Compact History

Threshold Program

Committed to ruling justly, investing in people, and promoting economic freedom, the Philippines was granted $21 million by the Millennium Challenge Corporation (MCC) in 2006. Referred to as the Threshold Program, it aimed to assist the country in fully meeting the selection criteria of MCC and consequently qualify for a Compact Program, a large-scale funding extended by MCC to qualified country to fight against global poverty.

The Philippines’ Threshold Program focused on improving revenue administration and anti-corruption efforts. Particular attention was given to strengthening the Office of the Ombudsman, the Revenue Integrity Protection Service of the Department of Finance, Bureau of Internal Revenue, and Bureau of Customs.

Gaining headway from the Threshold Program which met performance targets and after passing the selection criteria of MCC, the Philippines was declared eligible to receive Compact funding by MCC in March 2008.

Development of the Philippine Compact Program

Following eligibility, the team led by Dr. Dante Canlas, the designated Point of Contact for the development of the country’s Compact Program, together with various oversight government agencies, began the process of Compact Development. Providing focus for project selection was the study authored by Dr. Canlas, “Philippines: Critical Development Constraints”. The study identified the constraints to the country’s development as follows:

1. Tight fiscal situation;

2. Inadequate infrastructure, particularly on electricity and transport;

3. Weak investor confidence due to governance constraints, in particular, corruption and political instability; and

4. Inability to address market failures leading to a small and narrow industrial base.

Government agencies were encouraged to submit their project proposals, screened as to the extent to which the projects proposed would address the constraints identified and would comply with MCC requirements. After a series of evaluations done by the team of Dr. Canlas, in coordination with MCC technical experts and in consultation with the private sector and civil society groups within the Philippines and in the U.S., submissions were trimmed down to six (6) projects of which four (4) made it to the medium list and three (3) as standby projects. Finally, after a rigorous process of review and refinement and approval by the Investment Coordination Committee, the following projects were selected:

1. Revenue Administration and Reform Project of BIR and RIPS

Redesigning of policies and practices in the Bureau of Internal Revenue (BIR) and supporting the Revenue Integrity Program Service (RIPS), an investigation unit of the Department of Finance.

2. Kapit-Bisig Laban sa Kahirapan – Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) Project of the Department of Social Welfare and Development (DSWD).

Small scale grants to support community-driven projects in communities with poverty incidence below the national average.

3. Secondary National Roads Development Project of the Department of Public Works and Highways (DPWH).

Reconstruction and rehabilitation of a total of about 220km road in the Province of Western and Eastern Samar

The Philippine Compact Program

Following renewed commitment to the Philippine Compact Program by the Philippine Government as expressed by President Benigno S. Aquino III, the Compact was finally signed on 23 September 2010. The signing was presided by President Aquino and US Secretary of State and Chair of the MCC Board Hillary Rodham Clinton, signed by Secretary Cesar V. Purisima of the Department of Finance and MCC Chief Executive Officer Daniel W. Yohannes.

The Compact Program will finance the following:

Projects and Other Items

MCC Grant Amount
(in US $)

1. Secondary National Road Development Project (SNRDP) – DPWH 214.44 million
2. Revenue Administration Reform Project (RARP) – DOF-BIR 54.3 million
3. Kapit-Bisig Laban sa Kahirapan- Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) – DSWD 120 million
4. Monitoring and Evaluation 8.26 million
5. Program Administration and Oversight 36.91 million
Total MCC Funding $434 million

The Millennium Challenge Account – Philippines

Millennium Challenge Account – Philippines (MCA-Philippines) was established as the central point of contact for Compact Implementation by virtue of Executive Order 849 issued on December 15, 2009. It was incorporated with the Securities and Exchange Commission on January 10, 2010 as a subsidiary of the Development Bank of the Philippines Management Corporation.

Comprising the MCA-Philippines is the Board of Trustees that will set the policy direction, a Management Unit that will manage the day-to-day implementation activities, and a Stakeholders Committee composed of Citizen’s representatives to ensure transparency and accountability throughout the Compact implementation period.