The MCA budget request constituted the single greatest line item increase in the foreign operations
budget in FY 2007, while certain core development accounts have declined. Some have voiced
concern that despite President Bush’s promise, increases in MCA funding are diverting money away
from USAID. This paper analyzes the extent to which increases in MCA funding are coming at the
expense of existing development programs.
Our analysis of USAID budgetary requests and appropriations over FY 2002-2007 show that global
aid is stagnant in the “post-MCA” period (FY 2005-06), with no real signs of it increasing in FY
2007. We also find that, on average, ‘core’ development financing has dropped for MCA eligible and
compact countries since FY 2004, particularly in Africa and Latin America. Indeed, only two
compact countries—Vanuatu and Cape Verde—are able to claim full additionality of MCA funds.
Yet, and contrary to expectations, US development aid appropriations to MCA countries have on
average fared better than non-MCA countries. Given these findings, we hesitate to draw any strong
conclusions about the degree to which the MCA is responsible for cuts in other development aid.
That said, our analysis includes two important conclusions:
• MCA eligible and compact countries have experienced unequivocal reductions in the
Development Assistance (DA) account of US development aid; Greater transparency and accessibility of data on US foreign aid, in the form of a centralized
and comprehensive database, is an essential predicate to creating more effective decision
making and oversight by the U.S. government and key aid constituencies.