United States Government Accountability Office

Washington, DC 20548 

September 26, 2008 

Congressional Committees 

Subject: Millennium Challenge Corporation: Summary Fact Sheets for 11 Compacts 

Entered into Force 

The Millennium Challenge Corporation (MCC), now in its fourth year of operations, is 

to provide aid to developing countries that have demonstrated a commitment to 

ruling justly, encouraging economic freedom, and investing in people. MCC provides 

assistance to eligible countries through multiyear compact agreements to fund 

specific programs targeted at reducing poverty and stimulating economic growth.1

MCC has received appropriations for fiscal years 2004 through 2008 totaling more 

than $7.5 billion and has set aside about $6.4 billion of this amount for compact 

assistance.2

 As of August 2008, MCC had signed compacts with 18 countries totaling 

approximately $6.3 billion; of the 18 signed compacts, 11 compacts had entered into 

force, obligating a total of approximately $3 billion.3

 The President has requested an 

additional $2.225 billion for MCC for fiscal year 2009, of which MCC plans to use 

$1.88 billion for compact assistance to countries currently eligible for compacts. 

Enclosed are fact sheets for the 11 MCC compacts that had entered into force as of 

August 2008. The fact sheets summarize each country’s 

• general characteristics and location, 

• timeline of key compact events, 

 1

The Millennium Challenge Act of 2003 (Public Law 108-199, Division D, Title VI) authorizes MCC to provide 

assistance to countries that enter into public compacts with the United States. MCC has negotiated compacts with 

countries that contain agreed upon assistance objectives, responsibilities, implementation schedules, expected 

results, and evaluation strategies. The act stipulates that a compact may not last longer than 5 years and that MCC 

may have only one compact with a country at a time. 

2

About $1 billion has been set aside for MCC’s threshold country program, administrative expenses, due diligence, 

monitoring and evaluation, and other costs. MCC’s threshold program is designed to assist countries that have not 

yet qualified for compact assistance, but have demonstrated a significant commitment to improve their 

performance on MCC’s eligibility criteria. 

3

After compact signature, MCC and the country’s accountable entity must complete supplemental agreements, 

including a disbursement agreement and a procurement agreement, before the compact enters into force and 

funds are disbursed. Five additional MCC compacts entered into force in September 2008. The entry-into-force of 

these five compacts, with Lesotho, Mongolia, Morocco, Mozambique and Tanzania, occurred too late for them to 

be included in these fact sheets. With these additional five compacts, MCC has obligated a total of approximately 

$5.5 billion as of the end of September 2008. 

GAO-08-1145R MCC Compact Fact Sheets 
• per capita income relative to MCC income criteria, 

• performance on MCC's eligibility indicators, 

• compact characteristics and structure at the time of compact signature, 

• compact project funding distribution as of June 2008, and 

• allocated and disbursed compact funds as of June 2008. 

To develop these fact sheets, we compiled and summarized publicly available data 

from a number of sources, including our previous reporting on MCC. We used 

information from the World Bank and from Central Intelligence Agency Fact Books 

to provide a general overview of each country and its economy. To develop timelines 

of key compact events, we analyzed MCC data from its country quarterly status 

reports4

 and our previous reporting. To summarize country performance on MCC 

selection criteria, we (1) compared World Bank data on per capita incomes with 

MCC’s income eligibility thresholds published in its annual candidate country reports 

and (2) compiled country performance on MCC policy indicators from MCC’s annual 

candidate country scorecards and eligible country reports. To summarize the 

compact and its project plans, we reviewed and analyzed MCC's compacts, compact 

summaries, and monitoring and evaluation plans. These summaries reflect the 

compact structure and expectations at the time of compact signature and do not 

incorporate any subsequent compact restructuring. Finally, to analyze compact 

obligations, disbursements, and commitments, we compiled public information from 

MCC's quarterly reports on obligations and disbursements published in the Federal 

Register and from MCC's quarterly country status reports. The planned 

disbursements we report are based on MCC’s projections at compact signature and 

on the assumption that compact funds are disbursed evenly throughout the compact 

implementation year. Descriptions of any compact restructuring, included in our 

discussions of compact implementation, are based on MCC and compact country 

documents. To clarify and confirm our understanding of this information, we 

submitted written questions to MCC officials.

We determined that World Bank gross national income per capita data were 

sufficiently reliable to provide general information on compact funding and 

programmatic indicators. We further determined that MCC financial data were 

sufficiently reliable for our purposes based on our review of U.S. Agency for 

International Development Inspector General audits of MCC's internal controls and 

financial statements. We did not independently assess the reliability of MCC's 

projections of compact benefits and have noted this accordingly on each fact sheet. 

We conducted this performance audit from January to September 2008 in accordance 

with generally accepted government auditing standards. Those standards require that 

we plan and perform our work to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

 4

 See http://www.mcc.gov/about/reports/status/index.php for MCC country quarterly status reports. 

Page 2 GAO-08-1145R MCC Compact Fact Sheets
Agency Comments and Our Evaluation 

MCC provided written comments about drafts of these fact sheets (see encl. I for 

MCC’s comments and our response). Regarding the disbursement process, MCC 

noted that compact countries are ultimately responsible for project development and 

implementation, including the pace of commitments and disbursements, and that 

compact country entities sign contracts and therefore commit funds. We have 

modified the fact sheets to refer to commitments by the compact country, where 

appropriate, but have retained our presentation of MCC disbursements of funds for 

the recipient country. MCC also noted that its country counterparts revise their 

disbursement projections as additional information becomes available and that MCC 

will report updated projections to Congress in the first quarter of fiscal year 2009. We 

have incorporated the revised disbursement projections that MCC provided but have 

retained, as a baseline for the revised projections, a presentation of MCC’s 

disbursement plan at compact signature. Finally, MCC noted that most eligible 

countries that did not meet selection criteria had previously been determined eligible 

by the Board; we modified the draft to reflect this fact. 

We also received and incorporated as appropriate a number of technical comments 

from MCC. 

We are sending copies of this report to interested congressional committees. We will 

also make copies available to others on request. In addition, the report will be 

available at no charge on GAO’s Web site at http://www.gao.gov. If you or your staff 

have any questions or wish to discuss this material further, please contact me at (202) 

512-3149 or gootnickd@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. Emil 

Friberg, Jr. (Assistant Director), Jordan Holt, Reid Lowe, Michael Rohrback, Michael 

Simon, Jena Sinkfield, and Susan Tieh made significant contributions to this report. 

