Philippines flunks MCA's corruption-curbing test

Chances of fresh grant from USAID slim to none

Gloria's RP flunks MCA's corruption-curbing test

By Michaela P. del Callar

Daily Tribune 10/20/2008

The chances of the Philippines under the stewardship of President Arroyo in the matter of securing a fresh grant from a US government aid agency may be slim to none after a Washington-based think-tank gave the country a poor rating for failing to curb corruption in the government.

Mrs. Arroyo and her administration flunked the corruption curbing test, with the percentile ratings going lower and lower, and on its third year, the percentile rating went below the 50 mark.

In its Sept. 26, 2008 country assessment report, the Center for Global Development (CGD) said the Philippines has failed the control of corruption indicator this year since the Millennium Challenge Corp. (MCC), which provides financial assistance to developing countries, was established three years ago.

CGD monitors and analyzes the Millennium Challenge Account (MCA).

The report where it was stated that the Philippines flunked the test was written by Amy Crone, CGD research and policy analyst, and Sheila Herrling, a senior policy analyst and manager of the MCA Monitor.

CGD stated that the Philippines fails the control of corruption indicator after passing it in each year since the inception of the MCC.

CDG said the Philippine corruption rating dropped sharply in the last two years falling from the 76th percentile two years ago, to the 57th percentile last year, to the 47th percentile this year.

This decline creates an awkward situation for the MCC for two reasons: First, the Philippines was declared eligible by the MCC Board just six months ago in a highly unusual out-of-cycle decision, CGD said.

The Philippines is currently an MCC Threshold Country, having been given in 2007 a grant of US$21 million to fund anti-corruption projects after the government demonstrated its commitment to enact reforms necessary to improve policy and performance. The funding will end Nov. 21, coinciding with the weakening of the Philippines' corruption-curbing score.

In March this year, the MCC announced that the Philippines was already qualified to apply for an MCC poverty-reduction grant, known as a compact.

As a compact-eligible country, the Philippines can apply for a large-scale grant for poverty reduction.

It will be recalled that Mrs. Arroyo crowed about this achievement in her fight against corruption, saying that the country is now eligible for a large scale grant from the US aid agency.

But MCA officials in the past have noted that being selected as an eligible country does not guarantee additional funding nor will submission by the Philippines of a proposal guarantee a successful conclusion of a compact agreement.

The Board raised concerns over the fragility of the Philippines' control of corruption score during the regular FY2008 selection round, which now appear to have been justified. This new score will raise questions about the Philippines' eligibility just as it initiates compact development, CDG said.

To receive MCA funding, the MCC asks eligible countries to develop investment proposals that will reduce poverty by spurring economic growth.

The US Embassy in Manila said the MCC will evaluate the Philippine investment proposals based on two main criteria. It said the MCC will identify the country's obstacles to growth and review its strategy for addressing these challenges and finally, verify if the proposals reflect the goals of the people of the Philippines.

In the CDG report, entitled Which Countries Make the FY2009 Corruption Cut? it was stated that Good governance is one of the foundational principles of the Millennium Challenge Corporation (MCC), so much so that it uses five of the World Bank Institute's (WBI) Global Governance Indicators each year to assess country performance and select countries eligible for funding. One of these indicators is the WBI's control of corruptionindicator which is the only hard hurdle in the selection process, meaning that a country must pass it in order to become eligible.

This year, the report stated, several notable changes in the control of corruption scores were noted in the Lower- Income Country (LIC) group, with the Philippines failing the corruption hurdle for the first time; Nicaragua also fails for the first time, scoring as the median country (a failing score); Timor-Leste continues a pattern of decline; Indonesia, a current Threshold program country, improves from the median in FY2008 to the 56th percentile; Rwanda, a Threshold program country, maintains its position after a significant leap last year to one of the top five countries with a score in the 97th percentile; Liberia, which is not currently MCA eligible, passes the corruption hurdle for the first time, and passes easily, landing in the 88th percentile.

Indonesia passed the control of corruption indicator for the first time, rising from the 50th percentile last year to the 56th percentile this year. Indonesia continues to demonstrate improvement in the governance indicators; this year is the third in which all of the Ruling Justly indicators scores are the same 7 or higher than the previous year. The score for control of corruption this year is particularly noteworthy, as Indonesia would have passed even if the median hurdle had not been lowered due to the removal of Cuba,8 Georgia, and Vanuatu.

Indonesia has another year left in its $55 million threshold program, a major component of which focuses on corruption.

The report stated that Philippines failed in the control of corruption indicator after passing it in each year since the inception of the MCC. Its score dropped sharply in the last two years.

It added that the drop created an awkward situation for the MCC.

This new score will raise questions about the Philippines' eligibility just as it initiates compact development. Second, it raises questions about the efficacy of MCC Threshold Programs in making a measurable impact on the control of corruption indicator.

In most local and global surveys on corruption in the Philippines under Mrs. Arroyo, the country has always figured high in the corruption surveys, with one survey in the country stating that Mrs. Arroyo is the most corrupt president ever.

The country has also been adjudged as the most corrupt country in Southeast Asia.