The Market Monitor Minding the Nation's Business
The Department of Finance (DOF) said it appreciates the decision of the US government’s Millenium Challenge Corp. (MCC) to reopen a $434 -million (P2.17-billion) grant, but the conditions attached to it would have to be reviewed.
The US aid agency listed the Philippines as among the countries eligible to avail itself of the funds starting next year.
The MCC grant have strings attached to it that may fall under foreign loans that President Duterte wanted rejected for interference in domestic policies.
Malacañang said in May that the Duterte administration is rejecting aid from the European Union (EU) that has conditions that may interfere with the country’s internal affairs.
The President rejected any form of assistance from the EU with conditions attached to it after the EU warned the government of trade sanctions due to what it perceived as rising cases of extrajudicial killings in Mr. Duterte’s war on drugs.
Finance Secretary Carlos Dominguez III said he welcomes the decision of the US government’s MCC to uphold the eligibility of the Philippines to secure a fresh grant from it but he said the government would still go over the conditions set in the millennium challenge compact for the Philippines.
“We will look into the conditions of the MCC grant and determine if they are aligned with our priorities,” Dominguez said.
The MCC said on its website that the eligibility of recipient-countries for year 2018 will be based on, among others, their “demonstrated commitment to just and democratic governance, economic freedom and investments in (its) people,” and “the opportunity to reduce poverty and generate economic growth.”
He said the decision of the MCC is yet another confirmation of the Duterte administration’s strong commitment to the rule of law and inclusive growth.
“We welcome the decision of the Millennium Challenge Corp. (MCC) to approve a new compact for the Philippine government and thank them for this fresh grant offer . The government under the Duterte administration continues tovigorously implement initiatives that reinforce the Philippines’ commitment to good governance, peace and order and the rule of law,” Dominguez said.
He said the MCC decision is “testament to the fact that despite the political noise emanating from certain quarters, our development partners recognize our government’s commitment to reduce poverty and make growth inclusive while maintaining peace and order and upholding the rule of law.”
The MCC said last March it deferred its vote on the eligibility of the Philippines as its board “decided to revisit the discussion on the Philippines’ eligibility at a future date.”
MCC issued a statement in reaction to then Local Government Secretary Ismael Sueno who said the grant for the Philippines was not renewed this year.
Sueno then said that the US government did not continue its grant to the country due to alleged cases of human rights violations primarily charges rased by Vice President Maria Leonor Robredo during a recorded video message to the UN Human Rights Council.
In a press statement last Aug. 16, MCC included the Philippines among candidate countries for the milennium challenge compact with the United States “to support policies and programs that advance the progress of such countries to achieve lasting economic growth and poverty reduction.”
The Philippines was listed among 66 candidate countries in the low income category.
The MCC said all countries in the list are candidate for MCC grants next year. Low income candidate countries were chosen “as the 75 poorest countries as identified by the World Bank and provided that a country that changes during the fiscal year from low income to lower middle income (or vice versa) will retain its candidacy status in its former income category for the fiscal year and two subsequent fiscal years.”
In a report last May, the MCC said its “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, it deferred the vote on continued compact eligibility for the Philippines,” it added.
“While the board (of MCC) 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 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,” the statement added.
An MCC scorecard released in November last year nonetheless showed that the Philippines garnered passing scores in 13 out of the 20 indicators, including control of corruption, rule of law and civil liberties—an improvement from the performance in 2015 wherein the country passed in 12 indicators.
The previous five-year grant, which was worth $433.9 million, expired in May last year. The US government set up the MCC to promote economic growth and reduce poverty around the world. However, countries can only qualify if they “demonstrate a commitment to just and democratic governance, investments in its people, and economic freedom,” according to the corporation’s website.
The US under President Barack Obama was a vocal critic of Duterte’s war on drugs.
“MCC will continue to monitor unfolding events in the Philippines and underscores that all country partners are expected to maintain eligibility, which includes not just a passing scorecard but also a demonstrated commitment to the rule of law, due process and respect for human rights,” an Obama spokesman then said.
In a statement, MCC Chief Executive Officer Dana Hyde said their agency maximizes advocacy to fight poverty and transform people’s lives by partnering with developing countries “that meet rigorous standards for good governance, from fighting corruption to respecting the rights of women and the rule of law.”
At its quarterly meeting on December 13 last year the MCC awarded Burkina Faso, Sri Lanka and Tunisia with new compacts defined with five-year duration grants each as efforts to encourage economic growth and reduce poverty.
Among the reselected countries, the MCC voted approval for Cote d’Ivoire, Mongolia, Nepal and Senegal to continue developing their compacts.
It also selected Kosovo and Timor-Leste to develop MCC threshold programs, and reselected Togo to continue developing its threshold program.
Executive Director of Institute for Political and Electoral Reform Ramon Casiple said this was not surprising at all.
“It is expected from the US since MCC, from its inception, has a political agenda,” the political analyst said, adding that under the transition to Trump administration, “it is hedging its bet.”
While the move was expected, Casiple doubts that any major effect on the Philippines would follow.
“MCC aid does not have enough clout to change policy,” Casiple said. LUIS LEONCIO