David Dornisch, C. Etana Finkler, and Ernie Jackson provided technical assistance. 

David Gootnick 

Director, International Affairs and Trade 

Page 3 GAO-08-1145R MCC Compact Fact Sheets
List of Committees 

The Honorable Patrick J. Leahy 

Chairman 

The Honorable Judd Gregg 

Ranking Member 

Committee on Appropriations 

Subcommittee on State, Foreign Operations, and Related Programs 

United States Senate 

The Honorable Joseph R. Biden, Jr. 

Chairman 

The Honorable Richard G. Lugar

Ranking Minority Member 

Committee on Foreign Relations 

United States Senate 

The Honorable Nita M. Lowey 

Chair 

The Honorable Frank R. Wolf 

Ranking Member 

Committee on Appropriations 

Subcommittee on State, Foreign Operations, 

 and Related Programs 

House of Representatives 

The Honorable Howard L. Berman 

Chairman 

The Honorable Ileana Ros-Lehtinen 

Ranking Member 

Committee on Foreign Affairs 

House of Representatives 

Page 4 GAO-08-1145R MCC Compact Fact Sheets
Related GAO Products 

Millennium Challenge Corporation: Independent Reviews and Consistent 

Approaches Will Strengthen Projections of Program Impact. GAO-08-730. 

Washington, D.C.: June 17, 2008. 

Millennium Challenge Corporation: Analysis of Compact Development and Future 

Obligations and Current Disbursements of Compact Assistance. GAO-08-577R. 

Washington, D.C.: April 11, 2008.

Management Letter: Recommendations for Improvements to MCC's Internal 

Controls and Policies on Premium Class Air Travel. GAO-08-468R. Washington, 

D.C.: February 29, 2008.

Millennium Challenge Corporation: Projected Impact of Vanuatu Compact Is

Overstated. GAO-07-1122T. Washington, D.C.: July 26, 2007. 

Millennium Challenge Corporation: Vanuatu Compact Overstates Projected

Program Impact. GAO-07-909. Washington, D.C.: July 11, 2007. 

Millennium Challenge Corporation: Progress and Challenges with Compacts in 

Africa. GAO-07-1049T. Washington, D.C.: June 28, 2007. 

Millennium Challenge Corporation: Compact Implementation Structures Are Being 

Established; Framework for Measuring Results Needs Improvement. GAO-06-805. 

Washington, D.C.: July 28, 2006. 

Analysis of Future Millennium Challenge Corporation Obligations. GAO-06-466R. 

Washington, D.C.: February 21, 2006. 

Millennium Challenge Corporation: Progress Made on Key Challenges in First Year 

of Operations. GAO-05-625T. Washington, D.C.: April 27, 2005. 

Millennium Challenge Corporation: Progress Made on Key Challenges in First Year 

of Operations. GAO-05-455T. Washington, D.C.: April 26, 2005. 

Page 5 GAO-08-1145R MCC Compact Fact Sheets
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Page 6 GAO-08-1145R MCC Compact Fact Sheets
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION 

Armenia Compact Fact Sheet 

Country Characteristics Map 

Located in the Caucasus region of 

Asia, Armenia has a population of

about 3 million. Armenia had a gross 

national income (GNI) of $1,930 per 

capita in 2006. Armenia’s economy is 

primarily based on industry and

services, which together constitute

about 80 percent of the country’s 

gross domestic product (GDP).

Although agriculture comprises only

18 percent of Armenia’s GDP, it

employs about 46 percent of the

labor force. Since achieving 

independence from the Soviet Union 

in 1991, Armenia has made progress 

in implementing many economic 

reforms. From 2001 to 2006, Armenia 

sustained annual average economic

growth rates of 12.4 percent.

According to the World Bank, 

Armenia’s sustained high growth 

rates have led to a decrease in 

poverty, from over half the 

population in 1999 to less than 27 

percent of the population in 2006.

Armenia’s continued economic

growth is challenged by high 

transportation costs: the country is 

landlocked and its border with 

Turkey has been closed since 1991. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Armenia was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 40 percent of the compact’s 5-

year period had elapsed. 

Key Events for Armenia Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Armenia MCC Selection Criteria 

MCC Candidate Criteria Armenia GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Armenia was a low-income

candidate country from 2004, the 

year that MCC began operations, to 

2007. In 2008, Armenia's rising GNI 

per capita lifted it to lower-middleincome status. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC selected Armenia as eligible in 

2004-2007. In 2008, Armenia rose to 

lower-middle-income status and 

failed the indicator criteria for that

group. However, MCC selected 

Armenia as eligible in 2008. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Armenia’s Performance on MCC Eligibility Indicators

Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Armenia Compact Summary 

Compact Characteristics Structure of Armenia Compact at Signature

At signature, Armenia’s 5-year, $235

million compact focused on 

reducing rural poverty through a 

sustainable increase in the economic 

performance of the agricultural

sector. According to MCC, more 

than 1 million Armenians (35 percent 

of the population) live in rural areas 

and are dependent on semisubsistence agriculture.

The data in the graphic represent

MCC’s expectations of compact

benefits at compact signature. In

June 2008, GAO reported that MCC 

had made analytic errors in its 

original projections of the impact of

the Armenia compact. Correcting

these errors reduces MCC's

expected impact on income in rural 

areas and on poverty. (GAO-08-730). 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC funding allocations for 

Armenia projects have not changed 

since compact signature in March 

2006. 

Armenia Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Armenia Compact Status 

Compact Implementation Funds Provided for Armenia Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 35 percent of

Armenia’s 5-year compact period

had elapsed and MCC had disbursed 

$19.16 million (8.13 percent) of 

compact funds, compared with the 

$58.45 million (24.80 percent) that it

had originally planned to disburse as 

of that date. In the first quarter of

fiscal year 2008, MCC and the 

country revised the projected 

disbursement total to $34.47 million 

by June 2008. 

As of June 2008, the country has 

committed $50.26 million, or 21.33

percent of compact funds.

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

In March 2008, MCC warned the 

government of Armenia that the

compact could be suspended or 

terminated because the government 

had suspended media freedoms and

imposed a state of emergency. 

According to MCC, parts of the

compact are being restructured

because of rising construction costs 

and currency fluctuations. In August

2008, Armenia signed contracts with 

six construction companies for a 

total of $51.5 million to rehabilitate 

273 kilometers of rural roads. MCC 

had originally budgeted $67.1 million 

to rehabilitate up to 943 kilometers 

of roads. 

