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The Millennium Challenge Account

Founding of the MCA  
Signed Compacts  
Signed Threshold Program Agreements
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Download: "Lessons from Madagascar: Enhancing the Millennium Challenge Account Implementation Process"

Founding of the MCA
On March 22, 2002 President Bush announced The Millennium Challenge Account (MCA) at the UN's Financing for Development Conference in Monterrey, Mexico. He announced the new fund to "fight global poverty" and endorsed a set of internationally-agreed targets to meet that challenge, known as the "Millennium Development Goals.”

The Millennium Challenge Corporation (MCC) was established in January 2004 to administer the MCA. The MCC is governed by a Board comprised of nine members: the Secretary of State (Chair), the MCC CEO, the USAID Administrator, the Secretary of Treasury, the United States Trade Representative and four civil society members appointed by the President, pursuant to a recommendation by the Majority and Minority leaders of the House and Senate.

Ideals and Goals
The Millennium Challenge Corporation functions within three principles of aid effectiveness: good governance, economic freedom and investments in people. The stated goal of the MCC is “to reduce global poverty through the promotion of sustainable economic growth.”

Indicators and Program Eligibility
Candidates must be either low-income countries (per capita income below $1,675) or lower middle-income countries (per capita income between $1,676 and $3,465). The MCC uses 16 indicators from publicly available independent sources to determine eligibility that are divided into three categories or baskets: Ruling Justly, Investing in People, and Economic Freedom. In order for a country to be eligible for assistance, called Compacts, it must reach or exceed the median level for half of the indicators in each category. Countries must also be at or above the median on the corruption index. Those on the brink of achieving Compact eligibility may qualify for the Threshold Program to focus on areas of weakness and improve eligibility status.

As of August 2007, fourteen Compacts and fifteen Threshold Programs have been signed. An additional four countries are eligible for a Compact and six countries for a Threshold Agreement.

Funding
The Millennium Challenge Account’s funding mechanism is rather unique. Once a Compact or Threshold Agreement is signed the MCA guarantees the allotted funding for the five-year duration of the program. These funds are obligated and set aside; therefore they are not available for other purposes. Unlike other aid initiatives, MCA funds will not be cut or diminished part way through a project. Allowing programs to be implemented and completed as planned.

Appropriations
The Millennium Challenge Account was expected to increase development assistance overseas by $5 billion a year over current levels of foreign aid by 2006. However, funding levels never approached $5 billion. Annual appropriations were: 2004, $1 billion; 2005 $1.5 billion; 2006 $1.75 billion and 2007, $1.75 billion. Funding levels for 2008 were not final in August 2007. The Senate Appropriations Committee mark-up was a low of $1.2 billion while the House mark-up was higher at $1.8 billion. InterAction will continue to work with member organizations to gain full funding for this initiative and monitor its implementation and coordination with other U.S. foreign assistance programs.

Full Text of MCA Legislation

News

Recent MCC Press Releases

MCC Approves Threshold Program with the Kyrgyz Republic

MCC Approves Compact with Morocco

Mozambique Signed MCC Compact

Lesotho Signed MCC Compact

Alan Patricof and Lorne Craner Recently Appointed to MCC's Board of Directors

Danilovich To Be Nominated for MCC CEO (Daniliovich's biography)

Millennium Challenge Account Achieves Final Passage

Resources on the MCA

Millennium Challenge Corporation

The Center for Global Development MCA Resource Page

Women's Edge Coalition

Bread for the World

InterAction Materials on the MCA

InterAction Member Activities on the MCA

World Wildlife Federation's Letter to the MCC on adoption of the Natural Resources Management Indicator (NRMI)

Congressional Testimony by Catholic Relief Services, April 27, 2005

Offering of Letters for the MCA, by Bread for the World, 2003

Statement on the MCA by Save the Children, March 6, 2003

Recommendations for the Millennium Challenge Account, by Catholic Relief Services, June 24, 2002

Congressional Testimony by US Fund for UNICEF President on the MCA, by US Fund for UNICEF, May 9, 2002

Women's EDGE White Paper On the Millennium Challenge Account, April 2002

U.S. NGOs Respond to Bush Administration Millennium Challenge Account, by Center of Concern, March 14, 2002

Administration's Materials on the MCA

MCC Press Releases/Public Outreach Meetings and Testimonies

Millennium Challenge Corporation

Press Release: Summary of Millennium Challenge Corporation Public Outreach Meeting, March 1, 2005

President's Legislative Proposal for the MCA, February 2003

Section by Section Analysis of Legislative Proposal, February 2003

Congressional Hearings on the MCA

MCC Congressional Hearings Press Releases and Testimonies

Testimony on MCC's Impact in Vanuatu July 26, 2007

MCC Testifies before House Foreign Affairs Subcommittee on Africa June 28, 2007

House International Relations Committee Hearing, "Millennium Challenge Account: Does the Program Match the Vision?" April 27, 2005 (Scroll down to April 27, 2005)
View Transcript

Applegarth Responses to Senator Biden's Questions (Submitted April 26, 2005)

GAO MCC Testimony: Progress Made on Key Challenges in First Year of Operations April 27, 2005

Center for Global Development Testimony, "The Millennium Challenge Account: Making the Vision a Reality" April 27, 2005

Catholic Relief Services Testimony April 27, 2005

House Appropriations Subcommittee on Foreign Operations, Export Financing and Related Programs Hearing on FY2006 Appropriations, April 13, 2005 (Scroll down to April 13, 2005)
View Congressional Transcript