Philippine Compact Fact Sheet

Uplifting Lives of Filipinos through Economic Growth

What is the Philippine Compact?

The Philippine Compact refers to the grant agreement between the Government of the Philippines and Millennium Challenge Corporation (MCC) of the United States Government which was signed on September 23, 2010 by Philippine Finance Secretary Cesar W. Purisima and MCC Chief Executive Officer Daniel Yohannes and witnessed by Philippine President Benigno Simeon C. Aquino III and U.S. State Secretary and MCC Chair Hillary R. Clinton. Under the Compact, MCC will extend a $434-million grant to the Philippines to fund the implementation of three projects over a five-year period. The long-term goal is to reduce poverty in the Philippines through economic growth.

What is MCA-P?

Millennium Challenge Account – Philippines (MCA-P) is the accountable entity created to manage the grant. Registered with the Securities and Exchange Commission (SEC), MCA-P was established by virtue of Executive Order No. 849. A Board of Trustees oversees the functions of a Management Unit and is responsible for evaluating and approving major decisions of MCA-P. The Board is currently chaired by the Secretary of Budget and Management and co-chaired by the Secretary of Finance with the heads of the two other implementing entities, the Secretary of Social Welfare and Development and the Secretary of Public Works and Highways sitting as members. Five representatives from non-governmental and civil society organizations also sit as Board members, three of them as voting members and two as non-voting members. With seven other members, they comprise a bigger group called the Stakeholders Committee which was created to provide a mechanism for the government to continue the consultative process in implementing the Compact projects. The MCC Resident Country Director sits as Permanent Observer in the Board.

The Management Unit is headed by a Managing Director and Chief Executive Officer, supported by a Deputy Managing Director for Operations and Deputy Managing Director for Administration and Finance, a General Counsel, and a team of professionals whose core values are honesty and integrity, quality and excellence, transparency, service, professionalism, and teamwork.

What are the Compact Projects and their Objectives?

Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) is a community driven-development project where communities and their LGUs are trained to choose, design and implement sub-projects that address their most pressing need. It has the following objectives (i) improve the responsiveness of local government to community needs, (ii) encourage communities to engage in development activities, and (iii) deliver benefits to barangay residents through the individual sub-projects. The project is expected to benefit over five million beneficiaries over the next 20 years, with an estimated economic rate of return of 13%. MCC grant for KALAHI-CIDSS is $120 Million.
The Revenue Administration Reform Project (RARP) consists of two main activities. The first emphasizes the initiative of the Bureau of Internal Revenue (BIR) to redesign its policies and practices and implement the electronic Tax Information System (eTIS). Under this activity, there are three sub-activities, namely (i) the implementation of eTIS; (ii) the utilization of automated auditing tools in the large taxpayers unit; and (iii) a public awareness campaign to disseminate information about BIR’s reform and enforcement activities. The second activity focuses on supporting the Revenue Integrity Protection System (RIPS), a newly-formed investigation unit of DOF. MCC will fund the acquisition and customization of case management software, a related data depository system, and training. This is intended to strengthen surveillance and discipline of DOF and its attached agencies through administrative actions such as temporary suspensions or dismissals. RARP is geared towards addressing corruption in the tax system and thereby generating more revenues for government. MCC allocated $54.3 Million for RARP.
The Secondary National Roads Development Project (SNRDP) involves the rehabilitation of a 222-kilometer road in the Samar Island, one of the poorest provinces in the Philippines. Beginning at the junction of Pan Philippine Highway and Buray (Wright) in Western Samar and passing along mountainous terrain to Taft. From Taft, it continues southward along the coastline of Eastern Samar ending in Guiuan, passing through a total of 15 municipalities. The roads project is expected to accrue economic benefits by lowering vehicle operating costs, and saving the time of Filipinos living near the roads thus enabling them to have greater access to commercial activities as well as to their basic needs. SNRDP gets $214.4 Million from the grant.