Friday, 3 December, 2021

Need Of Political Consensus For MCC

 Shyam Prasad Mainali  

People in the country are divided on whether or not the Millennium Challenge Corporation (MCC) Compact is in the interest of Nepal. Intellectuals have made all efforts through written and verbal expressions to persuade politicians in recognising the compact in favour of the nation.

The incumbent Finance Minister asked some questions to the MCC headquarters in Washington DC. The answers to these inquiries submitted by the MCC headquarters gave some positive vibes as they accorded due regard to the sovereignty of an independent nation like Nepal, citing that the compact would not infringe upon the sovereignty and independence of our country. The MCC compact is dedicated to strengthening democracy and good governance. The sustainability of the compact is seen in democratic countries to reduce poverty through economic growth. Assistance under the MCC is given to low-income countries selected through a competition. 

To be considered for eligibility, a country must be classified as a low- or lower-middle-income country by the World Bank, and pass the annual MCC country scorecard that focuses on the country's commitment to just and democratic governance, investing in people, and economic freedom.  Development cannot succeed unless it is linked to free-market policies and democratic principles. This has been the main thrust of the compact. Countries that demonstrate a commitment to good governance in practice have positive development returns and take ownership of the programme are eligible for MCC grants.

 To receive the grants, requesting countries must have 10 of 20 indicators, ranging from proper business conditions for start-ups, environments conducive to child health, civil liberties to the status of political rights and funding for education. The grant is allotted for agriculture and irrigation, education, anti-corruption measures, power and energy, enterprise development, health, transportation, land rights, sanitation, and water supply. Grants in Nepal are to be utilised to facilitate the energy sector so that the macroeconomic condition of the nation would improve sustainably.  
The five-year grant has been planned to promote economic growth, reduce poverty, and strengthen institutions. Such investment support helps the stability and prosperity of partner countries and the USA is keenly interested to see the proper utilisation of the investment. Selected countries are required to identify their priority areas for sustainable economic growth. When a country is awarded an MCC compact, it sets up a local accountable entity to manage all aspects of policy implementation.
Economists suggest that Nepal should accept any economic support and there is no harm for the country in endorsing the compact. Other democratic countries are eagerly waiting to get this important grant for economic progress and prosperity. If Nepal feels uncomfortable going further, she can easily cancel the compact with a notice of 30 days unilaterally. There are 22 criteria specified in the threshold regarding providing grants to Nepal. The 'Nepal Growth Diagnostic' concluded that the country lagged far behind in most of the criteria specified to meet the threshold. It seems that the countries achieving a threshold of more than 75 per cent are eligible to receive the grant. But in the case of Nepal, not even 50 per cent have been met. It seems that there is a policy categorisation of countries receiving grants. This is a great favour of the USA to the people of Nepal.  

Nepal faces extensive economic development challenges caused by an inadequate supply of electricity and high transportation costs to move both goods and people. The MCC Nepal Compact marks a new chapter in the U.S.-Nepal Partnership and is designed to increase the availability of electricity and lower the cost of transportation in Nepal. It will help support the Government of Nepal to better deliver critical services to its people, ease the movement of goods around the country, and open new opportunities for private investment — all to create sustainable development for the people of Nepal. Strengthening the reliability of key infrastructure will put the country’s economy on a firmer growth trajectory, advance stability, support regional security, and reduce poverty.
The compact will take the U.S.-Nepal partnership to a newer height. It is designed to increase the availability of electricity and transportation services at a low cost in Nepal. Strengthening the reliability of key infrastructure will put the country’s economy on a firmer growth trajectory, advance stability, support regional security, and reduce poverty. As per the provision of this compact, it is based on sustainable and climate-smart, expanding opportunities for all, country-led, facilities and attracting private investment.

Every government and Nepali political party, when in power, has expressed a desire to conclude the MCC Compact for economic development. There is no military component involved in the compact. U.S. law prohibits it. It is entirely focused on economic development by helping build power lines and roads. At the request of Nepal, the U.S. government began working with Nepal in 2012 toward the development of an MCC compact. All provisions and procedures are open, transparent and available to everyone. Nepal has to commit to spending the money, transparently, for the projects that have been agreed upon. Nepalis proposed and decided which projects MCC will fund in Nepal based on Nepal's priorities.

Nepal does not require joining or signing up for anything to participate in the MCC. In Nepal, as in every country where MCC works, parliamentary ratification is required and provides transparency and an opportunity for Nepalis to understand the project. These are the facts behind the ratification of this significant compact from our parliament. The government of Nepal has given keen interest to table the proposal, furnishing a clear understanding with all ruling partners and the main opposition party as well.
Differing views
The MCC has created some political divisions in Nepal. Some political forces are advocating in favour of this grant as a noble scheme. But some other forces are opposing it. MCC headquarters has made it clear that the project in Nepal is not aimed against any country. Beijing says it is not objectionable for Nepal to seek assistance from anyone. A clear understanding among the alliance partners as well as with the main opposition, the UML, is essential to successfully ratify the MCC compact. Otherwise, the compact with a large grant will go back, affecting the future assistance to be offered by the western world to Nepal.  

(Mainali is a former secretary of Nepal government.)