Proposed Legislative Changes

As part of MCC’s strategic goals and plans for MCC@20, the agency is examining potential legislative changes that would increase MCC’s impact and better enable MCC to fulfill its congressionally mandated mission to reduce poverty through economic growth.

MCC is seeking three proposed legislative changes, which are the redefinition of MCC’s candidate country pool, the removal of the 25 percent funding cap on lower-middle income countries (LMICs), and updates to MCC’s Annual Report requirements.

The MCC Eligibility Act

The Millennium Challenge Act of 2003, as amended, currently defines MCC’s candidate country pool in a way that prevents MCC from considering numerous middle-income countries that face substantial threats to their economic development paths and ability to reduce poverty. MCC’s candidate country pool should be redefined via legislation to allow MCC to apply its selection model to countries below the IBRD graduation threshold and increase MCC’s capacity to reduce poverty through economic growth in vulnerable countries.

Text of proposed change is as follows:

SEC. 1. MODIFICATIONS OF REQUIREMENTS TO BECOME A CANDIDATE COUNTRY.

Section 606 of the Millennium Challenge Act of 2003 (22 U.S.C. 7705) is amended to read as follows:

“SEC. 606. CANDIDATE COUNTRIES.

“In General. – A country shall be a candidate country for purposes of eligibility for receiving assistance under section 605 if –
1. “the per capita income of the country is equal to or less than the gross national income per capita of those countries below the International Bank for Reconstruction and Development (IBRD) graduation threshold as defined by the World Bank for the fiscal year; and
2. “subject to subsection (b), the country is not ineligible to receive United States economic assistance under part I of the Foreign Assistance Act of 1961 by reason of the application of any provision of the Foreign Assistance Act of 1961 or any other provision of law.
“Rule of Construction. – For the purposes of determining whether a country is eligible for receiving assistance under section 605 pursuant to subsection (a)(2), the exercise by the President, the Secretary of State, or any other officer or employee of the United States of any waiver or suspension of any provision of law referred to in such paragraph, and notification to the appropriate congressional committees in accordance with such provision of law, shall be construed as satisfying the requirements of such subsection.
“Identification by the Board. – The Board shall identify whether a country is a candidate country for purposes of this section.”

SEC. 2. CONFORMING AMENDMENTS.

Amendment to Millennium Challenge Compact Authority. – Section 609(b)(2) of the Millennium Challenge Act of 2023 (22 U.S.C. 7708(b)(2)) is amended –
1. by striking the heading and inserting “COUNTRY CONTRIBUTIONS”; and
2. by striking “with respect to a lower middle-income country described in section 606(b).”
Amendment to Report Identifying Candidate Countries. – Section 608(a)(1) of the Millennium Challenge Act of 2003 (22 U.S.C. 7707(a)(1)) is amended by striking “section 606(a)(1)(B)” and inserting “section 606(a)(2)”.
Amendment to Authorization to Provide Assistance for Candidate Countries. – Section 616(b)(1) of the Millennium Challenge Act of 2003 (22 U.S.C. 7715(b)(1)) is amended by striking “subsection (a) or (b) of section 606” and inserting “section 606(a)”.

SEC. 3. MODIFICATION TO FACTORS IN DETERMINING ELIGIBILITY.

Section 607(c)(2) of the Millennium Challenge Act of 2003 (22 U.S.C. 7706(c)(2)) is amended in the matter preceding subparagraph (A) by striking “consider” and inserting “prioritize need and impact by considering”.

Funding for Compacts with LMIC Countries

The Millennium Challenge Act of 2003, as amended, prohibits MCC from allocating more than 25 percent of its annual program appropriation for compacts with lower middle-income countries (LMICs). This 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.

Text of proposed change is as follows:

In General. – Section 606 of the Millennium Challenge Act of 2003 (22 U.S.C. 7705) (the Act) is amended –

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

Applicability. – The amendments made by this section apply with respect to Compacts entered into between the United States and an eligible country under the Millennium Challenge Act of 2003 before, on, or after the date of the enactment of this amendment.

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 31st as it is currently, and to delegate the function of submitting the report to Congress to MCC’s Chief Executive Officer. The proposed change would decrease the reporting burden and allow MCC to better showcase the agency’s accomplishments of the past fiscal year.

Text of proposed change is as follows:

In General. – Section 613 of the Millennium Challenge Act of 2003 (22 U.S.C. 7712) (the Act) is amended –

by striking the current subsection (a);
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.”