MCC Approves $285 million Compact with Mongolia

Board of Directors also approves Threshold programs for Yemen and São Tomé and Principe, and approves new Selection Indicators

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Washington, D.C. — Millennium Challenge Corporation’s Board of Directors met today and approved a five-year, nearly $285 million Millennium Challenge Compact with Mongolia to alleviate poverty there by stimulating economic growth. In addition to this agreement with Mongolia, the Board approved two new threshold agreements and made significant changes to the criteria used to select countries eligible for MCC assistance.

The Compact with Mongolia will invest in the efficiency and capacity of the country’s critical rail system, the backbone of Mongolia’s economy. MCC is also working with Mongolia to improve the ability of Mongolians to register and obtain clear title to their land, expand vocational education in core technical skills, and focus on the health and well-being of the labor force by reducing non-communicable diseases and injuries.

In addition to the MCC Compact with Mongolia, the Board approved two new Threshold Program agreements. One is with São Tomé and Principe for $8.66 million to increase revenue collection through improved tax and customs administration and to reduce the days and costs required to start a business. The other is with Yemen for nearly $21 million to improve its performance on the rule of law and fiscal policy indicators. The Threshold Assistance Program is designed to assist countries that are on the “threshold,” meaning they have not yet qualified for larger compact grants, but have demonstrated a significant commitment to improve their performance on MCC’s eligibility criteria.

“Our partnership with Mongolia will have a significant impact on Mongolians living in poverty by enabling them to take advantage of the opportunities created by the MCC Compact, particularly in the transportation, land, education, and health sectors,” Ambassador Danilovich said.

“The Board also approved both the Yemen and São Tomé and Príncipe Threshold Assistance Program proposals we put forward,” Ambassador Danilovich said. “Since 2005, Yemen has undertaken significant reforms, and we are pleased to be supporting these efforts, although we will continue to monitor the situation there and are concerned particularly about press freedoms.”

“And the São Tomé and Príncipe Threshold Assistance Program is a testament to the country's desire to improve the institutional infrastructure needed to reduce poverty and spur lasting economic growth.”

The Board also formally adopted use of two new performance indicators, the Natural Resource Management index and the Land Rights and Access index. Before a country can become eligible to receive the compact grants funded by the Millennium Challenge Account, MCC will look at their policy performance on these and 15 other indicators that fall into three broad categories of ruling justly, investing in people, and supporting economic freedom.

“After an extensive public search and a broad consultative process, I am delighted to announce that the MCC Board has formally approved the Natural Resource Management and Land Rights and Access indicators,” said Ambassador Danilovich. “These indicators will measure a country’s policy performance in several areas, including eco-region protection, access to clean water and sanitation, the time and cost of property registration, and the availability of secure land rights to poor and vulnerable populations. The adoption of these indicators today provides an added incentive for countries to improve their policy performance in areas that will promote sustainable economic growth and poverty reduction.”

Ambassador Danilovich added, “MCC also conducted extensive research and consultations on potential measures of government commitment to education quality. While none were found that would meet our criteria, MCC will monitor closely the work of those institutions developing such measures in the hope that we can add another education indicator in the future.”

The Board also decided to combine two existing indicators—Days to Start a Business and Cost of Starting a Business—into a single Business Start-Up indicator.

In addition to these important decisions, the board also discussed a proposed new compact with Tanzania that, if approved, will make investments in transportation, water and energy. A decision on that is expected later this month.

For more information about the Compact with Mongolia, Threshold program with São Tomé and Principe, Threshold program with Yemen or the new indicators, please go to www.mcc.gov

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Millennium Challenge Corporation, a U.S. government agency 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.