Following the success of the Threshold Program in 2006-2008, the Philippines submitted a list of projects to MCC which have been identified as priorities for achieving sustainable economic growth and poverty reduction. The list was reviewed by MCC teams in close coordination with the country to help refine a program. The process ends with the selection of the projects to be funded under a five-year Compact.  

This is a grant, not a loan. Therefore, the Philippines is not expected to pay back the United States for this assistance.

Across the globe, MCC extends grants to poor countries with a good track record in governance, law and justice, investment in people, and the promotion of economic freedom, among others. Before a country can become eligible to receive assistance, MCC’s Board examines its performance on 17 independent and transparent policy indicators and selects compact-eligible countries based on policy performance. The United States, under its foreign aid program, assists these countries to help them achieve economic growth and raise their income levels. Aside from being a long-time political ally and trade partner of the U.S., the Philippines has achieved good grades in MCC’s scorecard was, therefore, granted the Compact with the objective of reducing poverty among direct beneficiaries and in the whole country in general.

Per the Monitoring and Evaluation Plan, the projects will benefit 125,822,000 Filipinos over the next 20 years. This does not include indirect beneficiaries that may arise through an increase in economic activities around the communities where the projects are implemented. In general, the benefits will come in the form of increased incomes and lower poverty incidence.

Anti-corruption is one of MCC’s advocacies for its Millennium Challenge Accounts (MCAs), and this jells well with the Aquino administration’s campaign against corruption.  Millennium Challenge Account-Philippines (MCA-P), as the accountable entity, is aware of this and has, thus, adopted measures to ensure transparency and integrity in the Compact projects. For procurement and financial management, there’s an independent Procurement Agent that handles the procurement of supplies, equipment and service contracts for MCA-P, and a Fiscal Agent that handles the disbursement of funds in accordance with quarterly disbursements guidelines. MCA-P and its implementing entities have signed a private sector-initiated Integrity Pledge as a vow to ethical business standards and good governance. MCA-P also has a strong Stakeholders Committee that actively participates in project monitoring activities.

Local CSOs and NGOs are encouraged to link up with MCA-P’s Stakeholders Committee so they can participate in consultations and discussions in the local level about the Compact projects affecting their respective areas. They can also give feedback to MCA-P through MCA-P’s website or to the implementing entities through their respective feedback mechanisms.

All MCC Compacts have a term of five years, with no extensions. Thus, it is imperative for MCA-P, as the accountable entity, to make sure that project schedules and timelines are properly planned and executed, including provisions to address unforeseen circumstances. At the beginning of the fifth year, MCA-P has to start its close-out and, as with other MCAs, no extension will be allowed.

MCA-P has an Environment and Social Impact unit that handles potential environmental and social impacts of the Compact projects. MCA-P ensures that appropriate permits, such as an Environmental Compliance Certificate, are secured and, accordingly, mitigating measures are instituted, if necessary. Public consultations with local government units and the local communities are also held to openly discuss the possible effects of the projects on members of the community, including women and the vulnerable groups such as children, the elderly, and persons with disabilities. Social and gender policies are integrated into the projects for the protection of these members of the communities.