MCC reports that as a result of

failing the indicator criteria in the 

2008 eligibility round, Armenia is 

preparing a plan to improve its 

performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

 9/26/2008 

MILLENNIUM CHALLENGE CORPORATION

Benin Compact Fact Sheet 

Country Characteristics Map 

Located in coastal West Africa, 

Benin has a population of 

approximately 8.3 million. Benin had 

a gross national income (GNI) of

$540 per capita in 2006. Benin’s 

economy depends on subsistence 

agriculture, cotton, and regional 

trade. The current government, 

which entered office in 2006, has 

emphasized efforts to fight

corruption and accelerate Benin’s 

economic growth. The economy has 

experienced some positive growth

trends in the last few years, with the 

real economic growth rate rising 

from 2.9 percent in 2005 to an

estimated 5.3 percent in 2008. In 

2005, Benin received debt reduction

from the G8 countries, an informal 

group of eight major industrial 

countries. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Benin was 1 of 16 countries that 

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 40 percent of the compact’s 5-

year period had elapsed. 

Key Events for Benin Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Benin MCC Selection Criteria 

MCC Candidate Criteria

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Benin has been a low-income 

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Benin as eligible

for compact assistance every year

since 2004, although the country

failed MCC's indicator for control of 

corruption in 2007 and 2008. 

Benin GNI Per Capita 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round.

Benin’s Performance on MCC Eligibility Indicators 

Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Benin Compact Summary 

Compact Characteristics Structure of Benin Compact at Signature 

At signature, Benin’s 5-year, $307

million compact aimed to improve 

core physical and institutional 

infrastructure and increase privatesector activity and investment. 

According to MCC, the compact

planned at signature to impact up to

5 million beneficiaries—more than

half of Benin’s population—in both

rural and urban areas. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

the time of compact signature. 

Previous GAO work has identified 

several problems with the 

methodology used to determine 

compact projects’ expected benefits 

(see GAO-08-730 and GAO-07-909). 

GAO has not independently verified 

the reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC funding allocations for Benin 

projects have not changed since 

compact signature in February 2006. 

Benin Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Benin Compact Status 

Compact Implementation Funds Provided for Benin Compact

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 35 percent of the 

Benin compact’s 5-year period had 

elapsed and MCC had disbursed 

$24.38 million (7.93 percent) of 

compact funds, compared to the 

$78.98 million (25.70 percent) that it

had originally planned to disburse as 

of that date. In the first quarter of

fiscal year 2008, MCC and the 

country revised the projected 

disbursement total to $32.03 million 

by June 2008. 

As of June 2008, the country had 

committed $53.16 million, or 17.30

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

MCC reports that as a result of

failing the indicator criteria in the 

2007 and 2008 eligibility rounds, 

Benin has developed a plan to 

improve its performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

Cape Verde Compact Fact Sheet 

Country Characteristics Map 

Located off of the coast of West 

Africa, Cape Verde is a chain of 10

islands with a population of about 

427,000. Cape Verde had a gross

national income (GNI) of $2,130 per 

capita in 2006, and is considered to 

be a lower-middle-income country 

by the World Bank. Its economy is 

service oriented, with commerce, 

transportation, tourism, and public 

services constituting about threefourths of its gross domestic product 

(GDP). Cape Verde is also one of

Africa’s most stable democracies, 

with the most recent government 

entering office in 2006. Since 

achieving independence from 

Portugal in 1975, Cape Verde has 

made strong advances in health,

education and economic growth. 

According to the World Bank, Cape

Verde is expected to have an

estimated growth rate of 7 percent in

2007. The World Bank also reports

that poverty in Cape Verde has 

declined from 37 percent in 2001 to

29 percent in 2006. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Cape Verde was 1 of 16 countries 

that MCC selected as eligible in its 

first eligibility round. It was the third 

country to begin implementing a

compact, and as of September 30,

2008, 59 percent of the compact’s 5-

year period had elapsed. 

Key Events for Cape Verde Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Cape Verde MCC Selection Criteria 

MCC Candidate Criteria Cape Verde GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two pools 

of candidate countries, low-income 

countries and lower-middle-income 

countries, based on World Bank 

lending thresholds. In addition, 

candidate countries must not be 

statutorily barred from receiving

U.S. assistance. By law, MCC can 

use a maximum of 25 percent of 

compact assistance for any given 

year for new compacts with lowermiddle-income countries.

Cape Verde was a low-income

candidate country in 2004. It was not

a candidate in 2005 because its per 

capita income rose above the cutoff

for low-income countries. Since 

2006, the first year MCC permitted 

lower-middle-income countries to 

become candidates, Cape Verde has

been a lower-middle-income

candidate country.

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC selected Cape Verde as eligible 

in 2004, 2006, and 2007. MCC did not 

select Cape Verde as eligible in 2008

because the country had failed the 

indicator criteria 3 years in a row. 

a

In its FY 2005 Annual Report, MCC reported Cape Verde’s GNI per capita to be $1,770, placing it above the low-income cutoff for the 

2005 eligibility round.

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Cape Verde’s Performance on MCC Eligibility Indicators 

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Cape Verde Compact Summary 

Compact Characteristics Structure of Cape Verde Compact at Signature

At signature, Cape Verde’s 5-year, 

$110 million compact focused on 

water and infrastructure projects on 

4 islands: Fogo, Santiago, Santo

Antão, and São Nicolau. The 

compact funds support the upgrade 

and expansion of the Port of Praia,

which is Cape Verde’s busiest port 

and handles half of the country’s 

cargo. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

the time of compact signature. 

Previous GAO work has identified 

several problems with the 

methodology used to determine 

compact projects’ expected benefits 

(see GAO-08-730 and GAO-07-909). 

GAO has not independently verified 

the reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC funding allocations for Cape

Verde projects have not changed 

since compact signature in July

2005. 

Cape Verde Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Cape Verde Compact Status 

Compact Implementation Funds Provided for Cape Verde Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 54 percent of the 

Cape Verde compact’s 5-year period

had elapsed, and MCC had disbursed 

$ 17.59 million (15.98 percent) of 

compact funds, compared with the 

$67.74 million (61.54 percent) it had 

originally planned to disburse by 

June 2008. In the first quarter of 

fiscal year 2008, MCC and the 

country revised the projected 

disbursement total to $30.78 million 

by June 2008. 

As of June 2008, the country had 

committed $ 45.68 million, or 41.50

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

In its most recent quarterly status

report, MCC reported that Cape

Verde’s compact was being

restructured because of rising global 

construction costs and currency 

fluctuations. 

