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Yemen’s Eligibility for Assistance Reinstated by Millennium Challenge Corporation Board

February 15, 2007

Washington, D.C.—The Millennium Challenge Corporation Board of Directors today reinstated the eligibility of the Republic of Yemen for participation in MCC’s Threshold Assistance Program.

The Threshold Program is designed to assist countries that are on the “threshold,” meaning they have not yet qualified for larger Compact grants, but have demonstrated a significant commitment to improve their performance on the eligibility criteria. The MCC Board of Directors selects countries for the Threshold program based on overall performance in 16 policy indicators, as well as countries’ demonstrated ability to undertake reforms.

“Since its suspension in 2005, Yemen has undertaken a series of impressive reforms,” said Ambassador John Danilovich, CEO of the MCC. “In addition to what has been accomplished thus far, the Government of Yemen has made a number of important reform commitments. Looking at the progress we have been able to document, Yemen has demonstrated its commitment to continuing this reform effort.”

Yemen was eligible for Threshold assistance in 2004, but its eligibility was suspended by the Board in November 2005, following deterioration in policy performance on the selection criteria. With today’s action, Yemen may now apply for a Threshold Program Agreement.

The MCC Board of Directors found that the Yemeni government has worked aggressively and demonstrably to address the country’s performance in MCC selection criteria.

In February 2006, President Ali Abdullah Saleh signaled the start of an aggressive reform effort with a cabinet shuffle. At that time, the government also introduced and began implementing an impressive National Agenda for Reform. This reform agenda addresses policies evaluated by the MCC indicators.

“Continued participation in the MCA program is contingent upon good performance on the policy benchmarks used to award eligibility. We will continue to monitor Yemen’s progress in these indicators,” Danilovich said.
The MCC Board acted after reviewing the reforms completed or in process by Yemen, including:

• Passing important anti-corruption and financial disclosure legislation;
• Launching a large national anti-corruption awareness campaign;
• Removing the President from the Supreme Judicial Council;
• Retiring, sanctioning, suspending and prosecuting more than 30 judges;
• Approving a national procurement manual and standard bidding documents;
• Preparing and submitting a new procurement law for parliamentary approval that removes all ministerial representation from the High Tender Board, establishes a new procurement monitoring board made up of technical experts and civil society, and allows non-voting observers to attend board meetings;
• Initiating online disclosure of procurement-related information;
• Beginning the implementation of the first phase of a public finance management strategy;
• Creating a civil servant identification system, which will eliminate thousands of “ghost workers” and “double dippers”;
• Holding elections deemed open and competitive by international observers;
• Suspending a controversial draft press law and initiating consultations with civil society on a new draft press law;
• Establishing a project to simplify business startup procedures;
• Recruiting new staff to begin implementing the General Sales Tax in 2007.

The Board reinstated Yemen’s eligibility for FY04 and FY05 Threshold Assistance and selected Yemen as eligible for FY07 Threshold Assistance.

If selected to receive Threshold assistance, countries must create a plan that identifies measurable ways to improve specific indicator scores and submit the plan to MCC for review and approval. Threshold Program Agreements are only awarded to countries whose plans demonstrate a meaningful commitment to reform and a high likelihood of successful implementation. By improving a low indicator score, a country may then become eligible for a Millennium Challenge Compact to help reduce poverty and stimulate economic growth.

MCC is an approach to development assistance that, based on research and lessons learned, recognizes sound policies and good governance are critical to poverty reduction and economic growth in developing countries.


Millennium Challenge Corporation (MCC), a U.S. government corporation designed to work with some of the poorest countries in the world, is based on the principle that aid is most effective when it reinforces good governance, economic freedom, and investments in people that promote economic growth and elimination of extreme poverty.

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