MCC Country Eligibility Predictions for FY2017

The last board meeting of the Millennium Challenge Corporation (MCC) under the Obama administration will take place on December 13, 2016. On the docket? Selecting which countries will be eligible for MCC assistance for fiscal year (FY) 2017. For the fourteenth year running, CGD’s Rethinking US Development Policy Initiative discusses the overarching issues that will impact the decisions and offers its predictions of which countries will be selected.

This year the board will face some particularly tough decisions. It will have to thoughtfully interpret seeming inconsistencies in the data MCC uses to measure countries’ policy performance. Four countries that are working toward developing a compact are up for “reselection,” but their MCC scorecard performance is somewhat incongruous with the direction of their actual policy environment. Any choice the board makes around these countries poses reputational risks for the agency. The right choice, however, will emphasize good data sense over data fundamentalism. The board will also have to weigh political risk carefully for the current set of prospective partner countries, most of which have had recent episodes of instability. On top of this, MCC faces an unusually uncertain budget environment in the wake of the recent US elections, forcing the board to be judicious in its selection of new partners.

With those considerations in mind, this paper predicts that MCC’s board will likely newly select for compact eligibility Sri Lanka, Tunisia (for initial compacts), and Burkina Faso (for a second compact). It will likely reselect for continued compact development Cote d’Ivoire, Nepal (both working toward initial compacts), Mongolia, and Senegal (both working toward second compacts). It will likely defer decisions to reselect Lesotho and the Philippines for continued second compact development until more is known about the direction of their policy environment. It will face a difficult decision about whether to reselect Kosovo to continue developing its initial compact, but will most likely move the country to the threshold program rather than continuing compact eligibility. The board may also select Bangladesh and/or Timor-Leste for new threshold program eligibility, with Timor-Leste the more likely choice. Finally, the board will likely reselect Togo to continue developing its threshold program.