Enhanced energy security and streamlined investment in the power sector will be the centerpiece of a new threshold program being developed by the United States (US) aid arm Millennium Challenge Corp. (MCC) and the Philippines, as the country grapples with surging oil prices and supply disruptions caused by Middle East tensions.

According to MCC’s fiscal year (FY) 2027 congressional budget justification document, published last April 3, the Philippines and MCC have reached “the final stages of designing the threshold program, which will focus on enhancing energy security and reducing barriers to investment in energy.”

Energy investments appear to be a fitting focus given the ongoing oil supply and price shocks from Middle East military tensions, which prompted the Philippine government to declare a state of national energy emergency.

Once the program design is completed, it will be presented to MCC’s board for consideration in June.

MCC noted that in November last year, its board decided to push through with the threshold program for the Philippines, based on the country’s “commitment to strengthening its policy performance, protections for human rights and fundamental freedoms, and anti-corruption efforts since its prior selection.”

Unlike the previous MCC compact secured by former President Benigno S. Aquino III in 2010, which was a $434-million grant concluded in 2016 aimed at reducing poverty and promoting development through infrastructure and reform projects, the new threshold program is smaller in scale and targeted specifically at policy and institutional reforms to support energy security and investment.

In 2023, MCC re-engaged with the Philippines—under President Ferdinand R. Marcos Jr.’s administration—through threshold programs designed to bolster policy and institutional reforms that support economic growth.

Last year, US President Donald Trump’s administration had decided to shutter MCC, putting a halt to the threshold program being developed. Former Department of Finance (DOF) secretary Ralph G. Recto told Manila Bulletin at the time that this was “not a concern” for the Philippines as it was not receiving aid at that time.

Before Trump returned to the White House last year, MCC said it would proceed with a smaller-scale grant program for the Philippines despite the country’s shortcomings in tackling corruption.

“Significant concerns” tied to human rights issues in 2016 prompted MCC to stop the renewal of its aid package, which occurred during the administration of former President Rodrigo R. Duterte, who was recently arrested by the International Criminal Court (ICC) and transferred to The Hague, Netherlands, to face trial concerning human rights violations during his high-casualty war on drugs.