MCC: Likely Budget Cuts Pose 'Serious challenges'

The Millennium Challenge Corp. is cautioning that proposed cuts to its budget would hinder the fledgling agency's development work.

The $875 million budget included in the House's 2009 omnibus spending bill, released earlier this week, would allow the agency to "continue negotiations with countries that have submitted proposals to reduce poverty," an agency spokesperson said in an e-mail. But this amount - a 40 percent cut to last year's MCC budget of $1.5 billion - "poses serious challenges for the agency given the current pipeline of countries wishing to partner with us."

"MCC understands that economic times are tight, and therefore appreciates congressional support for its mission to reduce poverty," the spokesperson said. "If MCC had more resources, however, it could have even greater impact."

The Senate is considering the 2009 omnibus spending package today. This bill will detail spending for the rest of the fiscal year. Lawmakers have said that the funding cut should not be interpreted as a lack of congressional support for the agency. Instead, Congress wants the agency to spend the money in its coffers before allocating additional funding.

"We want it to succeed, and we intend to fund future compacts," Sen. Patrick Leahy said after the Senate Appropriations Committee approved an even more drastic budget cut last July. "But with a pipeline of $7.5 billion and just $235 million disbursed, it makes sense first to process the billions that have already been appropriated. We want to see more results before we sign new compacts."

At the same time Congress is wrapping up the budget for the ongoing fiscal year, stakeholders are eagerly awaiting President Obama's 2010 spending request, expected to be released Thursday. This document and the accompanying budget justification will give a better indication of the new administration's support for MCC, a Bush administration creation.

MCC will continue compact negotiations despite looming funding cuts.

"MCC continues its conversations with countries who have worked in full faith to develop compact proposals," the spokesperson said. "The FY09 number does not impact those 18 compacts already underway. Funds for those poverty reduction programs have already been committed in their entirety."

The spokesperson added that the agency's board of directors would discuss the impact of the cuts at a March 11 meeting.

About the author

  • David Francis

    David is a Washington-based journalist and former Devex staffer who spearheaded Devex's "Obama's Foreign Aid Reform" blog. He has written for the Christian Science Monitor, Pittsburgh Post Gazette,, San Francisco Chronicle, Foreign Policy magazine, and the Washington Monthly. David holds an undergraduate degree from the University of Chicago and a graduate degree from Georgetown University.