Why We Did This Audit
Over the last decade, the Millennium Challenge Corporation has committed $172 million under its Threshold Program, in part, to assist countries undertaking difficult policy reforms in becoming eligible for compact grants. The smaller Threshold Program grants provide countries with an opportunity to demonstrate their commitment to just and democratic government, economic freedom, and investments in their people. However, Congress has previously expressed concern that MCC sometimes selected countries for compact eligibility before the countries implemented Threshold Program-related reforms.
Our audit objectives were to determine the extent to which MCC had (1) assessed progress on the Threshold Program’s overall objectives, (2) provided comprehensive performance information to the Board of Directors to consider when selecting countries for compacts, and (3) fully assessed Threshold Program implementation before recommending countries to the board for compact selection.
While MCC assessed progress for achieving objectives of individual Threshold Program projects, the agency lacked a process for assessing progress of the overall program. The Threshold Program division collected data from individual partner countries to ensure the timely completion of projects in a manner consistent with MCC standards, but it did not use the data to assess progress in achieving the three overall objectives of the Threshold Program:
- Boosting the “MCC Effect,”
- Investing in policy and institutional reforms critical to growth and good governance, and
- Assessing a country’s capacity to develop a potential compact in the future.
Without a process to assess progress in achieving the overall program objectives, MCC could not fully measure the effectiveness of the Threshold Program or determine how it contributed to assessing candidates for future MCC compacts.
Additionally, some members of the Board Representatives Interagency Advisory group indicated that additional performance information on countries in the Threshold Program would aid in the deliberation process for compact selection. While members of the board were generally satisfied with the performance information MCC provided on countries in the Threshold Program, some members stated that additional information on the performance of countries’ Threshold Programs would be helpful.
MCC recommended countries in the Threshold Program for compacts before allowing them to substantially implement their programs. While MCC recommended that partner countries substantially implement projects in the Threshold Program to reduce risk, the agency did not clearly define what substantially implementing programs entailed.
We made three recommendations to improve measurement of Threshold Program performance and communication and use of performance results. MCC agreed to act on one of three recommendations.