Millennium Challenge Account

President Bush announced on March 14, 2002 a "New Compact for Development." Under the Compact, the United States will increase its core development assistance by 50 percent over the next three years, resulting in a $5 billion annual increase over current levels. These additional funds will go to a new Millennium Challenge Account that will fund initiatives to help developing nations that demonstrate a strong commitment to ruling justly, investing in people, and promoting economic freedom, which are the foundations for broad-based, lasting development. 

The new compact recognizes that economic development assistance can be successful only if it is linked to sound policies in developing countries. In sound policy environments, aid attracts private investment by two to one - that is, every dollar of aid attracts two dollars of private capital. In countries where poor public policy dominates, aid can actually harm the very citizens it was meant to help by subsidizing bad policies and delaying reform.

The funds into the Millennium Challenge Account will be distributed to developing countries that have demonstrated a strong commitment toward:

• Ruling Justly. Rooting out corruption, upholding human rights, and adherence to the rule of law are essential conditions for successful development.
• Investing in People. Investment in schools and health care provide for healthy and educated citizens who become agents of development.
• Promoting Economic Freedom. More open markets, sustainable budget policies, and strong support for individual initiative will unleash the enterprise and creativity for lasting growth and prosperity.

In two generations, per capita income in developing countries has nearly doubled. Illiteracy has been cut by a third - giving more children a chance to learn and prepare for a brighter future. Infant mortality in the poorest countries has been almost halved -- giving more children a chance to live. Many nations have changed old ways and found new wealth. Yet in this world of growing opportunity, there are entire regions untouched by progress.

President Bush wants to close the growing divide between nations that are making progress and those that are failing. The MCA will provide significant new support to countries whose governments have made the right policy choices. The President wants to include every man, woman, and child in an ever-expanding circle of development.