[Federal Register Volume 70, Number 222 (Friday, November 18, 2005)]
[Notices]
[Pages 69992-69994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22840]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 05-19]


Report on the Selection of Eligible Countries for Fiscal Year 
2006

AGENCY: Millennium Challenge Corporation.

SUMMARY: Section 608(d) of the Millennium Challenge Act of 2003, Pub. 
L. 108-199 (Division D) requires the Millennium Challenge Corporation 
to publish a report that lists the countries determined by the Board of 
Directors of the Corporation to be eligible for assistance for Fiscal 
Year 2006. The report is set forth in full below.

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Report on the Selection of Eligible Countries for Fiscal Year 2006

Summary

    This report is provided in accordance with Section 608(d)(2) of the 
Millennium Challenge Act of 2003, Pub. L. 108-199, Division D, (the 
``Act'').
    The Act authorizes the provision of Millennium Challenge Account 
(``MCA'') assistance under Section 605 of the Act to countries that 
enter into Compacts with the United States to support policies and 
programs that advance the progress of such countries in achieving 
lasting economic growth and poverty reduction and are in furtherance of 
the Act. The Act requires the Millennium Challenge Corporation 
(``MCC'') to take a number of steps to determine the countries that, 
based, to the maximum extent possible, on their demonstrated commitment 
to just and democratic governance, economic freedom and investing in 
their people, will be eligible to receive MCA assistance for a fiscal 
year. These steps include the submission of reports to appropriate 
congressional committees and the publication of notices in the Federal 
Register that identify, among other things:
    1. The ``candidate countries'' for MCA assistance for a fiscal year 
and all countries that would be candidate countries if they met the 
requirement of Section 606(a)(1)(B) (Section 608(a) of the Act);
    2. The eligibility criteria and methodology that the MCC Board of 
Directors (the ``Board'') will use to select ``eligible countries'' 
from among the ``candidate countries'' (Section 608(b) of the Act); and
    3. The countries determined by the Board to be ``eligible 
countries'' for a fiscal year, the countries on the list of eligible 
countries with which the Board will seek to enter into MCA ``Compacts'' 
and a justification for the decisions regarding eligibility and 
selection for negotiation (Section 608(d)(1) of the Act).
    This is the third of the above-described reports by MCC. This 
report is for Fiscal Year 2006 (``FY06''). It identifies countries 
determined by the Board to be eligible under Section 607 of the Act for 
FY06 and those that the Board will seek to enter into MCA Compacts 
under Section 609 of the Act, and the justification for such decisions.