MCC reports that as a result of

failing the indicator criteria, Cape 

Verde has developed a plan to 

improve its performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

El Salvador Compact Fact Sheet 

Country Characteristics Map 

Located in Central America, El 

Salvador has a population of about 

7.1 million. El Salvador had a gross 

national income (GNI) of $2,680 per 

capita in 2006, and is considered to 

be a lower-middle-income country 

by the World Bank. The economy is 

largely based on services, which

constitute an estimated 63 percent of

the country’s gross domestic 

product (GDP). Following a decadelong civil war in the 1980s, the El 

Salvadoran government began to 

institute economic reforms in the 

1990s. Despite a strong record of 

economic reform, El Salvador has

experienced relatively low economic 

growth rates. From 2000 to 2004, 

growth averaged less than 2 percent.

However, the situation has improved 

recently, with a growth rate of 4 

percent in 2006 owing to the strong 

performance of the agricultural,

construction, and private service 

sectors.

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

El Salvador was one of three lowermiddle-income countries selected in 

the FY 2006 eligibility round, the first 

year of MCC’s program for lowermiddle-income countries. El

Salvador was the first lower-middleincome country to begin 

implementing a compact and as of

September 30, 2008, 21 percent of

the compact’s 5-year period had 

elapsed.

Key Events for El Salvador Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

El Salvador MCC Selection Criteria 

MCC Candidate Criteria El Salvador GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

El Salvador was a candidate for 

MCC assistance for the first time in

2006, the first year that MCC 

permitted lower-middle-income 

countries to be candidates for

assistance. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC selected El Salvador as eligible 

every year since 2006, although El

Salvador did not pass the indicator 

criteria in 2008 because it failed 4 of 

5 indicators in the Investing in 

People category.

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

El Salvador’s Performance on MCC Eligibility Indicators 

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

El Salvador Compact Summary 

Compact Characteristics Structure of El Salvador Compact at Signature 

At signature, El Salvador’s 5- year,

$461 million compact focused on 

developing the economy of the 

country’s Northern Zone, where,

according to MCC, nearly 20 percent

of El Salvador’s poor live. 

The data in the graphic represent

MCC’s expectations of compact

benefits at the time of compact

signature. In June 2008, GAO 

reported that MCC had made errors 

in its original projections of the

impact of El Salvador’s compact 

(GAO-08-730). MCC corrected these 

errors, reducing the expected impact

on poverty and income. For 

example, MCC originally projected 

that beneficiaries’ per capita income

would increase by $148 but now 

projects an increase of $123—a 17 

percent decrease from the original 

projection. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC funding allocations for El 

Salvador projects have not changed 

since compact signature in 

November 2006. 

El Salvador Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

El Salvador Compact Status 

Compact Implementation Funds Provided for El Salvador Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 16 percent of the El

Salvador compact’s 5-year period

had elapsed and MCC had disbursed 

$5.96 million (1.29 percent) of 

compact funds, compared with the 

$35.46 million (7.69 percent) it had 

originally planned to disburse by 

June 2008. In the first quarter of 

fiscal year 2008, MCC and the 

country revised the projected 

disbursement total to $12.27 million 

by June 2008. 

As of June 2008, the country had 

committed $53.20 million, or 11.54

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

MCC reports that as a result of

failing the indicator criteria in the 

2008 eligibility round, El Salvador 

has developed a plan to improve its 

performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

Georgia Compact Fact Sheet 

Country Characteristics Map 

Located in the Caucasus region of 

Asia on the southern border of 

Russia, Georgia has a population of

about 4.6 million. Georgia had a

gross national income (GNI) of

$1,580 per capita in 2006. Its 

economy is based on agriculture, 

mining, and industry and grew by 9.4 

percent in 2006. Following 

widespread protests that led to its 

president’s resignation, Georgia 

elected a new government in 2004. 

The new government has focused on 

anticorruption efforts and on 

economic, education, and healthcare 

reform. However, the conflict with

Russia that erupted in August 2008

poses a challenge to the 

government’s reform efforts.

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Georgia was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 50 percent of the compact’s 5-

year period had elapsed. 

Key Events for Georgia Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Georgia MCC Selection Criteria 

MCC Candidate Criteria Georgia GNI Per Capita

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Georgia has been a low-income

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Georgia as eligible

every year since 2004. Although

Georgia did not pass MCC’s 

indicator criteria from 2004-2006,

improved performance led to its 

passing the criteria in 2007 and 2008. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Georgia’s Performance on MCC Eligibility Indicators 

Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Georgia Compact Summary 

Compact Characteristics Structure of Georgia Compact at Signature 

At signature, the 5-year, $295.3

million Georgia compact aimed to 

stimulate growth in regions outside 

of the capital, T’bilisi, with an

emphasis on the Samtskhe-Javakheti

region in southwestern Georgia. 

Collectively, these regions are home

to more than 40 percent of the 

country’s total population. The 

compact included plans to

rehabilitate key infrastructure, 

creating a reliable energy and water 

supply and lowering transportation

costs. The compact also included

plans to invest in and provide 

technical assistance to regional 

enterprises, increasing agricultural

productivity, jobs, and incomes. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

the time of compact signature. 

Previous GAO work has identified 

several problems with the 

methodology used to determine 

compact projects’ expected benefits 

(see GAO-08-730 and GAO-07-909). 

GAO has not independently verified 

the reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC compact funding for Georgia 

has not changed at the project level. 

However, MCC has approved slight 

changes in the allocation of funds

within the Regional Infrastructure

Project, adding $21.4 million to 

complete the rehabilitation of the

Samtshke-Javakheti road. This sum 

was reallocated from funds

originally intended for regional 

infrastructure development and 

program administration. 

Georgia Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Georgia Compact Status 

Compact Implementation Funds Provided for Georgia Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 45 percent of the 

Georgia compact’s 5-year period had 

elapsed and MCC had disbursed 

$51.31 million (17.38 percent) of 

compact funds, compared with the 

$168.24 million (56.97 percent) it had 

originally planned to disburse by 

June 2008. In the first quarter of 

fiscal year 2008, MCC and the 

country revised the projected 

disbursement total to $70.58 million 

by June 2008.

As of June 2008, the country had 

committed $192.92 million, or 65.33

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

Owing to rising construction costs 

and currency fluctuations, MCC 

lacks sufficient funding for the full 

cost of rehabilitating 245 km of the

Samtskhe-Javakheti road. Therefore, 

MCC will fund the rehabilitation of 

about 119 km and may reallocate

funds from other activities for the 

rehabilitation of an additional 50 km. 

