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Round Three of the MCA: Which Countries Are Most Likely to Qualify in FY 2006?

Oct 17, 2005

Full Text Revised October 27, 2005 (PDF, 203 KB)
Data used in this paper (Excel file, 612 KB) *The data is also available directly from the MCC’s website.

This note draws on the MCC's selection process and newly released data to explore which countries are most likely to be selected for FY 2006. The analysis has several highlights:

34 countries pass the basic indicators test for FY 2006, including 26 countries from the original LIC group and 8 from the new LMIC group. Although the Board is unlikely to select all of these countries, they are likely to choose more than the 17 they selected last year.
Some of the new counties the Board seems most likely to select from the low-income group include Burkina Faso, East Timor, and Tanzania. Other possibilities include The Gambia and Uganda (each of which pass the test for the first time); and Guyana, Malawi, and Zambia (which are very close to passing these tests). India also passes the tests for the first time, but is unlikely to be selected.
It makes little sense for the United States to be considering providing grants to the new lower middle-income country group. These countries are three times richer than the low-income group on average, have access to other sources of financing, and for the most part have already graduated from other aid programs. In addition, even if the MCC is eventually going to consider the LMICs, it should not select any in FY2006. The budget for this year will be substantially less than the $5 billion that was anticipated when plans were made to include the LMICs, and the MCC does not yet have the staff or accumulated experience to expand to a new set of countries.
The Board made too many exceptions in the qualifying process last year, choosing just three-fifths of the countries that passed the tests. This element of subjectivity is necessary, but extensive exceptions could undermine the credibility of the selection process. The Board should be much clearer in explaining its exceptions and consider adding new rules that it has been applying de facto (like a democracy criterion) that would minimize exceptions.