Compact Development and Oversight

(in millions of $)	FY 2018 Enacted	FY 2019 Enacted	FY 2020 President's Budget
Total Appropriation/Request	905.0	905.0	800.0
Compact Development/Oversight	85.7	119.0	131.0
609(g) Assistance	26.6	30.0	36.0
Due Diligence	59.1	89.0	95.0

The compact development and oversight portion of the FY 2020 budget request will support pre-compact planning, post-compact evaluations, and oversight that are critical to the success of MCC programs and to ensuring that MCC, partner countries, and the development community are able to take advantage of the learning opportunities inherent in MCC programs. Of the requested $131 million under compact development/oversight, $36 million would support 609(g) assistance, while $95 million would be programmed for due diligence to support program assessment, monitoring, oversight, data collection and evaluation. With these increased funding levels over the FY 2019 baseline level, MCC can fully support the pre-compact planning activities in the countries selected for potential development of regional compacts.

609(g) Assistance[[The funds outlined within this 609(g) Assistance budget line are for preparatory activities in support of potential projects and are intended for use prior to compact approval and are exclusive of funds included under the Compact Assistance budget line, under the Section 609(g) Compact Development Funding (CDF) sub-line.]]

Section 609(g) of MCC’s authorizing statute allows for assistance to partner countries to facilitate the development and implementation of compacts. Laying the groundwork for compacts is a critical component of MCC’s successful implementation of a compact. These key preparatory activities include project design studies, feasibility studies, environmental impact assessments, engineering and geotechnical designs, economic baseline surveys, technical assessments of financial management and procurement capabilities, and other specialized analyses that help partner countries fully prepare projects that can be implemented within the fixed five-year timeframe, within budget, and provide substantial returns to MCC’s compact programs.

Due Diligence

MCC utilizes due diligence funds at every stage of the compact and threshold program lifecycle. Due diligence funds allow MCC to obtain information necessary to evaluate, assess, and appraise proposed projects during compact and threshold program development, to effectively oversee and monitor projects during implementation, and to evaluate the results after closeout. These funds are utilized to finance the technical expertise required throughout the compact and threshold program life cycles and allow MCC to right-size its staffing requirements based on the relative size and diversity of its portfolio. The number of compacts and threshold programs MCC oversees is projected to grow between FY 2019 and FY 2020. In addition, MCC’s new concurrent compact authority in support of regional economic integration, trade and cross-border collaborations will require additional due diligence oversight in support of operationalizing this new authority and maintaining MCC’s high-quality programs. Due diligence funds are also utilized after compact closure to conduct independent impact evaluations that use rigorous statistical methods to measure changes in beneficiary incomes related to MCC activities. In addition to offering valuable lessons on how MCC can improve, impact evaluations provide critical information about program successes.

Due diligence funds also support data and technical expertise needed for calculating economic rates of return for compact programs. Through pre-project economic modeling of expected economic rates of return, MCC chooses which projects are most likely to generate benefits, particularly increased income for program beneficiaries, and refines program design to optimize results. Economic modeling done after compact closeout helps to assess the cost effectiveness of the agency’s programs.