The Georgian government may fund 

the remaining road’s rehabilitation. 

In December 2007, MCC completed 

the first phase of the pipeline 

project, rehabilitating six sections of 

the North-South gas pipeline that 

needed emergency repairs. MCC had 

prioritized these repairs based on 

feasibility studies. 

The conflict between Russian and 

Georgia that erupted in August 2008

may affect the implementation of 

compact projects. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

Ghana Compact Fact Sheet 

Country Characteristics Map 

Located in coastal West Africa, 

Ghana has a population of 

approximately 23.4 million. Ghana

had a gross national income (GNI) of

$510 per capita in 2006. Ghana’s 

economy is based on agriculture, 

which accounts for 40 percent of its 

gross domestic product (GDP).

Despite its low income per capita, 

Ghana has experienced strong

economic growth rates since 2000, 

with real GDP growth rising from 3.7 

percent in 2000 to 6.4 percent in

2006, and expected to reach 6.7 

percent in 2008. Additionally, 

according to World Bank statistics, 

poverty levels fell from 52 percent in 

1992 to 28.5 percent in 2005. Ghana 

has received debt relief as part of the 

Heavily Indebted Poor Country

Initiative—in which multilateral 

organizations and governments 

reduce poor countries’ debts—and 

the Multilateral Debt Relief 

Initiative, in which multilateral 

organizations provide full debt relief. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Ghana was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 32 percent of the compact’s 5-

year period had elapsed. 

Key Events for Ghana Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Ghana MCC Selection Criteria 

MCC Candidate Criteria Ghana GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Ghana has been a low-income 

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Ghana as eligible 

for compact assistance every year

since 2004, although Ghana did not 

pass MCC's criteria in 2007 because

it failed 4 of 6 indicators in the

Encouraging Economic Freedom

category.

 Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Ghana’s Performance on MCC Eligibility Indicators 

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Ghana Compact Summary 

Compact Characteristics Structure of Ghana Compact at Signature 

At signature, Ghana’s 5-year

compact provided approximately

$547 million for projects in 23

districts in the northern region, the 

Afram Basin region, and the 

southern agricultural area in the

Southeastern region. Poverty rates in 

these locations are generally higher 

than 40 percent. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

the time of compact signature. 

Previous GAO work has identified 

several problems with the 

methodology used to determine 

compact projects’ expected benefits 

(see GAO-08-730 and GAO-07-909). 

GAO has not independently verified 

the reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC funding allocations for Ghana 

projects have not changed since 

compact signature in August 2006. 

Ghana Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Ghana Compact Status 

Compact Implementation Funds Provided for Ghana Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 27 percent of the 

Ghana compact’s 5-year period had 

elapsed, and MCC had only

disbursed $15.53 million (2.84 

percent) of compact funds,

compared with the $114.42 million 

(20.92 percent) it had originally

planned to disburse as of that date. 

In the first quarter of fiscal year

2008, MCC and the country revised 

the projected disbursement total to

$48.63 million by June 2008. 

As of June 2008, the country had 

committed $75.12 million, or 13.73

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

MCC reports that as a result of

failing the indicator criteria in the 

2007 eligibility round, Ghana has 

developed a plan to improve its 

performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

Honduras Compact Fact Sheet 

Country Characteristics Map 

Located in Central America, 

Honduras has a population of about 

7.4 million. Honduras had a gross

national income (GNI) of $1,170 per 

capita in 2006, making it the second

poorest country in Central America.

The Honduran economy is based on 

trade in agricultural and 

manufacturing products. However,

the economy’s reliance on a narrow 

range of exports, especially bananas 

and coffee, makes it vulnerable to 

natural disasters and commodity 

price changes. The current 

government, elected in 2005, has 

made poverty reduction its top 

priority. The World Bank reports 

that Honduras’s economy has grown 

at a faster pace recently, rising from

an average of 2.4 percent growth in

2001-02 to about 6.3 percent in 2007. 

 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Honduras was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. Honduras was the

second country to begin 

implementing a compact with MCC 

and as of September 30, 2008, 60

percent of the compact’s 5-year

period had elapsed.

Key Events for Honduras Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Honduras MCC Selection Criteria 

MCC Candidate Criteria Honduras GNI Per Capita

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Honduras has been a low-income

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Honduras as 

eligible for compact assistance every

year since 2004, although the 

country did not pass MCC’s indicator

for control of corruption in 2008. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Honduras’ Performance on MCC Eligibility Indicators

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Honduras Compact Summary 

Compact Characteristics Structure of Honduras Compact at Signature

At signature, the 5-year, $215 million 

Honduras compact aimed to 

generate economic growth in rural

areas by enhancing agricultural

development and linking the large 

rural population to markets. At 

signature, the compact’s Rural

Development Project planned to

increase the productivity and 

business skills of farmers who 

operate small- and mid-size farms, 

and the Transportation Project 

planned to reduce costs of 

transportation between targeted

production centers and national,

regional, and global markets. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

compact signature. Previous GAO 

work has identified several 

problems with the methodology 

used to determine compact projects’ 

expected benefits (see GAO-08-730

and GAO-07-909). GAO has not 

independently verified the

reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC has approved slight changes to 

Honduras’s compact funding 

allocations since compact signature 

in June 2005. At signature, the $215

million Honduras compact included

$72.2 million for the Rural 

Development Project and $125.7

million for the Transportation 

Project. 

Honduras Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Honduras Compact Status 

Compact Implementation Funds Provided for Honduras Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 55 percent of the 

Honduras compact’s 5-year period 

had elapsed and MCC had disbursed 

$21.46 million (9.98 percent) of 

compact funds, compared with the 

$149.60 million (69.58 percent) it had 

originally planned to disburse as of 

that date. In the first quarter of fiscal

year 2008, MCC and the country 

revised the projected disbursement

total to $48.49 million by June 2008. 

As of June 2008, the country had 

committed $92.12 million, or 42.85

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

MCC reported that the 

Transportation Project is being

restructured owing to both

escalating global construction costs 

and an expansion of the project’s 

scope that was requested by the 

Government of Honduras. The 

Central American Bank for 

Economic Integration has approved 

a $130 million loan for the

government of Honduras to cofinance the additional costs of the 

improvements to the CA-5 Highway.

According to MCC, the loan remains 

subject to approval by the 

Government of Honduras.

