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The Millennium Challenge Corporation (MCC), now in its fourth year of operations, provides aid to developing countries that have demonstrated a commitment to ruling justly, encouraging economic freedom, and investing in people. MCC provides monetary assistance to eligible countries through multiyear compact agreements to fund specific programs targeted at reducing poverty and stimulating economic growth. MCC has received appropriations for fiscal years 2004 to 2008 totaling more than $7.5 billion, and has set aside about $6.4 billion of this amount for compact assistance. The President has requested an additional $2.225 billion for MCC for 2009, of which MCC plans to use $1.88 billion for compact assistance with countries currently eligible for compacts. MCC compact development is a four-phase process: (1) an eligible country submits a compact proposal; (2) MCC conducts a due diligence review of the proposed projects; (3) MCC and the country negotiate and sign the compact; (4) MCC and the country complete preparations, including developing disbursement plans, for the compact to enter into force. After the compact enters into force, compact implementation begins, and funds are obligated and disbursed. As of March 2008, MCC had selected 28 countries as eligible for compact assistance and had signed compacts with 16 of these countries. Eleven of these compacts have entered into force. Ten countries have not signed compacts and remain in the compact development process. We conducted this performance audit on the initiative of the Comptroller General. This report assesses (1) the current status and pace of compact development; (2) projected time frames for the commitment and obligation of MCC's existing (2004 to 2008) and requested (2009) appropriations; and (3) MCC's progress in disbursing compact assistance.

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