| (in millions of $) | FY2023 Enacted* | FY2024 Annualized CR* | FY25 Request |
|---|---|---|---|
| Total Appropriation/Request | 930.0 | 930.0 | 937.0 |
Total Compact Assistance |
651.0 | 650.0 | 650.0 |
Threshold Programs |
31.0 | 51.0 | 31.0 |
Compact Development/Oversight |
113.5 | 94.5 | 105.5 |
|
Compact Development Funding
|
28.0 | 15.0 | 24.0 |
|
Due Diligence
|
85.5 | 79.5 | 81.5 |
Administrative Expenses |
130.0 | 130.0 | 146.0 |
Office of the Inspector General |
4.5 | 4.5 | 4.5 |
*FY 2023 enacted appropriation included a $100 million rescission of prior year unobligated balances. A full-year 2024 appropriation for this account was not enacted at the time the Budget was prepared; therefore, the budget request assumes this account is operating under the annualized level provided by a continuing resolution (CR).
Overview
The Millennium Challenge Corporation (MCC) requests $937 million in discretionary funding for fiscal year (FY) 2025 to deliver on its mission to reduce poverty through sustainable, inclusive, economic growth. MCC partners with countries to invest in infrastructure and address policy constraints that are holding their economies back, all while creating new markets for trade and investment, jobs, and opportunities for American businesses. In addition, the President’s FY 2025 budget includes a mandatory funding proposal for an International Infrastructure Fund, from which MCC would access at least $200 million for infrastructure. MCC’s ability to leverage grants to finance high-quality, sustainable infrastructure projects stands in stark contrast to others that often create increased debt burdens on low and lower-middle income countries.
MCC was conceptualized in the early 2000s, and emerged as a bold experiment to test innovative, cost-effective, and data-driven approaches to end global poverty. It represented a new approach to development: a focus on strong economic policies, good governance, democracy, and country-led solutions and implementation. Twenty years later, the experiment is standing strong, with MCC having approved nearly $17 billion in investments for compacts, threshold programs, and concurrent compacts to 47 low-income and lower-middle-income countries that are expected to benefit over 380 million people worldwide.
MCC delivers values-driven, high-impact, sustainable, and transparent infrastructure projects to meet the needs of low- and middle-income countries and to support the United States’ economic and national security interests. The agency not only responds to immediate development needs but also reinforces a network of partner countries—both nascent and thriving democracies—that share the United States’ belief that ruling justly, investing in people, and upholding human rights create durable pathways to prosperity. In addition to improving the lives of millions of people around the world, MCC serves as an important counter to malign influence of foreign nations by increasing U.S. Government presence, building stronger relationships and trust, and helping implement important institutional changes in partner countries. In fact, with 20 years of experience, MCC has proven to be an effective and highly sought after development partner for countries promoting sustainable policy changes and institutionalizing reforms.
Amidst today’s challenging geopolitical and social challenges, MCC’s grant assistance is a key economic contributor to the way the United States combats growing challenges and incentivizes good governance and democratic values globally. In FY 2023, MCC continued to achieve major milestones across its portfolio, including compact signings with Indonesia ($649 million) and Mozambique ($500 million), and threshold program grant agreements with Kenya ($60 million) and Kiribati ($29 million). These aggregate investments amounted to over $1.2 billion and are expected to improve the lives of more than 59 million people by helping partner countries with their policy and institutional reforms, providing the resources for core physical infrastructure investments that drive economic growth while also embracing country ownership and locally led development.
After the COVID pandemic slowed compact development, MCC has been accelerating its program execution. Over the past two fiscal years, MCC signed 12 programs worth over $3 billion with partner countries, at a pace nearly 2-3 times our typical annual rate. By the end of FY 2023, MCC had committed nearly 80% of its unobligated balances and reduced the overall balances from the Nepal compact ($500 million) entering into force (EIF). In FY 2024, that progress will continue. MCC plans to sign compacts in Sierra Leone ($480 million estimated) and Belize ($125 million estimated), and, after two years of achieving major signing milestones, will EIF and begin implementation of compacts in Indonesia ($649 million), Kosovo ($202 million), Lesotho ($300 million), and Malawi ($350 million), and the Kenya threshold program ($60 million). Across FY 2023 and FY 2024, these implementing compacts will obligate roughly $2 billion of MCC’s prior year funds. At the same time, MCC is continuing to develop programs with multiple countries, including Zambia (announced in early FY 2022), four partners selected in early FY 2023 and announced by President Biden at the African Leaders Summit (Mauritania, Senegal, Togo, and The Gambia) and MCC’s most recent selectees (Cabo Verde, Tanzania, and the Philippines) announced in December 2023.
To support this programming, the FY 2025 budget request supports the following activities:
- Program Development. MCC plans to complete development of, sign and begin pre-implementation work on three compacts at the beginning of FY 2025 (Zambia and Togo compacts and the Cote d’Ivoire regional energy program) and on the Mauritania threshold program. Additionally, MCC will continue developing three compact programs, including The Gambia and Senegal and Cabo Verde regional programs, as well as threshold programs with two newly selected threshold partners, the Philippines and Tanzania. Additionally, FY 2025 funds would cover initial development costs of new compact and threshold program selections to be made by MCC’s Board of Directors in December 2024.
- Program Oversight of Implementing Programs. MCC maintains a rigorous oversight model, projected to be across 17 implementing programs in FY 2025, including compact and threshold program reviews, portfolio management, activity modifications, and the suspension or termination of programs, projects, or activities when deemed appropriate.
- Selection and Economic Analysis. MCC administers a competitive selection process, whereby countries selected by MCC’s Board of Directors as compact-eligible must pass MCC’s scorecard of 20 independent, third-party indicators that measure a country’s policy performance in the areas of ruling justly, economic freedom, and investing in people. MCC administrative funds includes funding for staffing and administering economic and constraints analyses.
- Evidence, Monitoring and Evaluation. MCC has an evidence-based approach to developing projects and assessing impacts, including publishing MCC Evaluation Briefs and Star Reports, and consistently earns top rankings for the agency’s commitment to transparency and evidence. These reports consolidate critical programmatic information throughout the lifecycle of each compact and threshold program to draw on the lessons learned in areas such as performance, sustainability, and other best practices.
- Program Acceleration. MCC continues to accelerate and streamline compact and threshold development processes to leverage efficiencies, reduce timelines, and achieve impacts sooner while maintaining quality.
Legislative Changes
In FY 2025, MCC is seeking two legislative changes:
- Candidate country pool reform. 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 challenges on their economic development paths and their ability to reduce poverty. MCC is seeking to redefine its candidate country pool to allow MCC to apply its selection model to countries below the International Bank for Reconstruction and Development (IBRD) graduation threshold and increase MCC’s capacity to reduce poverty through economic growth in vulnerable countries. The proposal would also remove the cap on funding for compacts with lower middle-income countries.
- Modify Annual Reporting 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 of the following year as is currently required. Additionally, MCC requests the agency’s annual report be submitted directly to Congress by MCC’s Chief Executive Officer. The proposed change would enhance reporting efficiency and allow MCC, an independent agency, to showcase the agency’s accomplishments of the past fiscal year sooner.