MCC reports that as a result of

failing the indicator criteria in the 

2008 eligibility round, Honduras has 

developed a plan to improve its 

performance. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

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MILLENNIUM CHALLENGE CORPORATION

Madagascar Compact Fact Sheet 

Country Characteristics Map

Located in the Indian Ocean off of 

the coast of southeastern Africa, 

Madagascar is an island state with a 

population of approximately 18.6 

million. Madagascar had a gross 

national income of $280 per capita in 

2006, making it one of the world’s 

poorest countries. Agriculture is one 

of the largest sectors of the 

economy, and 73 percent of the 

population lives in rural areas. Since 

the current government took charge

in 2002, it has brought about 

improvements in social, economic, 

and governance conditions. The 

economy has grown at an average of

5 percent per year, and poverty has

declined to 69 percent from its peak 

of 80 percent in 2002. The

International Monetary Fund and

Malagasy officials predict moderate, 

above average real GDP growth 

through 2011, mostly owing to the 

impact of two large mining projects. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Madagascar was 1 of 16 countries 

that MCC selected as eligible in its 

first eligibility round. Madagascar 

was the first country to begin 

implementing a compact with MCC.

In July 2008, MCC extended the 

Madagascar compact by 1 year--from 

4 to 5 years--in order to allow the

country more time to fully

implement projects. As of September 

30, 2008, 64 percent of the compact’s

5-year period had elapsed. 

Key Events for Madagascar Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Madagascar MCC Selection Criteria 

MCC Candidate Criteria Madagascar GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Madagascar has been a low-income

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Madagascar as 

eligible every year since 2004, 

although the country did not pass

the indicator test in the Investing in

People category in 2007 and 2008. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Madagascar’s Performance on MCC Eligibility Indicators 

Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Madagascar Compact Summary 

Compact Characteristics Structure of Madagascar Compact at Signature 

At signature, the 5-year, $109.8

million Madagascar compact 

targeted 5 predominately rural zones

with 5 million inhabitants (27 

percent of the total population).

Agriculture is the main source of 

income in these zones; 94 percent of 

breadwinners are farmers or farm

laborers. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

compact signature. Previous GAO 

work has identified several 

problems with the methodology 

used to determine compact projects’ 

expected benefits (see GAO-08-730

and GAO-07-909). GAO has not 

independently verified the

reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

As of June 2008, MCC funding 

allocations for Madagascar projects 

had not changed since compact

signature in April 2005. According to 

MCC, funding allocations have been

changed since June to reflect its

amendment of the compact term 

from 4 to 5 years. 

Madagascar Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Madagascar Compact Status 

Compact Implementation Funds Provided for Madagascar Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, more than half of

the Madagascar compact’s 5-year 

period had elapsed and MCC had

disbursed $37.79 million (34.43

percent) of compact funds,

compared with the $97.25 million 

(about 89 percent) it had originally 

planned to disburse as of that date. 

In the first quarter of fiscal year

2008, MCC and the country revised 

the projected disbursement total to

$55.22 million by June 2008. 

As of June 2008, the country had 

committed $71.08 million, or 64.75

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

In December 2007, the U.S. Agency

for International Development’s 

Office of Inspector General (IG) for

MCC found that MCC may have

difficulty in measuring the compact’s 

impact owing to inconsistent data 

collection methods. The IG noted 

that MCC had set program indicators 

and targets too low for at least one 

project; the country surpassed 

indicators for the Finance Project

before it had begun implementation. 

The IG also found that MCC

reported some inaccurate

information on compact results due 

to data quality weaknesses, but 

these inaccuracies were below the

IG’s threshold for significance. 

MCC reports that as a result of

failing the indicator criteria in the 

2007 and 2008 eligibility rounds, 

Madagascar has developed a plan to

improve its performance. 

 Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. These projections are based on a compact term of 4 years. In 

July 2008, MCC amended the compact to increase the term to 5 years. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

 9/26/2008 

MILLENNIUM CHALLENGE CORPORATION

Mali Compact Fact Sheet 

Country Characteristics Map 

Located in West Africa, east of

Senegal, Mali has a population of

about 12.3 million. Mali had a gross 

national income (GNI) of $460 per 

capita in 2006, making it one of the

poorest nations in the world. 

According to the World Bank, 47.4 

percent of Mali’s population lives in 

poverty. The economy is based on

agriculture, which accounts for 45 

percent of Mali’s gross domestic 

product (GDP). Because 60 percent 

of its land is desert, Mali is 

particularly vulnerable to drought. 

Mali is considered to be one of the 

strongest democracies in Africa, and 

its government has pursued 

economic reforms to encourage

growth. Despite its low income, Mali 

has experienced favorable economic 

growth in recent years. According to

the World Bank, Mali’s economic 

growth averaged 5.3 percent from

2003 to 2006, with gold mining and 

transportation and communications

services as main drivers of growth. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Mali was 1 of 16 countries that MCC 

selected as eligible in its first 

eligibility round. As of September 30, 

2008, 21 percent of the compact’s 5-

year period had elapsed. 

Key Events for Mali Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Mali MCC Selection Criteria 

MCC Candidate Criteria Mali GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Mali has been a low-income 

candidate country each year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

MCC has selected Mali as eligible for 

compact assistance every year since 

2004, although Mali did not pass the 

indicator test in 2008 because it 

failed 3 of 5 indicators in the

Investing in People category. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Mali’s Performance on MCC Eligibility Indicators 

Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Mali Compact Summary 

Compact Characteristics Structure of Mali Compact at Signature 

At compact signature, Mali’s 5-year, 

$460 million compact sought to 

improve agriculture in a geographic

zone in one of the poorest areas of

central Mali. At signature, the

compact also planned to improve the 

Bamako-Sénou airport and create an 

industrial park on the airport’s land. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

compact signature. Previous GAO 

work has identified several 

problems with the methodology 

used to determine compact projects’ 

expected benefits (see GAO-08-730

and GAO-07-909). GAO has not 

independently verified the

reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

As of June 2008, MCC has approved

slight changes to Mali’s compact 

funding allocations since compact 

signature in November 2006. At

signature, the compact included 

$94.27 million for the Industrial Park 

Project; $234.61 million for the

Alatona Irrigation project; and 

$42.31 million for program 

administration and monitoring and 

evaluation. MCC reports that it has 

amended the compact since June to

remove funding for the Industrial 

Park Project. 

