Millennium Challenge Corporation Could Receive Budget Cuts Because Of 'Slow Pace' In Launching Development Projects, New York Times Reports

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Article Date: 11 Dec 2007 - 6:00 PDT

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The Millennium Challenge Corporation's "slow pace" in launching development projects worldwide has made it "politically vulnerable at budget crunch time," the New York Times reports. MCC -- which aims to encourage economic and political reforms in developing countries -- to date has spent $155 million of the $4.8 billion it has approved for projects in 15 countries in Africa, Central America and other regions, according to the Times. Both the House and Senate have reduced Presidents Bush's fiscal year 2008 budget request for the program, and the Senate is "pushing for a change that African leaders say threatens the essence of the agency's novel approach," the Times reports.

MCC's budget accounts for less than 10% of the U.S. foreign aid budget. Bush requested $3 billion for MCC for FY 2008. The House has approved $1.8 billion in its FY 2008 foreign aid spending bill, and the Senate approved $1.2 billion for the agency. The Senate also has proposed that Congress provide no more than half the financing up-front for future five-year projects, which usually total about $250 million to $700 million. Currently, such projects initially are fully financed. Sen. Patrick Leahy (D-Vt.), chair of the Senate appropriations subcommittee on foreign aid, said that Congress could provide the remaining funds if recipient countries successfully carry out projects. He added that it would be difficult to determine where to make reductions in the foreign aid budget to finance MCC. "Do we cut maternal health?" Leahy asked, adding, "AIDS? Malaria? Do we cut refugees? The only thing that's got a blank check is the war in Iraq."

However, MCC officials and some African leaders have said that such a change would be detrimental. By changing how MCC's projects are financed, the agency "becomes like the World Bank and all the other countries using overseas development aid in stop and go fashion," John Kufuor -- the president of Ghana and head of the African Union -- said. Sheila Herrling of the Washington, D.C.-based Center for Global Development said that MCC management has been more concentrated on creating projects than on launching them. "It shouldn't have taken so long," she said, adding, "The agency needs to figure it out this year. They are part of the problem." However, Herrling said that there are understandable reasons why MCC projects take time, adding that the agency's five-year timeline for each project might be too short. Poor nations, even those with well-run governments, are not used to planning such complex projects and have needed more time than originally thought to launch them, Herrling said.

MCC head John Danilovich recently reorganized the program to concentrate on results with what he called "laser focus." He added, "We need to do better and we will do better." The House and Senate are expected to decide on funding for MCC by this week (Dugger, New York Times, 12/7).

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