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On December 12, the Millennium Challenge Corporation (MCC) Board will select the countries eligible to apply for funding in 2008. With funding tight, new countries passing the eligibility indicators test, nine of sixteen countries with signed MCC compacts failing the indicators test, and an organizational decision to shift its focus to implementation, this year's selection round will both test the MCC's adherence to its principles and perhaps set new standards. In "Round Five of the MCA," CGD's MCA Monitor team takes a hard look at tough choices and predicts which countries the MCC Board is likely to choose.

The paper explores key questions that should guide the Board deliberations this year and offers recommendations for the FY08 and future selection rounds:

  • To what extent should the expected small FY08 budget allocation limit country selection? In a best case scenario, the MCC would receive $1.8 billion in FY08 – just enough to cover the three countries now sitting at the finish line (Tanzania, Namibia and Burkina Faso).
  • To what extent should the MCC-announced shift of operational focus from compact development to compact implementation limit country selection? The Board will have to weigh the merits of selecting many (or any) new countries as eligible when there are five recently approved/signed compacts and eight currently eligible countries in various stages of compact development.
  • What are the principles that should guide decisions about reselection in the cases of the nine countries with signed (and even approved) compacts that do not pass the indicators test, as well as existing eligible countries that are not demonstrating the requisite effort to develop a compact?
  • How can the guidelines for Threshold Program country selection be made more precise? The current set of Threshold countries is a broad assortment of countries ranging from those that had already passed the indicators test, were legitimately “on the threshold” of passing the indicators test, are far from passing the indicators test, or are “rewards” for committed reformers. It is time to explicitly define “on the threshold.”
  • To what extent is MCA assistance additional to USAID assistance or displacing it?