El Salvador: Field Report

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Amy Crone
August 2008[1]

El Salvador volcano fields

This report provides a snapshot-in-time of El Salvador’s Millennium Challenge Account (MCA) program in the early phases of implementation, during a year in which the Millennium Challenge Corporation (MCC) is under pressure to increase and accelerate disbursements, demonstrate tangible impacts, and substantiate the country-driven model as a viable alternative to traditional U.S. government foreign assistance. El Salvador, deemed eligible in FY 2006, is one of four lower-middle-income countries (LMICs) with a signed compact.[2] The $461 million compact was signed on November 29, 2006, and targets the Northern Zone of the country. The compact entered into force on September 2007, which marked the beginning of the 5-year implementation period for the accountable entity Fondo del Milenio (Fomilenio). By September of 2012, El Salvador must complete the human development, productive development, and connectivity program components outlined in the agreement.[3]

El Salvador stands out as a case in which country ownership and the will to succeed are unusually high. Political and social pressure to succeed and attention to the lessons learned from countries that preceded it offer great promise for more efficient implementation. By deliberately sequencing the prerequisite steps toward entry-into-force (EIF) and by completing agreements to allow existing ministries to execute component activities, El Salvador could implement its MCC program more efficiently than other MCC compact countries have. These strategies, combined with robust civil society advocacy and a desire to achieve tangible results in time for the upcoming election cycles may make El Salvador a model pre-EIF performer.

Flag of El Salvador

This report focuses on three major challenges and potential opportunities for effective implementation:

  1. country ownership;
  2. procurement; and
  3. management of expectations.

The report aims to highlight the successes and challenges of a strengthened country-focused model of development as well as to inspire proactive solutions to difficult issues facing the MCC.

After passing the MCC qualification indicators each year since 2006, El Salvador failed the indicator test for FY 2008. This failure complicates implementation since the government is now required to submit a policy improvement plan (PIP, formerly known as a remediation plan) to address the shortcomings. The indicator test failure adds more pressure for El Salvador to get project activities up and running quickly to meet obligations and demonstrate that the policy environment is not declining.

Next Section: Snapshot of MCA El Salvador

 

1. Amy Crone is a research and policy analyst at the Center for Global Development. This report is based on interviews conducted in El Salvador in March 2008.

2. Two of the four—Cape Verde and Morocco—were lower-income countries (LICs) at the time of compact signing and subsequently graduated to LMIC status.

3. The entire compact is available here.