Mali Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Mali Compact Status 

Compact Implementation Funds Provided for Mali Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 16 percent of the 

Mali compact’s 5-year period had 

elapsed and MCC had disbursed 

$8.49 million (1.84 percent) of 

compact funds, compared with the 

$37.86 million (8.22 percent) it had 

originally planned to disburse as of 

that date. In the first quarter of fiscal

year 2008, MCC and the country 

revised the projected disbursement

total to $15.35 million by June 2008. 

As of June 2008, the country had 

committed $24.12 million, or 5.23

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

MCC has reported that Mali’s 

compact is being restructured owing

to rising construction costs and 

currency fluctuations. According to

MCC, the compact has been 

amended to remove the Industrial 

Park Project. As of June 30, 2008, 

MCC had disbursed $2.08 million for 

this cancelled project. 

 Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

 9/26/2008 

MILLENNIUM CHALLENGE CORPORATION

Nicaragua Compact Fact Sheet 

Country Characteristics Map 

Located in Central America, 

Nicaragua has a population of about 

5.8 million. Nicaragua had a gross 

national income (GNI) of $980 per 

capita in 2006. Forty-six percent of 

Nicaragua’s population lives below 

the poverty line. Its economy, which 

is based primarily on industry and 

services, has grown at an average of

3.2 percent since 2001. In 2004,

Nicaragua received $4.5 billion in 

debt reduction through the Heavily

Indebted Poor Countries initiative in 

which multilateral organizations and 

governments reduce poor countries’ 

debts. Nicaragua has also expanded 

export opportunities through the 

U.S.-Central America Free Trade 

Agreement, which took effect in

April 2006. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Nicaragua was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 47 percent of the compact’s 5-

year period had elapsed.

Key Events for Nicaragua Compact
MILLENNIUM CHALLENGE CORPORATION Page 2 

Nicaragua MCC Selection Criteria 

MCC Candidate Criteria Nicaragua GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Nicaragua has been a low-income 

candidate country every year since 

MCC began operations in 2004. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

Nicaragua has passed MCC’s 

eligibility indicators and MCC has 

selected the country as eligible for 

compact assistance every year since 

2004. 

Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

MCC used, for example, 2006 data in its 2008 eligibility round. 

Nicaragua’s Performance on MCC Eligibility Indicators 

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Nicaragua Compact Summary 

Compact Characteristics Structure of Nicaragua Compact at Signature 

At compact signature, the 5-year,

$175 million Nicaragua compact 

aimed to build productive capacity 

in León and Chinandega, two regions 

in the northwest that lie along a 

major highway linking Nicaragua to 

Honduras and El Salvador.

Approximately 800,000 people live in 

these two regions, where 70 percent 

of the rural population is poor. 

These data are provided as context 

for understanding MCC’s 

expectations of compact benefits at

compact signature. Previous GAO 

work has identified several 

problems with the methodology 

used to determine compact projects’ 

expected benefits (see GAO-08-730

and GAO-07-909). GAO has not 

independently verified the

reliability of MCC’s benefit 

projections for this compact. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

In January 2008, MCC approved 

changes to Nicaragua’s compact

funding allocations in order to fund 

the rehabilitation of an additional 18

km of primary roads that were not 

included in the original compact. At 

compact signature, MCC allocated 

$92.8 million for the Transportation 

Project; $33.7 million for the Rural 

Business and Development Project; 

$26.5 million for the Property 

Regularization Project; and $22.1 

million for program administration 

and monitoring and evaluation. 

Nicaragua Compact Funding as of June 2008 
MILLENNIUM CHALLENGE CORPORATION Page 4 

Nicaragua Compact Status 

Compact Implementation Funds Provided for Nicaragua Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 42 percent of the 

Nicaragua compact’s 5-year period 

had elapsed and MCC had disbursed 

$22.56 million (12.89 percent) of 

compact funds, compared with the 

$68.86 million (39.35 percent) it had 

originally planned to disburse as of 

that date. In the first quarter of fiscal

year 2008, MCC and the country 

revised the projected disbursement

total to $28.45 million by June 2008. 

As of June 2008, the country had 

committed $29.23 million, or 16.70

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

In commenting on this fact sheet,

MCC reported that it had re-scoped 

the Transportation Project to 

upgrade 80 kilometers of secondary 

roads, rather than the 100-150

kilometers planned at compact 

signature.

 Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
MILLENNIUM CHALLENGE CORPORATION Page 1 

 9/26/2008 

MILLENNIUM CHALLENGE CORPORATION

Vanuatu Compact Fact Sheet 

Country Characteristics Map 

Located in the South Pacific about

1,300 miles northeast of Sydney,

Australia, Vanuatu consists of 83 

islands and has a population of

about 215,000. Vanuatu had a gross 

national income (GNI) of $1,690 per 

capita in 2006. An estimated 40

percent of Vanuatu’s population has 

incomes below $1 per day. Its 

economy is primarily based on

agriculture and tourism, which 

contribute about 15 percent and 19 

percent, respectively, to the gross 

domestic product (GDP). The 

country’s real economic growth 

averaged 2 percent over the past

decade, but rose to an estimated 5 

percent in 2007. According to the 

Asian Development Bank, tourism is 

one of Vanuatu’s most promising 

sectors in terms of potential for 

earning foreign exchange and 

creating employment. 

Compact Timeline 

During compact development, MCC 

evaluates the country’s proposal 

and, if MCC approves it, MCC 

negotiates and may sign a compact 

with the country. After compact 

signature, the country must 

complete MCC’s entry into force 

requirements, such as procurement 

and disbursement agreements, in 

order for compact implementation 

to begin. MCC’s statute limits 

compact implementation to 5 years. 

Vanuatu was 1 of 16 countries that

MCC selected as eligible in its first 

eligibility round. As of September 30, 

2008, 49 percent of the compact’s 5-

year period had elapsed. 

Key Events for Vanuatu Compact 
MILLENNIUM CHALLENGE CORPORATION Page 2 

Vanuatu MCC Selection Criteria 

MCC Candidate Criteria Vanuatu GNI Per Capita 

Each fiscal year, MCC uses per 

capita incomes to identify two 

pools of candidate countries, lowincome countries and lowermiddle-income countries, based on 

World Bank lending thresholds. In 

addition, candidate countries must 

not be statutorily barred from 

receiving U.S. assistance. By law, 

MCC can use a maximum of 25 

percent of compact assistance for 

any given year for new compacts 

with lower-middle-income 

countries. 

Vanuatu has been a low-income

candidate country every year since 

MCC began operations in 2004.

Vanuatu’s gross national income per

capita has approached lower-middleincome status in recent years. 

