The Millennium Challenge Corporation Releases Fiscal Year 2006 Country Selection Criteria & Methodology Report

Washington, D.C. – The Millennium Challenge Corporation (MCC) announced today the criteria and methodology for selecting eligible countries for Millennium Challenge Account (MCA) assistance in fiscal year 2006. The report can be viewed here.

On July 28, 2005, the MCC Board identified 69 “candidate countries” in the “low income” category and 29 “candidate countries” in the “lower middle income” category for fiscal year 2006. These candidate countries compete against their income peer group on 16 policy indicators that assess the degree to which the political, social and economic conditions in these countries promote poverty reduction and sustainable economic growth. These indicators, developed by independent third parties, are selected based on a number of factors, including their relationship to growth and poverty reduction, transparency and country coverage, analytical rigor and objectivity, applicability across countries and broad consistency in results from year to year.

In November, the MCC Board will select countries eligible for MCA assistance in fiscal year 2006 based on their indicator performance. For the first time, in fiscal year 2006, there will be two competitions: one for low income countries and one for lower middle income countries.

For fiscal year 2006, MCC is proposing one change to the selection criteria and methodology. It will substitute the World Bank Group's Cost of Starting a Business indicator for Institutional Investor's Country Credit Rating indicator. MCC believes there are potentially significant gains from this replacement. In addition to meeting all of MCC's criteria for an indicator, including demonstration of a strong empirical relationship to economic growth, this additional measure of the entrepreneurial environment is easily understood by policy makers in recipient governments and is highly actionable.

The selection criteria and methodology report is open to public comment for 30 days beginning September 8, 2005. Comments should be submitted to developmentpolicy@mcc.gov.

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Millennium Challenge Corporation (MCC), a U.S. government corporation designed to work with some of the poorest countries in the world, is based on the principle that aid is most effective when it reinforces good governance, economic freedom, and investments in people that promote economic growth and elimination of extreme poverty.