30 November 2006
U.S., El Salvador Agree on $461 Million Program To Cut Poverty
Millennium Challenge Corporation Compact complements trade agreement
Washington -- The government of El Salvador and the U.S. Millennium Challenge Corporation (MCC) have agreed to a $461 million anti-poverty program intended to stimulate economic growth in one of the poorest areas of the country and complement its participation in the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR).
The MCC is a U.S. supplementary aid program launched by President Bush to assist developing nations that invest in their people, promote economic freedom and demonstrate good governance. To help these countries break through barriers to poverty reduction and economic growth, the MCC provides sizable grants aimed at making a sustainable difference in the lives of the poor, according to Ambassador John Danilovich, MCC’s chief executive officer.
At a November 29 State Department ceremony, Danilovich joined Eduardo Zablah, technical secretary to the presidency of El Salvador, to sign the compact. El Salvadoran President Elias Antonio Saca witnessed the signing.
“This agreement is a testament to El Salvador’s strong commitment to good governance and to building the necessary institutional framework for aid to be used effectively.” Danilovich said.
COMPACT’S PROVISIONS
According to the MCC, the five-year compact seeks to promote economic growth and reduce poverty in the northern zone of El Salvador where more than 50 percent of the population lives below the poverty line. Work under the compact will be aimed at improving the lives of approximately 850,000 Salvadorans through investments in education, public services, agricultural production and rural business development, and transportation infrastructure. The compact comprises three components.
One component is a $95 million human development project designed to support formal and nonformal education as well as expand access to water, sanitation and electricity for poor communities.
A second component is an $88 million productive development project that will provide technical assistance, training and financial services to help poor farmers transition to higher-value crops and assist small and medium-sized rural businesses transition to greater profits activities, expand markets and increased incomes.
The third component of El Salvador’s MCC compact is a $234 million transportation project that includes the design, construction and rehabilitation of 300 kilometers of the long-sought Northern Transnational Highway, and paving and improving a 240-kilometer network of roads that will connect rural households to national and regional markets and decrease shipping costs and travel times.
The remainder of the compact funds is for program administration, monitoring and evaluation.
MCC AND CAFTA-DR
El Salvador’s MCC grant will seek to build not only on El Salvador’s good governance, but also on the economic opportunities ushered in by El Salvador’s participation in CAFTA-DR, Danilovich said.
“El Salvador is making considerable strides to build peace and prosperity for its citizens and to foster regional integration and trade throughout the CAFTA-DR region and the hemisphere,” he pointed out. “This compact furthers El Salvador’s economic development and positions the country as an active contributor and beneficiary of the ever-emerging opportunities in the region.”
In her remarks at the State Department signing ceremony, U.S. Trade Representative Susan Schwab lauded El Salvador’s MCC compact as a model for the region. She added that the compact’s commitment to infrastructure improvement should reinforce El Salvador’s decision to participate in CAFTA-DR.
“The MCC compact that is being signed today complements El Salvador's trade agenda,” she said. “I am confident that this compact will complement the deeper and stronger ties that the United States is forging with El Salvador and strengthen El Salvador's decision to embrace market reforms and to conclude the Central America Free Trade Agreement.”
Salvadoran President Saca said that he shares the Bush administration’s vision for sustained economic growth as the only and best solution for the reduction of poverty. The MCC compact will serve to transform the northern zone of his country and have a “significant and lasting impact on the entire nation,” he said.
Apart from this transformational impact on El Salvador, Saca said that the MCC also reflects the United States’ commitment to assist countries that govern wisely.
“I would like to thank the people and the government of the United States for their valuable contribution to our country,” he said. “It demonstrates this country's commitment to helping countries that are taking the right steps toward achieving governance, greater investment in the population, and economic liberties.”
The full text of the MCC announcement of the compact is available on the organization’s Web site.
For additional information, see Millennium Challenge Account and Central America Free Trade Agreement-Dominican Republic.
(USINFO is produced by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