Eligible Countries

    The Board met on November 8, 2005, to select countries that will be 
eligible for MCA assistance under Section 607 of the Act for FY06. The 
Board determined the following countries as eligible for such 
assistance for FY06: Armenia, Benin, Bolivia, Burkina Faso, Cape Verde, 
East Timor, El Salvador, The Gambia, Georgia, Ghana, Honduras, Lesotho, 
Madagascar, Mali, Mongolia, Morocco, Mozambique, Namibia, Nicaragua, 
Senegal, Sri Lanka, Tanzania, and Vanuatu.
    In accordance with the Act and with the ``Report on the Criteria 
and Methodology for Determining the Eligibility of Candidate Countries 
for Millennium Challenge Account Assistance in FY 2006'' submitted to 
the Congress on September 6, 2005, selection was based primarily on a 
country's overall performance in relation to three broad policy 
categories: Ruling Justly, Encouraging Economic Freedom, and Investing 
in People. The Board relied on sixteen publicly available indicators to 
assess policy performance and demonstrated commitment in these three 
areas, to the maximum extent possible, for determining which countries 
would be eligible for assistance. In determining eligibility, the Board 
considered if a country performed above the median in relation to its 
peers on at least half of the indicators in each of the three policy 
categories and above the median on corruption and, if the country 
performed substantially below the median on any indictor, whether it is 
taking appropriate action to address the shortcomings.
    The Board also considered whether any adjustments should be made 
for data gaps, lags, trends, recent events since the indicators were 
published, and strengths or weaknesses in particular indicators. Where 
appropriate, the Board took into account additional quantitative and 
qualitative information, such as evidence of a country's commitment to 
fighting corruption and promoting democratic governance, its economic 
policies to promote the sustainable management of natural resources, 
and the rights of people with disabilities. In addition, the Board 
considered the opportunity to reduce poverty, promote economic growth 
and have a transformational impact in a country in light of the overall 
context of the information available to it as well as the availability 
of appropriated funds.
    Sixteen of the countries selected as eligible for MCA assistance 
for FY06 were in the low income category and were previously selected 
as eligible in FY04 and/or FY05: Armenia, Benin, Bolivia, Ghana, 
Georgia, Honduras, Lesotho, Madagascar, Mali, Mongolia, Morocco, 
Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu. On November 8, 
2005, the Board re-selected these countries based on their continued 
performance since their prior selection, most notably in the areas 
outlined in MCC's Report on the Selection of MCA Eligible Countries for 
FY 2004 and FY 2005, previously submitted to Congress on May 7, 2004 
and November 12, 2004, respectively. The Board also determined that no 
material change has occurred in the performance of these countries on 
the selection criteria since the FY05 selection that would justify not 
including them in the FY06 eligible country list.
    Six new countries were selected for the first time in FY06, which 
included (i) Four in the ``low income'' category under Section 606(a) 
of the Act: Burkina Faso, East Timor, Tanzania and The Gambia and (ii) 
two in the ``lower middle income'' category under Section 606(b) of the 
Act: El Salvador and Namibia. Each of these countries (i) Performed 
above the median in relation to their peers on at least half of the 
indicators in each of the three policy categories, (ii) performed above 
the median on corruption and (iii) in cases where they performed 
substantially below the median on an indicator, there was either 
evidence that the data did not adequately reflect their policy 
performance or that the government was taking corrective action to 
address the problem. The Board also selected Cape Verde in the lower 
middle income category. Cape Verde was selected as a low income 
eligible country in FY04 but was not a candidate in FY05 because it 
exceeded the per capita income threshold for that year. Although Cape 
Verde ``passes'' only two of the six indicators in the ``Economic 
Freedom'' category, this was because the International Finance 
Corporation does not yet include Cape Verde in its Doing Business 
survey. As a result, there was no data for Cape Verde on two 
indicators: ``Cost of a Business'' and ``Days to Start a Business.'' 
Based on supplemental information available to MCC, we believe that, 
had this data been collected, Cape Verde would have ``passed'' this 
category and, indeed, have been one of the highest performing of the 
lower middle income countries. A number of countries that performed 
well on the quantitative elements of the selection criteria (i.e., on 
the policy indicators) were not chosen as eligible countries for FY06. 
As discussed above, the Board considered a variety of factors in 
addition to the country's performance on the policy indicators in 
determining whether they were appropriate candidates for assistance 
(e.g., the country's commitment to fighting corruption and promoting 
democratic governance; the availability of

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appropriated funds; and in which countries MCC would likely have the 
best opportunity to reduce poverty, generate economic growth and have a 
transformational impact).

Selection for Compact Negotiation

    The Board also authorized MCC to seek to negotiate an MCA Compact, 
as described in Section 609 of the Act, with each of the eligible 
countries identified above that develops a proposal that justifies 
beginning such negotiations. MCC will initiate the process by inviting 
newly eligible countries to submit program proposals to MCC (previously 
eligible countries will not be asked to submit another proposal for 
FY06 assistance). MCC has posted guidance on the MCC Web site 
(www.mcc.gov) regarding the development and submission of MCA program 
proposals. Submission of a proposal is not a guarantee that MCC will 
finalize a Compact with an eligible country. Any MCA assistance 
provided under Section 605 of the Act will be contingent on the 
successful negotiation of a mutually agreeable Compact between the 
eligible country and MCC, approval of the Compact by the Board, and 
availability of funds.

    Dated: November 14, 2005.
Jon A. Dyck,
Vice President and General Counsel, Millennium Challenge Corporation.
[FR Doc. 05-22840 Filed 11-17-05; 8:45 am]
BILLING CODE 9210-01-P