USCCB - (SDWP) - Millennium Challenge Account

Millennium Challenge Account

February 2004

The Issue: In January 2004, Congress provided $1 billion for the Millennium Challenge Account (MCA), the new development assistance initiative announced by the Bush Administration in March 2002. Currently, the MCA is in early stages of implementation and the countries which are eligible to receive MCA funds have yet to be selected. Thus, in evaluating progress as the program unfolds in 2004, and in looking to 2005, it is important to ensure that the MCA, when implemented, is focused on poverty reduction in the poorest countries, provides for the participation of civil society, and receives adequate funding that is in addition to funding for core development and humanitarian programs.

Background: In March 2002, the USCCB and CRS welcomed President Bush’s new MCA, which promises to increase annual development aid by $5 billion by the year 2006. The Administration established three criteria for determining country eligibility for MCA funds: that a country rule justly, have economic openness, and invest in its people.

MCA Timeline
March 2002. President Bush announces the Millennium Challenge Account, a new development assistance initiative, at the Monterrey Conference on Financing for Development

January 2004. Congress authorizes the structure of the MCA, establishes the Millennium Challenge Corporation (MCC) to administer the MCA and provides $1 billion for the program in 2004.

February 2004. The Board of the MCC becomes operational with its first meeting, where it approves an initial list of candidate countries for participation in the MCA.

Early March 2004. The MCC plans to send Congress a report describing the criteria and methodology by which eligible countries will be selected from the list of candidate countries. At this time, there will be a 30-day period for public comment.

Early May 2004. The MCC Board will meet and select eligible countries that will be invited to develop a proposal to receive MCA assistance.

Over the course of 2002 and 2003, as the MCA eligibility and implementation process was further defined by the Administration, and as various legislative proposals were considered in Congress, the USCCB and CRS voiced concerns that a strict interpretation of the criteria could exclude many of the poorest countries, most of which would be in Africa. We urged Congress and the Administration to ensure that MCA funds be reserved for the poorest countries which have the fewest options for accessing financial assistance, and that the criteria for MCA eligibility be flexible enough to allow a substantial number of African countries to participate. Finally, we urged that the MCA program emphasize poverty reduction and civil society participation.

In January 2004, many of our concerns were addressed when Congress authorized the MCA program, established the Millennium Challenge Corporation (MCC) to administer it, and appropriated $1 billion for 2004. The MCA law ensures that in 2004 only the poorest countries will be eligible for assistance; it authorizes up to 10% of funds for those countries that just miss qualifying for full funding from the MCA in 2004; and it includes emphases on poverty reduction and civil society participation.

Next Steps: Over the next several months, the MCC will determine those countries which are eligible for the MCA, invite public comment on this proposed list, and then invite selected countries to submit proposals for MCA assistance. It will be important to monitor progress throughout the MCA implementation process in 2004 in order to ensure that the program is geared towards poverty reduction in the poorest countries. It will also be important to ensure that an adequate amount of MCA assistance (the legislation authorizes up to 10%) is provided for those countries that just miss qualifying for full funding from the MCA.

USCCB/CRS Position: The USCCB and CRS commend Congress for authorizing this important new development assistance initiative and for providing $1 billion for the MCA in 2004.

We urge Congress to:

• provide $2.5 billion for the MCA in 2005, in addition to critical funding for core development and humanitarian aid accounts.
We also urge members, as they oversee implementation of the MCA, to ensure that in 2004 and 2005:

MCA funds are directed towards the poorest countries;

adequate funds are available for those countries that just miss qualifying for full funding from the MCA; and

the MCA emphasizes poverty reduction and civil society participation in each eligible country.

Resources:
See the November 10 letter on U.S. foreign assistance from Bishop Ricard and Ken Hackett to Senator Stevens. See also the June 6 letter on the MCA from Gerard Powers and Ken Hackett to Representative Hyde, Chairman of the House Committee on International Relations (www.usccb.org/sdwp/international).

See also: “Millennium Challenge Account: A Proposed Conceptual Approach for Eligibility,” USCCB White Paper, August 2002; and “Improving Development Effectiveness: Recommendations for the Millennium Challenge Account,” CRS White Paper, June 2002.

For Further Information:
Gerry Flood, Office of International Justice and Peace, USCCB 202 541-3167, gflood@usccb.org; LaVita Strickland, Office of Government Liaison, USCCB, 202-541-3235 (ph), lstrickland@usccb.org; Kathy Brown, Catholic Relief Services, 410 951-7232, kbrown@catholicrelief.org; Tina Rodousakis, Catholic Relief Services 410 951-7462, trodousa@catholicrelief.org.