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  • Congressional Budget Justification (CBJ):  Congressional Budget Justification, FY 2023
  • March 2022

Proposed Legislative Changes

Proposed Legislative Changes

As part of MCC’s strategic goals and plans for MCC@20, the agency is both exercising the authority granted by Congress to extend existing compacts delayed by COVID-19 and examining a potential suite of legislative changes that would expand MCC’s impact and better enable the agency to fulfill its congressionally mandated mission to reduce poverty through economic growth.

MCC is exercising the authority granted by Congress to extend existing compacts that have been adversely impacted and delayed by the COVID-19 pandemic. This welcome flexibility provides MCC and its partner countries with the ability to complete critical compact activities and to ensure the sustainability of MCC’s investments. Specifically, MCC has extended compacts in five countries (Benin, Côte d’Ivoire, Ghana, Morocco and Niger), with COVID-related funding increases of $51.8 million in total. These extensions are detailed in the Compact Modifications annex.

MCC is seeking three legislative updates to more flexibly meet the growing challenges of delivering on its mission. Specifically, MCC proposes removing the 25 percent funding cap on LMICs, updating MCC’s Annual Report requirements and allowing threshold programs after compacts. These changes would enable MCC to achieve greater reductions in poverty as its candidate pool of countries evolves.

Removing the Cap for Compacts With LMICs

The Millennium Challenge Act of 2003, as amended, prohibits MCC from allocating more than 25 percent of its annual program appropriation for compacts with LMICs. This cap limits MCC’s ability to flexibly support eligible countries and should be removed to enable MCC to right size compact programs based on project opportunities and potential to reduce poverty through growth, irrespective of country income classifications.

The text of the proposed change is as follows:

In General. —Section 606 of the Millennium Challenge Act of 2003 (22 USC 7705) (the Act) is amended—

  1. by striking the current subsection (b)(3).

Updating MCC’s Annual Report Requirements

MCC is seeking to change the Millennium Challenge Act of 2003, as amended, to make MCC’s Annual Report due to Congress the third Friday in December each year, rather than March 31 as it is currently, and to delegate the function of submitting the report to Congress to MCC’s CEO. The proposed change would decrease the reporting burden and allow MCC to showcase the agency’s accomplishments of the past fiscal year sooner and more effectively.

The text of the proposed change is as follows:

In General. —Section 613 of the Millennium Challenge Act of 2003 (22 USC 7712) (the Act) is amended—

  1. by striking the current subsection (a);
  2. by inserting within subsection (a) the following:

(a) Report. No later than the third Friday in December of each year, the Chief Executive Officer shall submit to Congress a report on the assistance provided under section 605 of this title during the prior fiscal year.

Allowing Threshold Programs After Compacts

MCC threshold programs incentivize candidate countries to demonstrate their commitment to just and democratic governance, economic freedom, and investments in their people. Congress has prohibited threshold programs with countries that previously had a compact, limiting the countries with which MCC is able to engage, regardless of changes in the countries’ policy environment in intervening years. In countries in which there has been significant political or governance changes since MCC’s previous compact, threshold program assistance may be more appropriate than no engagement. Removing this restriction would allow MCC to engage with a broader range of countries and build a larger pipeline of potential projects.

With the change to remove this limitation incorporated, the proposed text of the MCC appropriations provision for FY 2023 is as follows:

For necessary expenses to carry out the provisions of the Millennium Challenge Act of 2003 (22 U.S.C. 7701 et seq.) (MCA), [930,000,000] to remain available until expended: Provided, That of the funds appropriated under this heading, up to [130,000,000] may be available for administrative expenses of the Millennium Challenge Corporation: Provided further, That section 605(e) of the MCA shall apply to funds appropriated under this heading: Provided further, That funds appropriated under this heading may be made available for a Millennium Challenge Compact entered into pursuant to section 609 of the MCA only if such Compact obligates, or contains a commitment to obligate subject to the availability of funds and the mutual agreement of the parties to the Compact to proceed, the entire amount of the United States Government funding anticipated for the duration of the Compact: Provided further, That of the funds appropriated under this heading, not to exceed $100,000 may be available for representation and entertainment expenses, of which not to exceed $5,000 may be available for entertainment expenses.

Consistent with MCC@20, the agency is also reviewing the ways in which the pool of countries that can be considered candidates for MCC compact assistance affects MCC’s impact on poverty reduction through economic growth. These countries are legislatively defined in relation to a specific income threshold. MCC is examining whether there are additional considerations, and thus legislative requests, that would better reflect the economic contexts and vulnerabilities of the types of countries with which the agency has traditionally worked.