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Millennium Challenge
Corporation
Presentation to the International Consortium of
Government Financial Managers
May, 2005
Millennium Challenge Corporation
Millennium Challenge Corporation

14 Months Old

Established in law January 2004

Mandate is Poverty Reduction
Through Economic Growth
Based on Key Lessons of Aid

POLICIES MATTER

COUNTRY OWNERSHIP

RESULTS BASED
Policies Matter

Funding Alone Does Not Solve the Problem

Country Eligibility Based on Sixteen Independent
Indicators
 Ruling Justly
 Investing in People
 Encouraging Economic Freedom

Candidate Pool is IDA Eligible Countries
Policies Matter
 17 Selected by MCC Board in FY 2004
and FY 2005
• Armenia
• Honduras
• Mozambique
• Benin
• Lesotho
• Nicaragua
• Bolivia
• Madagascar
• Senegal
• Cape Verde
• Mali
• Sri Lanka
• Georgia
• Mongolia
• Vanuatu
• Ghana
• Morocco
Policies Matter

MCC Eligibility Intended to be an Incentive to
Improve Policies

Threshold Program Reinforces this Objective

Threshold Countries
▪ Close on the Indicators
▪ Demonstrated Commitment to Reform

May Propose Funding to Specifically Improve on
MCC Indicators
Policies Matter
 13 Threshold Countries Selected by MCC
Board in FY 2004 and FY 2005
• Albania
• Philippines
• Burkina Faso
• Sao Tome and Principe
• East Timor
• Tanzania
• Guyana
• Uganda
• Kenya
• Yemen
• Malawi
• Zambia
• Paraguay
Country Ownership

Eligible Countries Submit Proposal for
MCC Funding

Proposals
– Identify Obstacles to Poverty Reduction Through
Economic Growth
– Identify Actions to Eliminate Obstacles
– Must be Measurable
– Must be Based On a Consultative Process
Results Based

Specific Objectives Built Into Compacts

Monitoring and Evaluation Integrated in
Design of Compacts

Performance on the Indicators Must
Continue
What is Fiscal Accountability?

The Processes and Entities Responsible for
Managing MCC Funds

The Guidelines Governing Procurement

The Entities Responsible for
Administering Procurements
Principles of Fiscal Accountability
Mechanisms

Every Country is Unique, No Single Solution

Find a Solution That Best Serves Compact
Objectives

Build Upon Existing Mechanisms When Possible

Leave Capacity In Place Wherever Possible

Solution Must Have Maximum Transparency,
Integrity, and Accountability
ELEMENTS OF FISCAL
ACCOUNTABILITY1
Audit
MCC
$$
GOVT
MCC
REP
FISCAL AGENT/
FUNDS CONTROL
ACCOUNTABLE
ENTITY
BANK
ACCOUNT
PROCUREMENT
AGENT
PROJECT
MANAGER 1
VENDOR
VENDOR
PROJECT
MANAGER 2
VENDOR
VENDOR
$$
1This
diagram is for illustrative purposes only.
Illustrative Models
Government
Non-Government
Accountable Entity –
Prime Minister or Cabinet
MCC Steering Committee
Fiscal Agent –
Ministry of Finance
Accounting Firm
Procurement Agent –
Ministry of finance
Private Implementer
Bank Account –
Central Bank
Commercial Bank
Project Managers --
Line Ministries
NGOs
Common Elements

Financial and Procurement Information
Available Publicly Through a Local MCC
Website

Money Will be in Tranches

All MCC Programs Will Be Subject to
External Audit

Role of the MCC Inspector General
Where is the MCC Today?

Sixteen Proposals Received

Due Diligence is Ongoing

$2.5 billion Appropriated To Date

Request for Additional $3 billion
Compact With Government of
Madagascar Signed on 18 April 2005

$110 Million over 4 Years

Goal – Increase Investment In Rural
Madagascar

Three Projects
1) Land Tenure
2) Financial Sector
3) Agricultural Business Investment
Madagascar Compact Fiscal
Accountability

MCA-Madagascar Established By GOM as
Governing Body

Steering Committee Serves as Board, both
Government and Non-Government Members

Professional Fiscal Agent and Procurement Agent
Selected Through A Competitive Process

Procurement Guidelines Based on Madagascar
Law
Upcoming MCC Activity

At Least 4 Additional Compacts Expected
This Summer

More by the End of the Year

Threshold Programs Expected to Be
Approved Starting This Summer