Finance Secretary Benjamin E. Diokno has welcomed the United States Millennium Challenge Corporation (MCC)’s decision to re-engage with the Philippines through the development of threshold programs that will support policy and institutional reforms towards economic growth, highlighting that such move is a vote of confidence in the Marcos, Jr. administration’s commitment to strengthen democratic governance, uphold human rights, and combat corruption.
The MCC was created by the US Congress to invest in well-governed countries. It provides time-limited grants promoting economic growth, reducing poverty, and strengthening institutions.
On December 13, 2023, the MCC Board of Directors selected the Philippines to develop threshold programs in recognition of its renewed commitment to advancing reforms in good governance, human rights, and anti-corruption.
“We welcome the eligibility of the Philippines under the Millennium Challenge Corporation Threshold Program which we hope will allow us to further access the bigger Compact Program. We appreciate the MCC Board’s approval of the selection of the Philippines’ eligibility to the grant-based resources of the US MCC,” Secretary Diokno said in a statement.
The MCC provides three different kinds of grant financing: Compact, Threshold, and Regional Compact.
Specifically, a Compact Program is a multi-year agreement between the MCC and an eligible country to fund specific programs targeted at reducing poverty and stimulating economic growth.
A Threshold Program, on the other hand, is a contract between the MCC and a country that provides financial assistance to assist countries meet requirements to access large scale grants resources by becoming “compact eligible” through support for policy and institutional reforms by addressing a country’s constraints to economic growth.
Introduced in 2018, the MCC Regional Compact intends to promote cross-border economic integration, trade and collaboration and for regional integration.
The Philippines previously enjoyed the US Government’s support under the MCC’s first Compact grant of USD 434 million which concluded in 2016 and a prior threshold grant of USD 20.7 million that was implemented between 2006 to 2009.
The Threshold Program enhanced the anti-corruption efforts of the government by strengthening the Office of the Ombudsman, improving revenue administration and increasing enforcement capacity within the Department of Finance-Revenue Integrity Protection Service (DOF-RIPS).
The Philippines was first named eligible for the MCC Compact Program assistance on March 11, 2008, and was later on named eligible for the MCC Threshold Program assistance on November 8, 2006 in recognition of the country’s commitment to promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law.
The Marcos, Jr. administration is committed to improving anti-corruption measures as outlined in Chapter 14, entitled “Practice Good Governance and Improve Bureaucratic Efficiency” of the Philippine Development Plan (PDP) 2023-2028 for genuine social and economic transformation.
Moreover, the government is mobilizing a whole-of-nation approach in addressing economic growth constraints by investing heavily in infrastructure, modernizing agriculture and agribusiness, and accelerating climate action.
“The Philippine government stands ready to work hand in hand with the US Government towards developing and implementing important programs that will unlock growth in the Philippines and redound to economic and social transformation for all Filipinos,” Secretary Diokno said.
