Millennium Challenge Corporation Signs $21 Million Threshold Program to Fight Corruption in the Philippines

MANILA, Philippines — In a ceremony hosted by President Gloria Macapagal-Arroyo, the Republic of the Philippines and the Millennium Challenge Corporation (MCC) today signed a $21 million agreement to tackle corruption in the nation's tax and customs administration.

The signing of the agreement was witnessed by President Arroyo, Charles Sethness, MCC Vice President for Accountability, and U.S. Ambassador Kristie A. Kenney. The two-year program seeks to improve revenue administration and anti-corruption efforts and is consistent with the “Medium-Term Philippine Development Plan, 2004-2010,” which was announced by President Arroyo in October 2004.

MCC's board of directors approved the Philippine program in June. Following the decision, Filipino media reported that the government intended to match the MCC Threshold funds one-for-one.

The program will be administered for MCC by the U.S. Agency for International Development, and today's agreement was signed by Margarito B. Teves, Secretary of Finance for the Republic of the Philippines , and Frank Donovan, Acting USAID Mission Director.

With MCC's support for its anti-corruption initiatives, the Philippines is expected to further accelerate and institutionalize efforts to stamp out corruption, improve tax collection and channel more resources to programs such as healthcare and education.

“Not only is corruption an obstacle to an open and free democracy, but it frustrates equitable growth and stability,” said Sethness, whose office is responsible for monitoring and evaluating MCC-funded programs. “The decision by the Arroyo Administration to match the program funds with an amount equal to the MCC investment illustrates the importance of this vital endeavor. It is our hope that these reforms will ultimately bring the people of the Philippines closer to realizing greater opportunity and prosperity for themselves and their children.”

The Philippines is working to improve performance on corruption and fiscal policy, and its participation in MCC's Threshold Program, which assists countries that are on the “threshold” of eligibility for Compacts, is intended to help countries address specific policy weaknesses in 16 policy measurements.

Eligibility for MCC Compact assistance is based on a country's demonstrated commitment to policies that promote political and economic freedom, investment in education and health, control of corruption, and respect for civil liberties and the rule of law as measured by performance on the policy indicators.

Philippines Fact Sheet

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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.