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With United States (US) President Donald Trump shutting down the Millennium Challenge Corp. (MCC), the threshold program that the US aid agency had been developing with the Philippines will no longer push through.
But Finance Secretary Ralph G. Recto, the Marcos administration's chief economic manager, told Manila Bulletin on Thursday, May 1, that this development is "not a concern" for the Philippine government.
Recto disclosed that the Department of Finance (DOF) has been informed of the Trump administration's decision to shutter MCC.
"But it's not a concern. Today, we're not getting anything from MCC," the Finance chief pointed out.
"So we don't lose anything," he added.
Before Trump returned to the White House in late January, MCC, back in December last year, said it was moving forward with its planned smaller-scale grant assistance for the Philippines, despite the country's failure in weeding out corruption.
MCC's board of directors had re-selected the Philippines as eligible to continue developing a threshold program for 2025, "based on its commitment to strengthening its policy performance, protections for human rights and fundamental freedoms, and anti-corruption efforts since its prior selection."
In 2023, MCC selected the Philippines and Tanzania for threshold programs, which are designed for countries that "demonstrate a significant commitment to meeting the eligibility criteria but do not qualify for compact assistance."
The proposed Philippine program aimed to "support the government's efforts to reduce poverty and encourage economic growth, while continuing to strengthen just and democratic governance, economic freedom, and social investment" through institutional and policy reforms, MCC said in February 2024, during the visit of its chief executive officer (CEO) Alice Albright.
As Manila Bulletin reported earlier, MCC’s fiscal year 2025 country scorebook released in November 2024 showed that the Philippines passed 14 out of the 20 annual indicators but earned a red mark in the pass-or-fail control of corruption indicator.
Under MCC rules, countries must pass at least half of the 20 indicators and garner green marks on so-called "hard hurdles"—control of corruption, as well as civil liberties and political rights—to qualify for a compact, or multiyear, grant.
For many years, the Philippines has consistently failed the control of corruption indicator. This and the red mark on the rule of law indicator are based on the latest Worldwide Governance Indicators (WGI) from the both Washington-based World Bank and Brookings Institution.
The Philippines scored in the 41st percentile for control of corruption—short of the required 50th percentile to pass.
Following a $20.7-million threshold program from 2006 to 2009, the Philippines received its first and only MCC compact grant of $434 million in 2011. The grant funded road construction on Samar island, revenue administration reforms, and delivery of social services to the poor.
When that compact ended in 2016, MCC deferred new assistance due to "a further review of concerns around rule of law and civil liberties" under then-US President Barack Obama, who had been critical of former President Rodrigo R. Duterte’s deadly war on drugs.
In 2017, the Philippines also withdrew from a planned MCC grant intended for road construction along the eastern coast of Luzon.
