President Arroyo welcomed Wednesday the decision of a US government corporation to make the Philippines eligible for more US funds to fight poverty under the Millennium Challenge Corp. (MCC) on the basis of "good governance."

"This is a great day for the Philippines and the actions by the Millennium Challenge Corporation offers a remarkable validation of the efforts of our government and nation to invest in our people, fight corruption and encourage economic freedom," she said in a statement.  

"These are the hallmarks of my Administration, and I am absolutely thrilled to be so recognized for consideration by this prestigious and serious-minded corporation of the US government," she said.

WHY RP PASSED TEST

Notwithstanding the corruption scandals hounding Mrs. Arroyo, the MCC announced March 11 in Washington that the Philippines “has been selected as eligible” for more MCC funds based on good governance indicators.

“Congratulations to the Government of the Philippines for its demonstrated commitment to tackling difficult challenges and improving the lives of its people,” said MCC CEO Ambassador John Danilovich.

The MCC Board lauded the Arroyo government efforts in fighting corruption in three MCC-funded programs focused on “helping curb corruption through improved tax and customs administration and strengthening of their Ombudsman’s office.”

The MCC said the Philippines could now apply for an MCC Compact, a multi-year funding facility for poverty reduction and economic growth projects.

Only fifteen poor countries, mostly in Africa and South America, have MCC accounts.
“The MCC Board determines eligibility for this large-scale grant funding based on independent indicators that measure good governance, the country’s investments in its people and policies that encourage economic freedom,” the MCC said in a press statement.

Arroyo said the MCC's decision showed her government's "efforts are paying off and have been recognized in Washington, DC."  

"I believe that if we can all come together, redouble our efforts and continue to meet the criteria of the Millennium Challenge Corporation, the long term benefit to our nation will be the best gift I can leave this nation when I step down in 2010," she said.

MCC CRITERIA

Established in January 2004, the MCC is a US government corporation assisting deserving developing countries. It works on the principle that “aid is most effective when it reinforces sound political, economic, and social policies that promote poverty reduction through economic growth.”

According to the MCC, “countries are selected to receive assistance based on their performance in governing justly, investing in their citizens, and encouraging economic freedom. Because corruption undermines every aspect of sustainable development, MCC has made fighting it one of its highest priorities.”

The decision on whether the Philippines could qualify for more MCC funds was delayed last December “when the Board requested additional time for review and deeper analysis of the Philippines' passing performance on the eligibility criteria.”

The MCC Board decided Tuesday that the Philippines had passed the MCC’s criteria for the next stage.

FUNDING STILL NOT GUARANTEED

However, the MCC said being eligible does not guarantee funding approval.

 “While eligibility is an essential first step towards a poverty reduction grant from the MCC, selection does not guarantee funding,” Danilovich said.

“The Philippines, like all countries eligible for a compact, must maintain its performance on the MCC selection criteria and must now begin a broad-based consultative process with its people to develop a proposal that addresses the country’s barriers to poverty reduction and economic growth,” he added.

Danilovich said that “as partners, we agree that ending corruption and finding long-term ways to reduce poverty are urgent priorities that deserve our full attention.”

RP MUST SUBMIT NEW PROGRAM

The MCC said countries selected as “eligible for a large-scale grant, or compact, have the opportunity to submit a proposal for five-year program to reduce poverty through sustainable economic growth.”

“Once selected as eligible, countries begin a consultation process that includes citizens, nongovernmental organizations, and representatives of the private sector and government to identify the barriers to poverty reduction and economic growth,” it said.

MCC teams then work in partnership to engage with countries on their compact proposals to ensure that projects meet economic growth and poverty reduction targets.

“The resulting compact also sets forth how the country plans to manage and implement its MCA program, including how it will ensure financial accountability, transparency, fair and open procurement, and measurable results,” it said.

$21M PROGRAM VS. CORRUPTION

In June 2006, the MCC Board approved a $21 million for a “Philippines Threshold Program” which sought to address “improved revenue administration and anti-corruption efforts.”

It involved “strengthening the Office of the Ombudsman and strengthening enforcement within three areas of the Department of Finance (DOF) -- the Revenue Integrity Protection Service (RIPS), the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).”

According to a MCC’s Philippines’ country overview, the expected results of the $21 million threshold program were:

·    Increase the conviction rate in corruption cases filed before the anti-graft court, Sandiganbayan, on a cumulative basis from 30 percent to 40 percent.

·    Increase the number of cases successfully mediated in the Ombudsman's Public Assistance Office from 0 to 300 per year.

·    Increase the number of RIPS cases filed from 13 to 50.

·    Increase the number of officials charged by RIPS who were suspended by the Ombudsman from 6 to 35.

·    Increase the percentage of income tax returns filed by professionals and the self-employed by 10 percent.

·    Increase the percentage of corporate tax returns filed by 10 percent.

·    Increase the number of RATE cases filed with the Department of Justice from 44 to 116.

·    Increase the number of cases filed by RATS with the Department of Justice from 9 to 24 per year.

·    Increase in RATS cases filed by the Department of Justice with the Court of Tax Appeals from 2 to 15 per year.