MCC Urges Nicaraguan Government to Respect Democracy

Agency holds future disbursements for all projects not under contract

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Washington, DC – Ambassador John Danilovich, Chief Executive Officer of the United States’ Millennium Challenge Corporation (MCC), yesterday expressed his deep concern and disappointment over the events surrounding the municipal elections in Nicaragua and has ordered the agency to reevaluate its $175 million aid package.

“We had hoped, for the sake of the Nicaraguan people, that the government would continue the country’s trend towards peaceful, democratic and credible elections,” Ambassador Danilovich said. “I am afraid recent evidence shows that this is not the case.”

“I am not satisfied that the electoral process in Nicaragua has been conducted in accordance with the principles upon which MCC awards and delivers grants to reduce poverty,” Ambassador Danilovich added. “This fundamental commitment to democracy is critical because MCC has determined that our funds are most effective when we partner with governments who are governing justly, investing in their own people and committed to economic freedom -- and free and fair elections are a cornerstone of that.”

As a result of the actions of the Government of Nicaragua, MCC will not approve disbursements for any projects or activities not already contracted by MCA-Nicaragua, the entity that implements the program, until further notice.

“I am very concerned about the impacts any holds on our program will have on Nicaragua’s poor, so it is taken very seriously and with the hope that the Nicaraguan government will do all it can to reestablish what has been an effective partnership” said Ambassador Danilovich.

MCC is concerned about the Government’s actions, which limited the activity of the political opposition, civil society, media and election observers prior to the elections, and MCC is disappointed that the electoral results have been certified despite serious concerns regarding electoral irregularities.

“We call on the government to return to democratic norms and respect for the democratic process,” said Ambassador Danilovich. “In the coming weeks, MCC will continue to monitor the situation and MCC’s Board of Directors will discuss recent events and the next steps for Nicaragua’s eligibility and program at our December 11th meeting.”

Requirements for a country to be eligible for MCC assistance include a commitment to policies that promote political and economic freedom, investments in people, control of corruption, and respect for civil liberties and the rule of law, as measured by 17 independent policy indicators.

MCC is currently funding a $175 million poverty reduction grant with Nicaragua, which provides direct assistance to some of the poorest regions, and promotes long-term development goals. The five-year grant, signed July 14, 2005, seeks to support those living in the Departments of Leon and Chinandega by significantly increasing incomes of rural farmers and entrepreneurs. The compact is designed to reduce transportation costs, improve access to markets, strengthen property rights, increase investment, and raise incomes for farms and rural businesses.

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The Millennium Challenge Corporation, a U.S. government agency designed to work with developing countries, is based on the principle that aid is most effective when it reinforces sound political, economic, and social policies that promote poverty reduction through economic growth. For more information about MCC, please visit www.mcc.gov.