The Millennium Challenge Corporation (MCC) board of directors recently held its quarterly meeting and follow-up outreach meeting to discuss new MCC partner countries. The Board selected Tunisia as threshold-eligible, conditionally approved a $600 million compact with Indonesia, and heard results from compact close-out in Armenia. The Board also endorsed changes to the MCC’s selection system and criteria; for more information on these changes, see here.Tunisia: Tunisia is the first country selected as threshold-eligible under the revamped threshold program. Under the new threshold program guidelines, Tunisia will undergo a constraints-to-growth analysis to determine targeted policy reform efforts that best address impediments to growth. In its FY2011 scorecard (produced before the Arab Spring), Tunisia was one indicator short of passing the indicators test. But why now? This Board meeting was the last in which Tunisia could be declared eligible for FY2011. In FY2012, Tunisia graduates to upper middle income country status and out of MCC candidacy.Indonesia: Upon completion of technical negotiations with the Indonesian government, the MCC will enter into a $600 million compact with Indonesia. The compact will focus on three projects:
- The Green Prosperity Project is designed to raise household incomes in some of Indonesia’s poorest provinces by supporting low-carbon economic development and protecting the country’s natural capital.
- The Community-Based Nutrition to Prevent Stunting Project is designed to reduce and prevent low birth weight, childhood stunting, and malnourishment of children in project areas, which is expected to increase incomes through cost savings, greater productivity, and higher lifetime earnings.
- The Procurement Modernization Project is designed to achieve significant savings in government procurements, reduce the incidence of corruption and waste, and improve the delivery of public goods and services.
The compact was designed to simultaneously address development and natural resource stewardship, a priority of the Indonesian government. Rather than focus solely on infrastructure projects, the Indonesian government opted to take advantage of the innovative nature of the MCC and pursue cutting-edge projects with a high economic rate of return.Malawi: The MCC Board opted to continue the operational hold that was placed on the compact with Malawi. The MCC and Malawi signed a $350 compact on April 7, 2011 to revitalize Malawi’s power sector, but violence and media restrictions perpetrated by the government led to an operational hold in July 2011.Armenia: The MCC also reviewed results from its five-year compact with Armenia at the post-board outreach meeting. The Armenian compact, which totaled $177 million at closeout, was completed on September 29, 2011 and focused on reducing rural poverty through improving the economic performance of the agriculture sector. The MCC and MCA-Armenia completed one of Armenia’s largest ever irrigation infrastructure rehabilitations in addition to rural road construction and farmer training in high-value agriculture.
