MCC mulls second PH compact by 2019

The Philippine government would likely secure a fresh grant from the US government’s Millennium Challenge Corp. (MCC) by 2019 for projects aimed at improving the competitiveness of the agriculture sector, even as the aid agency continues to monitor concerns on the rule of law in the country.

“At both the December 2016 and March 2017 meetings of the MCC’s board of directors, the MCC board did not make a decision on the Philippines’ eligibility for a second compact. This was neither a suspension of the Philippines’ eligibility for an MCC compact nor a withdrawal of funding. As a result, the second Philippines compact remains in development, and has not yet been brought forward for board approval,” Laura Allen, press secretary at the MCC’s office of congressional and public affairs, told the Inquirer in an e-mail.

Separately, Finance Secretary Carlos G. Dominguez III told reporters last week that he already talked about three times with MCC officials who said “they want to have a second compact.”

Dominguez said it would ultimately be up to the Trump administration to decide if it would give the Philippines another grant. The Philippine government will just await the US government decision.

In case the MCC offers another compact, Dominguez said “we will consider their offer, if it is in our priorities, the terms are reasonable, [and] our sovereignty not affected.”

In a report justifying its fiscal year 2018 budget proposal of $800 million to the US Congress, the MCC included the Philippines among the countries for which its board might appropriate funds in “future fiscal years.”

As the MCC in 2015 selected the Philippines as eligible for a second compact ahead of the close of the first grant in May last year, the projected signing for the fresh grant was scheduled for January 2019, with project definition that started in 2016 expected to end in the third quarter of this year, to be followed by project development from the fourth quarter of 2017 until the second quarter of 2018.

“The MCC board of directors selected the Philippines as eligible for compact assistance in fiscal year 2015, but, following national elections in May 2016, the board raised concerns over issues tied to the country’s trajectory on human rights, due process, and rule of law. When the board made country selection decisions for fiscal year 2017 [last December], it deferred the vote on the continued compact eligibility for the Philippines,” the MCC said.

“While the [MCC] board continues to closely monitor the policy environment, the government of the Philippines continues developing project proposals on agricultural competitiveness and productivity after a jointly completed a constraints to growth analysis identified four binding constraints to economic growth including government coordination and implementation capacity, the high costs of transport logistics, the high cost of electricity, and market failures in the rural economy,” according to the MCC.
The MCC said that last year, the Philippine government had submitted preliminary concepts to the US agency that sought to address rural market failures, “with initial ideas for improving public support programs, raising agricultural productivity, and strengthening the infrastructure that allows access to markets.”