Aid Expert Urges U.S. Millennium Challenge Corp. to Focus on Poorest

WASHINGTON, Nov. 8 /U.S. Newswire/ -- Foreign aid expert Steven Radelet welcomed new country selections announced today by the Millennium Challenge Corporation (MCC), the Bush administration's flagship foreign aid program, but questioned the decision to include for the first time two lower-middle income countries.

Radelet, a senior fellow at the Center for Global Development and a former Deputy Assistant Secretary of the U.S. Treasury who served under both Democratic and Republican administrations, said he was pleased that the MCC had resisted pressure to rapidly expand the number of middle-income countries in the program, and had largely kept the focus on the poorest, so-called low-income countries.

"The rubber is meeting the road this year and the MCC faces some critical choices in terms of its mission, its institutional capacity, and its placement within the broader foreign assistance apparatus," he said.

Of the 34 countries that passed the performance indicators, the Board chose to add only 6 new countries to its current list of 17 eligible for MCC funding. Two of the six-El Salvador and Namibia-are lower middle income countries, with average incomes much higher than the countries previously covered by the program.

"It's great news that more countries passed the basic eligibility tests of good governance and strong economic policies. But not all of these countries that passed the tests were selected. Faced with a budget appropriation that will fall well below the requested $3 billion, the Board appears to be sending some clear signals that it will reward a more selective group of countries with larger, higher-impact programs," he said. "I hope that the Board will clarify to the public why several countries that passed its criteria were not chosen for the program."

Radelet said he disagrees with the MCC decision to expand from low-income countries to lower middle-income countries this year, or ever. "It makes little sense for the United States to be considering providing grants to countries that are three times richer than the low-income group on average, have access to other sources of financing, and for the most part have already graduated from other aid programs," he said. "Faced with the budget reality and lack of accumulated experience, expansion was premature. But it could have been worse. The Board deserves credit for only selecting two lower-middle income countries this year," he said.

Radelet, a leading expert on foreign aid and economic growth, was previously Deputy Assistant Secretary of the U.S. Treasury for Africa, the Middle East, and Asia developing policies on U.S. financial relations with the countries in these regions, including debt rescheduling and programs with the IMF, World Bank, and other international financial institutions. CGD's MCA Monitor Initiative http://www.cgdev.org/section/initiatives/_active/mcamonitor tracks the progress of the Millennium Challenge Account.