RP gets poor report card from MCC

WASHINGTON – The Philippines received a poor report card from the US Millennium Challenge Corp. (MCC) this year but so did everyone else, some faring worse than others.

The Philippines flunked in seven out of 17 indicators the MCC examines to determine which developing countries to select for grant assistance for fiscal year 2010.

But the country’s hopes remain alive because all 86 candidates wanting to get a slice of the US economic pie failed to pass all 17 indicators.

Last year the Philippines scored above the median in 14 out of 17 indicators, receiving failing grades in control of corruption, health expenditure and primary education.

Explaining why the country received a worse report than before, Philippine embassy officials on Monday said this was because the goalposts were moved. “We were victims of our own success,” was how one official explained it.

Until last year the Philippines was graded as a low-income country (LIC) whereas this year it was graded as a lower middle-income country (LMIC) based on improved income per capita.

In a press statement, the embassy quoted Foreign Secretary Alberto Romulo as saying the failing marks resulted chiefly from the country’s transition from LIC to LMIC.

“Higher income countries are measured using more stringent standards,” he said.

The MCC Board of Directors is due to meet here on Dec. 9 to select which of 86 eligible countries – 51 of them rated as LIC and 36 as LMIC – it will sign a compact agreement with for economic development assistance.

Scorecards play an important role in the selection process but the MCC also factors in a country’s capacity and political and economic will, and embassy officials said they remained hopeful that being placed in a higher income category would not derail the Philippine bid for an MCC compact grant in 2010.

To be able to sign a compact with MCC, developing countries must show their commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law.

They must score well in 17 different policy indicators.

In the latest report card released on Monday, not one of the 51 countries rated as low income aced its score.

Four failed one indicator each and the rest had more than one poor score.

Also not one of the 36 countries rated as lower middle income passed all 17 indicators.

The best performer in this group was Albania which had three failing grades, followed by China and Thailand with five failing grades each.

The Philippines, which failed in seven of the 17 benchmarks, was actually in the top third of the grouping.

The Philippines last year was unable to sign a $500-million compact agreement with the MCC for three high-impact projects – Secondary National Roads Development (SNRD), Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) and Integrated Revenue Information System (IRIS) – because of a poor scorecard.

The MCC said successful candidates had to meet the selection criteria, particularly the control of corruption benchmark, to be eligible for a compact.

But that was then, when the MCC was run by Republicans, and this is now, when the Democrats are in control.

This year the Philippines failed to score above the median in control of corruption (26 percent), rule of law (47 percent), immunization rates (41 percent), health expenditures (six percent), primary education expenditures (27 percent), girls’ primary education completion (44 percent), and business start-up (34 percent).

The year before the country was unable to meet the performance standard in control of corruption (47 percent), health expenditures (19 percent) and primary education expenditures (32 percent).

‘Technicalities’

The Department of Foreign Affairs said the MCC scorecard of the Philippines was a result of “technicalities in evaluation.”

Foreign Secretary Romulo said the Philippines’ ranking on the corruption indicator has actually improved by six notches, from 39th to 33rd, or above the 37th rank of the median country out of the 73 countries in the LIC list of the MCC.

“The country’s failing grades in some areas is the result of technicalities in evaluation, such as the country’s rise from a low-income country to a lower middle-income country. Higher income countries are measured using more stringent standards,” Romulo said.

“The improvement in the country’s income category is a clear reflection of the Philippine government’s sustained commitment to economic and governance reforms amid the global financial crisis,” he added.

“We also recall that in the 2009 World Governance Indicators (WGI) report published by the World Bank Institute, the Philippines demonstrated significant improvements in four out of six governance dimensions, namely government effectiveness, regulatory quality, rule of law and control of corruption,” Romulo said.

“In fact, the biggest jump was recorded in the control of corruption where our score increased from 22.2 percent to 26.1 percent,” he added.

Romulo said the WGI report represents the largest publicly available data resource on governance in the world. It is also used by the MCC in making its allocation decisions.

The DFA also said the Philippines has intensified the fight against poverty and corruption.

“While the gains from the government’s anti-corruption efforts were clearly manifested in notable international governance reports, the Philippine government will continue to build on these gains,” Romulo said. –-Jose Katigbak STAR Washington Bureau (The Philippine Star) with Pia Lee-Brago