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A New MCC Compact For El Salvador


El Salvador's President Mauricio Funes and Daniel Yohannes (R), executive director of MCC, at a school MCC helped fund.

The Millennium Challenge Corporation, or MCC, is a US foreign aid that enables countries to implement development projects.

The Millennium Challenge Corporation, or MCC, is a United States foreign aid corporation that works with countries to enable country-led development projects aimed at alleviating poverty through sustainable economic growth. MCC partners with countries around the globe committed to good governance, economic freedom, and investments in their citizens.

Intent on improving El Salvador’s competitiveness and productivity in international markets, MCC’s Board of Directors in mid-September approved a five-year, $277 million compact with El Salvador.

An in-depth analysis concluded that El Salvador’s low productivity in internationally traded goods and services stifles economic growth.
Last year, El Salvador completed a $461 million compact to strengthen the transportation and agricultural sectors and improve the education system in its Northern Zone.

“Through these compact results, the Northern Zone is being transformed for the better. It is becoming part of an integrated, stronger El Salvador,” said MCC Chief Executive Officer Daniel Yohannes last October, during a compact completion celebration. “The results we see in El Salvador at the completion of the MCC compact are making a difference.”

An in-depth analysis concluded that El Salvador’s low productivity in internationally traded goods and services stifles economic growth. To help overcome this barrier, the second MCC compact aims to help streamline El Salvador’s regulations and enhance the investment climate; improve the quality of education and better match students’ skills with the demands of firms engaged in international trade; and to reduce transportation and logistics costs along a critical coastal highway and at the border with Honduras.

Following its decision to approve a second compact for El Salvador, the MCC board noted the need for the El Salvador’s government to strengthen its commitment to good governance and the rule of law. According to Mr. Yohannes, without demonstrated progress on strengthening the investment climate, combating money laundering and effectively implementing its trade agreements, the Government of El Salvador could jeopardize the MCC compact.

“The sole mission of the United States Government’s Millennium Challenge Corporation is to reduce poverty through economic growth. And, of course, a key way to do this is to invest in human capital, to invest in the abilities of citizens to be champions of their own development and destinies,” said Mr. Yohannes. “The Human Development Project, made possible through the partnership between El Salvador and MCC, is doing just that.”
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