Paolo Romero
Philippine Star

Amid the corruption scandals hounding the Arroyo administration, a US government corporation declared the Philippines is still eligible to receive more funding, owing to the government’s track record in fighting corruption and poverty.

A statement from the Millennium Challenge Corp. (MCC) Board said the Philippines has been “elected as eligible to apply for an MCC compact,” which would allow the country to avail of “large-scale grants” in connection with its efforts to fight corruption.

In 2006, the Philippines obtained a $21-million grant from the MCC’s Millennium Challenge Account (MCA) Threshold Program to combat corruption.

MCC chief executive officer Ambassador John Danilovich congratulated the Philippine government “for its demonstrated commitment to tackling difficult challenges and improving the lives of its people.”

Danilovich said “while eligibility is an essential first step towards a poverty reduction grant from the MCC, selection does not guarantee funding.

“The Philippines, like all countries eligible for a compact, must maintain its performance on the MCC selection criteria and must now begin a broad-based consultative process with its people to develop a proposal that addresses the country’s barriers to poverty reduction and economic growth,” Danilovich said.

President Arroyo said she was “deeply-honored” and “absolutely thrilled” by the MCC declaration.

She said the MCC rating is a vindication of her administration’s drive against graft and corruption.

“The decision of the MCC Board represents a vote of confidence in the Philippines as it was based on a rigorous assessment of independent indicators that measure the country’s performance in good governance, investments in its people, and adoption of policies that encourage economic freedom,” she said.

Mrs. Arroyo described the development as “another piece of good news for the long term prosperity and stability of our nation.”

She said the MCC funding will provide “an opportunity that can bring hundreds of millions of dollars to our nation to lift our nation out of poverty.”

Mrs. Arroyo said the eligibility from the MCC was “a remarkable validation of the efforts of our government and nation to invest in our people, fight corruption and encourage economic freedom.”

The Philippine Embassy in Washington confirmed the MCC declaration and said the Department of Foreign Affairs (DFA) is expected to receive a team from the MCC which will prepare a program for enhanced and intensified development assistance in the three key areas of governance.

The embassy said the MCC Board of Directors designated the Philippines as a “Compact Country” following a stringent and objective selection process.

The MCC assessed the degree to which the political, social and economic conditions in the Philippines promote broad-based sustainable economic growth.

The Philippines was evaluated using objective and quantifiable policy indicators in three areas: Ruling Justly, Investing in Health and Education, and Encouraging Economic Freedom.

The MCC identified 17 indicators for evaluation, including, under ruling justly: rule of law, control of corruption, government effectiveness, voice and accountability; under investing in people: health expenditures, primary education, natural resources management; and under economic freedom: sound fiscal and trade policy and controlling inflation.

The MCC based its decision on policy indicators provided by independent third party institutions using objective, publicly available data and an analytically rigorous methodology.

MCC seeks indicators that have broad country coverage, cross-country comparability, and broad consistency in results from year to year.

The MCC also seeks indicators that are linked to economic growth, poverty reduction, and government policies.

The MCC was formed in 2004 by US President George W. Bush as an incentive for good governance among poor countries. The MCC board is chaired by Secretary of State Condoleezza Rice.

The Philippines recently hurdled successfully a two-year Threshold Country Program on anti-corruption from the MCC.

Tanzania, the latest nation granted Compact Status country last month, received an MCC development assistance package of $698 million.

A Compact Status under the MCC means the country will receive a multi-year funding facility for poverty reduction and economic growth projects.

Executive Secretary Eduardo Ermita said it would be too early to tell the amount of the possible grant to the Philippines but pointed out that Kenya will also receive $698 million from the MCC under its compact program.

Mrs. Arroyo said the MCC grant has recognized her efforts in fighting corruption in government.

“These are the hallmarks of my administration, and I am absolutely thrilled to be so recognized for consideration by this prestigious and serious-minded corporation of the US government,” she said.

The President cited Finance Secretary Margarito Teves, Budget Secretary Rolando Andaya Jr., and Ombudsman Merceditas Gutierrez, who “have shown a solid track record in going after corrupt officials.”

Andaya, she said, made the government’s procurement program a world-class model.

Mrs. Arroyo directed Teves to lead a team to work with the Office of the President and other government agencies, non-government organizations, and private sector representatives to prepare and submit a grant proposal to the MCC for a five-year plan to reduce poverty through sustainable growth.

Mrs. Arroyo said the grant proposal would include support for the current initiatives to improve governance and tax administration, “and for the pursuit of greater transparency and accountability in the use of revenues.”

“Through period and more detailed reporting of the uses of our revenues, we hope to trigger a virtuous cycle of higher tax compliance and more revenues to finance infrastructure and social services. I would also like to see the proposal provide support on improving health and education,” the President said.

– With Pia Lee-Brago