US funding on hold due to RP corruption

WASHINGTON – The US Millennium Challenge Corp. (MCC) said it will not provide economic assistance to the Philippines until it curbs corruption, and urged the government to intensify efforts to fight this evil.

The Philippines had hoped to be elevated to MCC compact status this year to be eligible for large-scale grant funding under the US government’s innovative foreign assistance program, but a continuing drop in its “control of corruption” scorecard doomed it to failure.

MCC’s aim is to reduce global poverty through the promotion of sustainable economic growth.

In a press statement on Thursday, MCC said the Philippines will remain eligible for developing a compact proposal but emphasized the board will not sign a compact until the country passes the indicator criteria on corruption.

“The board called upon the government of the Philippines to intensify its efforts to fight corruption and will closely monitor the country’s performance,” said Ambassador John Danilovich, MCC chief executive officer.

The MCC announced the selection of Indonesia, Colombia and Zambia as new countries eligible for funding.

Since its inception in 2004, MCC has approved compacts totaling over $6.3 billion with 18 countries. 

In addition to the Philippines, MCC said Jordan, Malawi, Moldova and Senegal will be able to continue the process of developing compacts in fiscal year 2009.

In its report for fiscal year 2009 the MCC noted the Philippines failed to score above the median in 14 out of 17 indicators that it assesses to determine if a country meets the criteria for receiving aid.

To be eligible for US assistance, developing countries must show their commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law by performing well on 17 different policy indicators.

Country performance in these policy areas is one of the key criteria the MCC board considers in its annual country selection process.

These indicators include control of corruption, fiscal policy, education and health expenditures and primary education.

The Philippines received failing grades in control of corruption (47 percent), health expenditures (19 percent) and primary education (32 percent) in the FY2009 report.

But even more troubling was the continuing decline in the country’s “control of corruption” scorecard which fell progressively from 76 percent in fiscal year 2007 to 57 percent in FY2008 and 47 percent in FY2009.

The Philippines received $21 million from MCC in July 2006 after it was selected to join the threshold program to help it fight corruption. 

It is unlikely more money will be forthcoming.

Countries selected as threshold eligible have to address areas of weakness in their policy performance in order to help them eventually qualify for the larger compact grants.