MCC Eligibility Criteria

Each fiscal year, MCC’s Board uses 

quantitative indicators to assess a 

candidate country's policy

performance. MCC compares the 

country’s performance on each 

indicator to that of other 

candidates. To pass an indicator, a 

country must score better than at 

least half of the other candidates 

(above the median) in its income 

group. To meet MCC’s eligibility 

criteria, a country must pass the 

indicator for control of corruption 

and at least half of the indicators in 

each of three categories. However, 

the Board may select a country as 

eligible even if it does not meet the 

criteria, and has done so in the 

past—mostly for countries

previously selected as eligible. If the 

policy performance of a country 

implementing a compact declines, 

the Board can suspend or terminate 

the compact; however, it has not yet 

done so for any country. 

Vanuatu has passed MCC indicator 

criteria and been selected as eligible

for compact assistance every year

since 2004. 

 Notes: The April 2008 data may include Bank updates that occurred after MCC candidate selection. Because of a two-year data lag, 

 MCC used, for example, 2006 data in its 2008 eligibility round. 

Vanuatu’s Performance on MCC Eligibility Indicators 

 Note: For the 2004 eligibility round, MCC used Primary Education Completion instead of Girls' Primary Education Completion.
MILLENNIUM CHALLENGE CORPORATION Page 3 

Vanuatu Compact Summary 

Compact Characteristics Structure of Vanuatu Compact at Signature 

At compact signature, the 5-year,

$65.7 million Vanuatu compact 

aimed to benefit poor, rural 

agricultural producers and providers

of tourism-related goods and 

services by reducing transportation

costs and improving the reliability of 

access to transportation services. At

signature, the compact focused

primarily on infrastructure projects

on 8 of Vanuatu’s 83 islands. 

In July 2007, GAO reported that MCC 

had overstated the expected benefits

of its Vanuatu compact; GAO also 

identified additional risks that could

affect compact results (GAO-07-909). 

The graphic to the right shows 

MCC’s expectations of compact

benefits at compact signature. 

Compact Project Funding 

Although the total amount of 

compact funding is fixed, MCC and 

the country may reallocate funds 

among projects during compact 

implementation as more detailed 

information about costs becomes 

available. 

MCC has approved slight changes to 

Vanuatu’s compact funding

allocations since compact signature 

in March 2006. At signature, the 

$65.7 million Vanuatu compact 

included $60.7 million in project 

funds and $5.0 million for program 

administration and monitoring and 

evaluation activities.

Vanuatu Compact Funding as of June 2008
MILLENNIUM CHALLENGE CORPORATION Page 4 

Vanuatu Compact Status 

Compact Implementation Funds Provided for Vanuatu Compact 

At compact signature, MCC 

develops a preliminary 

disbursement plan for the compact. 

MCC disburses funds as the 

country begins implementing

projects. According to MCC, any 

funds not disbursed within 120 

days after the compact ends would 

return to MCC for reprogramming. 

As of June 2008, 43 percent of the 

Vanuatu compact’s 5-year period had 

elapsed and MCC had disbursed 

$14.66 million (22.32 percent) of 

compact funds, compared with the 

$40.05 million (60.97) it had 

originally planned to disburse as of 

that date. In the first quarter of fiscal

year 2008, MCC and the country 

revised the projected disbursement

total to $6.38 million by June 2008. 

As of June 2008, the country had 

committed $57.09 million, or 86.91

percent of compact funds. 

Commitments include signed 

contracts and the forecasted value of

recurring expenses outside of a 

contract. 

Due to escalating global

construction costs and currency 

fluctuations, MCC restructured the 

Vanuatu compact to fund up to 70 

percent of the planned road

rehabilitations, with a focus on the

Efate and Santo islands. According 

to MCC, it has supported the 

government of Vanuatu in its efforts 

to secure funding from other donors 

for the remaining projects.

Due to the restructuring, MCC 

reports that it has revised its

estimate of compact benefits. MCC 

originally estimated that the

compact would benefit 65,000 

residents of Vanuatu; it now reports 

that it will benefit 51,239. MCC 

originally estimated that the

compact would increase average per

capita incomes by about $200 by

2010. MCC now expects an increase

of approximately $150 by 2010. 

Notes: Planned disbursements are based on MCC’s projections at compact signature and assume that compact funds are 

disbursed evenly throughout the compact implementation year. 

Actual disbursements by project may not add up to the figure presented for total compact disbursements because 

disbursements reported as “pending subsequent report” are reflected in the compact total but not in project totals. In general,

“pending subsequent report” amounts represent disbursements that will be allocated to individual projects in subsequent 

quarters. 
Enclosure I: Comments from the Millennium Challenge Corporation 

GAO comments 

supplementing 

those in the report 

text appear at the 

end of this

enclosure.

See comment 1.

Page 51 GAO-08-1145R MCC Compact Fact Sheets
See comment 2.

See comment 3.

Page 52 GAO-08-1145R MCC Compact Fact Sheets
Page 53 GAO-08-1145R MCC Compact Fact Sheets
The following are GAO’s comments on the Millennium Challenge Corporation letter 

dated September 22, 2008. 

GAO Comments 

1. MCC notes that compact countries are ultimately responsible for project 

development and implementation, including the pace of commitments and 

disbursements, and that compact country entities sign contracts and therefore 

commit funds. In response to this and MCC’s technical comments, we revised 

the draft fact sheets’ references to MCC commitments where it was more 

appropriate to refer to compact country commitments. However, we retained 

our presentation of MCC's disbursement of funds, because the fact sheets 

summarize data from MCC’s quarterly disbursement reports, which show 

disbursements provided by MCC for the recipient countries. 

2. MCC states that its country counterparts revise their disbursement projections 

as additional information becomes available and that the countries are 

currently undergoing an annual planning exercise to update these projections. 

MCC also notes that its report to Congress in the first quarter of fiscal year 

2009 will include these revised projections. We incorporated into the fact 

sheets the revised disbursement projections that MCC provided in its technical 

comments. However, we retained a presentation of MCC’s disbursement plan 

at compact signature, as a baseline for MCC’s revised projections. 

3. Commenting on the draft fact sheets' statement that the MCC Board has 

selected 17 countries that did not meet the selection criteria, MCC notes that 

14 of these countries had met the criteria in previous years. We modified the 

text to reflect that most eligible countries that did not meet selection criteria 

had previously been determined eligible by the Board. 

(320554)

Page 54 GAO-08-1145R MCC Compact Fact Sheets
GAO’s Mission The Government Accountability Office, the audit, evaluation, and 

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