Millennium Challenge Corporation: Independent Reviews and Consistent Approaches Will Strengthen Projections of Program Impact

GAO-08-730 Published: Jun 17, 2008. Publicly Released: Jun 17, 2008.
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Highlights

In January 2004, Congress established the Millennium Challenge Corporation (MCC) for foreign assistance. Eligible countries submit compact proposals for MCC funding for projects aimed at reducing poverty through economic growth. To assess the proposed compacts' likely impact, MCC performs economic analyses estimating the compacts' economic rate of return (ERR) and effects on income and poverty as well as the number of compact beneficiaries. MCC uses these analyses to inform its decisions to fund proposed compacts and to inform Congress and the public about its progress in achieving its mission of poverty reduction through economic growth. GAO was asked to examine MCC's projections of (1) ERR and (2) compacts' impact on income and poverty as well as numbers of beneficiaries. GAO reviewed MCC's stated impacts and analyses for four MCC compacts that represented 41 percent of MCC's compact assistance and met with MCC officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Millennium Challenge Corporation To improve the reliability and comparability of its projected ERR and economic impacts, the CEO of MCC should adopt and implement written procedures for a secondary independent review of the methods and results of its economic analyses.
Closed – Implemented
In response to the GAO recommendation, the Millennium Challenge Corporation (MCC) adopted an internal peer review process coordinated by MCC's Chief Economist. MCC has used this new process on the Burkina Faso, Namibia, and Senegal compact proposals. In addition, MCC has posted its economic analysis spreadsheets for compact countries online to make them available for review outside of MCC.
Millennium Challenge Corporation To improve the reliability and comparability of its projected ERR and economic impacts, the CEO of MCC should improve MCC's guidelines by identifying a consistent approach with preferred methods for projecting compacts' impact on income and poverty.
Closed – Implemented
The Millennium Challenge Corporation (MCC) has adopted revised Guidelines on Economic and Beneficiary Analysis that include specific guidance on counting beneficiaries, estimating the incidence of benefits, and disaggregating benefits by demographic groups.

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