) EC ($82)

Japan ($75) AsDF ($33) Ger. ($27)

France ($181) EC ($141) Japan ($54)

Italy ($237) IDA France ($231) ($156)

IDB ($103) IDA ($98) Ger. ($84)

France ($115) IDA ($107) EC ($48)

Australia ($13) France ($5) New Zealand ($4)

United States ($86) Japan ($65) IDB ($58)

Japan ($150) AsDF ($123) IDA ($116)

Largest donors in eligible country AsDF Asia Development Bank Special Funds

EC European Commission

Ger. Germany

IDA International Development Association 

 (concessionary lending arm of the World Bank) 

IDB Inter-American Development Bank

 Special Operating Fund

IMF International Monetary Fund

ODA Official Development Assistance 

UK United Kingdom

United States among the 

top 3 donors in eligible country

Numbers may not add due to rounding

Other donors

$ 276

260

821

120

272

793

424

80

469

512

234

520

1588

695

460

 523

31

Total ODA net 

(2004 U.S. dollars in millions)

Vanuatu

Sri Lanka

Senegal

Nicaragua

Mozambique

Morocco

Mongolia

Mali

Madagascar

Lesotho

Honduras

Ghana

Georgia

Cape Verde

Bolivia

Benin

Armenia

Largest donors (2004 U.S. dollars in millions)

Eligible 

countries

Source: GAO, based on Organization for Economic Cooperation and Development (OECD) data.
Page 50 GAO-05-455T 

MCC is coordinating its program and funding activities with various 

stakeholders to keep them informed and to utilize their expertise or 

resources at headquarters and in the field (see fig. 13). In addition, several 

U.S. agencies have taken steps to coordinate their activities with MCC. 

Figure 13: MCC Coordination with Key Stakeholders 

a

Although MCC was formally established in February 2004, an interagency team that included 

representatives from the National Security Council, State, USAID, Treasury, and the Office of 

Management and Budget began designing and implementing the MCA initiative in the spring of 2002. 

Appendix VII: MCC Coordination with Key 

Stakeholders 

Coordination mechanisms Examples of coordination

• USAID and State facilitated MCC country visits

• USAID provided country-specific information to MCC. 

• USAID formulated its 2003a regional strategy for Central 

America around MCC’s three policy categories. 

• State provided supplemental information for country 

selection process. 

• Treasury has facilitated coordination with multilateral 

donors. 

• USTR has facilitated meetings with World Trade 

Organization ambassadors of eligible countries. 

• USDA has reviewed agricultural projects. 

• USACE is helping review infrastructure projects.

• Eligible countries are using World Bank- and IMFsupported Poverty Reduction Strategy Papers to develop 

compact proposals. 

• IMF provided budget data for MCC’s fiscal policy indicator. 

Inter-American Development Bank (IDB) has provided 

studies and assessments. 

• World Bank and IDB officials have briefed MCC. 

• MCC has sought program-specific input from donors in 

eligible countries. 

• U.S. NGOs have helped MCC identify country-based NGOs 

• NGOs have shared monitoring and evaluation expertise 

• NGOs provided input to make an Investing in People

indicator gender sensitive 

Source: GAO synthesis of information provided by MCC.

• USAID established an MCC coordination unit with three staff

• State has assigned an MCA coordinator 

• Treasury and USTR officials are providing advice or reviewing 

information as needed 

• MCC has signed agreements with

 - USAID to design and implement Threshold Program 

 - U.S. Army Corps of Engineers (USACE) to evaluate proposed 

 infrastructure projects 

 - Treasury’s Office of Technical Assistance to assess and

 monitor fiscal accountability 

- U.S. Census Bureau to evaluate proposed monitoring and

 evaluation methodologies. 

- USDA to evaluate proposed agricultural sector projects. 

• MCC conducts direct outreach to and consultations with donors 

in headquarters and eligible countries 

• Existing donor coordination mechanism in eligible countries 

U.S. 

agencies

Donors

• Public meetings

• NGO-specific meetings

NGOs
Page 51 GAO-05-455T 

Within each of the eight functional areas shown in figure 14, the actual 

staffing level as of April 2005 appears in the pie chart in each box and the 

planned staffing level by December 2005 appears in the right corner of 

each box. 

Figure 14: MCC Organizational Structure As of April 1, 2005 

Appendix VIII: MCC Organizational 

Structure 

(320254) 

Board of Directors

Senior Advisor

Chief Executive Officer

Chief of Staff

Development 

Policy

Monitoring and 

Evaluation

General

Counsel

Administration

and

Finance

Market and 

Sectoral 

Assessments

Country 

Relations

Domestic 

Relations

International 

Relations

Actual staffing level (including personal services contractors, detailees, and temporary hires)

Planned staffing level (including personal services contractors, detailees, and temporary hires)

Source: GAO synthesis of MCC information.

• Administration

• Regional units

• Compact 

development

• Controller

• Risk management

• Acquisitions 

(contracting and 

procurement)

• Security

• Information 

technology

• Human resources

• Administrative 

support

• Legal/regulatory

• Agriculture

• Fiscal accountability

• Infrastructure

• Social sector

• Financial sector 

development

• Sustainable 

development

• Threshold Program 

• Economic logic 

and growth impact

• Monitoring and 

evaluation plans

• Performance data 

reporting

• Country statistical 

capacity reviews

• Impact evaluations

• Eurasia

• Francophone Africa

• Lucophone 

(Portuguesespeaking) and 

Anglophone Africa

• Latin America

• MCC mission 

directors 

• Domestic country 

liaison

• Legislative relations

• Interagency liaison

• Communications

• Media

• Donor/multilateral 

relations

• Bilateral affairs

• Donor coordination

• Country selection 

and indicators

• Research and 

development

8

7

7

4

16

12

12

8

26

20

40

24

65

35

12

7

6

3
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