After a seven-year hiatus prompted by human rights concerns, the Washington-led Millennium Challenge Corp. (MCC) has decided to resume providing grants to the Philippines.

In a statement, Finance Secretary Benjamin E. Diokno said the US foreign aid agency that gives grant to developing countries selected the Philippines to develop smaller grant programs, known as threshold program.

“We welcome the eligibility of the Philippines under the Millennium Challenge Corp. Threshold Program which we hope will allow us to further access the bigger Compact Program,” Diokno said on Sunday, Dec. 17.

The MCC was established by the US Congress to invest in well-governed countries by offering time-limited grants that promote economic growth, reduce poverty, and strengthen institutions.

“We appreciate the MCC Board’s approval of the selection of the Philippines’ eligibility to the grant-based resources of the US MCC,” he added.

In 2016, the MCC did not renew its aid package to the Philippines due to "significant concerns" about the rule of law under the Duterte administration.

Manila previously received $434 million in support through the MCC's first Compact grant, which ended in 2016, and an earlier $20.7 million threshold grant implemented from 2006 to 2009.

Diokno said that MCC's decision to re-engage with the Philippines shows confidence in the Marcos administration's commitment to strengthening democratic governance, upholding human rights, and combating corruption.

The MCC provides three types of grant financing. The first is the compact program, which involves a multi-year agreement between the aid agency and an eligible country to fund specific programs aimed at reducing poverty and stimulating economic growth.

The second is the threshold program, which is a contract between the MCC and a country that provides financial assistance to help countries meet requirements to access large-scale grant resources.

Lastly, there is the MCC Regional Compact, introduced in 2018, which aims to promote cross-border economic integration, trade, collaboration, and regional integration.

Diokno said the Marcos administration is committed to improving anti-corruption measures as outlined in the Philippine Development Plan (PDP) 2023-2028. 

Additionally, he said the government is taking a comprehensive approach to address economic growth constraints by investing in infrastructure, modernizing agriculture and agribusiness, and accelerating climate action.

“The Philippine government stands ready to work hand in hand with the US Government towards developing and implementing important programs that will unlock growth in the Philippines and redound to economic and social transformation for all Filipinos,” Diokno said.