US agency approves $434-M fund vs poverty, corruption

Board members of a United States aid agency, the Millennium Challenge Corporation (MCC), have approved a $434-million fund to help the Philippines reduce poverty and fight corruption.

“Congratulations to the people and Government of the Philippines for tackling difficult challenges to create tangible opportunities for growth and prosperity," said MCC Chief Executive Officer Daniel Yohannes in Washington.

“The Filipinos have articulated a clear vision to improve the quality of their lives through a technically, environmentally, and socially sound plan. I am confident that the country’s ongoing commitment to positive reforms, accountability and transparency, and the timely implementation of the compact will deliver tangible results," he said.

Last year, the Philippines failed to secure the large-scale grant from the MCC due to the long-standing allegations of corruption under the administration of former President Gloria Macapagal-Arroyo.

However, the Philippines was re-selected to apply anew for additional funding under the MCC’s compact program for its development projects.

US Ambassador to the Philippines, Harry Thomas, said the decision by the MCC Board of Directors, chaired by Secretary of State Hillary Clinton, “marks a vote of confidence in the Aquino administration and its commitment to confront corruption."

“The MCC grant will support President Aquino’s efforts to reduce poverty, stimulate economic growth, combat corruption, and ensure a better future for all Filipinos. I am delighted that we now have this new opportunity to build on our partnership with the Philippines. We look forward to signing the final agreements in the coming weeks, and getting to work as soon as possible," Thomas said.

The compact funding by the Millennium Challenge Corporation (MCC) may be signed after a 15-day congressional notification period, which follows after the MCC Board's approval.

A senior Foreign Affairs official said the signing is scheduled at the sidelines of the United Nations General Assembly in New York in September. Finance Secretary Cesar Purisima will reportedly sign for the Philippines and it will be witnessed by President Benigno Simeon Aquino III.

The US aid provides funding for three major projects. First, the compact includes $54.3 million in investments to computerize and streamline business processes in the Bureau of Internal Revenue. This project will make revenue collection more effective and reduce opportunities for corruption.

Second, the compact includes $120 million to expand Kalahi-CIDSS, a community-based, rural development program for poor communities.

Third, the compact includes $214.4 million for the construction and repair 220 kilometers of Samar Road, which passes through 15 municipalities.

The results of the MCC’s corruption test, which the Philippines flunked, had a great impact on the decision of MCC Board of Directors when they selected and reviewed eligible developing countries for compact funding.

The Philippines would have received a $500-million poverty-reduction funding from the MCC had it passed the MCC’s anti-corruption index in 2009.

"Control of Corruption" is considered by the MCC as the only pass or fail indicator. No country can receive funding unless it passes at least half of the 17 indicators and the Control of Corruption indicator.

The Philippines, which qualified in 2007 under the MCC’s threshold program, initially received $21 million for the government’s anti-corruption projects.

The MCC is a US government corporation working with developing countries. Created by the US congress in 2004, the MCC forms partnerships with some of the world’s poorest countries which are committed to: good governance, economic freedom, and investments in their citizens.

Source: GmaNews