US Millennium Challenge Corporation Approves Five Year Aid Deal For Vanuatu

by Leroy Baker, Tax-News.com, New York

12 January 2006

The Millennium Challenge Corporation has approved a five-year $65.69 million Compact with Vanuatu.

The Millennium Challenge Program is expected to increase average income per capita by 15% within five years and directly impact the lives of more than 65,000 of the rural poor in Vanuatu. Presently, approximately half of Vanuatu's citizens live in poverty.

First proposed by President George W. Bush in 2003, the Millennium Challenge Corporation (MCC) was established on January 23, 2004 to administer the Millennium Challenge Account (MCA), a mechanism in which development assistance is provided to those countries that rule justly, invest in their people, and encourage economic freedom.

An island nation comprised of 83 islands in the South Pacific, Vanuatu identified costly and unreliable transportation infrastructure as a major impediment to economic growth. To overcome this constraint, the Compact consists of up to eleven infrastructure projects — including roads, wharfs, an airstrip and warehouses — that will help poor, rural agricultural producers and providers of tourist-related goods and services reduce transportation costs and improve access to transportation services.

The Compact also includes an institutional strengthening component and policy reform initiatives to ensure the sustainable operation and maintenance of Vanuatu's entire transport infrastructure network, not only those assets built or rehabilitated with MCC funds.

“Congratulations to the people and Government of Vanuatu for completing an ambitious and transformative Compact,” said MCC CEO Ambassador John Danilovich.

“The ni-Vanuatu have developed a results-oriented program that will improve the lives of the rural poor by giving them access to increased economic activity through improved roads and transportation infrastructure. This Compact is a testament to Vanuatu's commitment to good governance and desire to chart their path to economic development," he added.

MCC expects to sign the Compact with Vanuatu in February.

Congress provided nearly $1 billion in initial funding for the MCA in FY04 and $1.5 billion for FY05. The President has requested $3 billion for FY06 and pledged to increase annual funding for the MCA to $5 billion in the future.

The MCC is managed by a Chief Executive Officer appointed by the President, confirmed by the Senate and overseen by a Board of Directors composed of the Secretary of State, the Secretary of Treasury, the U.S. Trade Representative, the Administrator of USAID, the CEO of the MCC and four public members, also appointed by the President with the advice and consent of the Senate.

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