President Marcos’ chief economic manager said the proposed $60-million Millennium Challenge Corp. (MCC) threshold program is expected to secure United States (US) congressional approval by August, with the grant supporting the country’s reform efforts and opening the door to larger funding from the US aid arm.

Finance Secretary Frederick D. Go told Manila Bulletin on Friday, June 26, that MCC “has continued to engage with the Philippines.” On the night of Thursday, June 25, MCC announced that its board of directors had approved the Philippines’ threshold program during its meeting on Wednesday, June 24.

According to MCC, the program is intended to help the Philippines address elevated power costs and unreliable electricity while modernizing energy-sector governance. This comes as the country continues to grapple with an energy crisis caused by the Middle East conflict.

With nearly all of its oil requirements sourced from overseas, the Philippines is particularly vulnerable to global supply shocks. For one, retail fuel prices surged when Iran ordered the closure of the vital Strait of Hormuz.

After the board’s approval, Go told Manila Bulletin that the program is “now awaiting the corresponding approval of the US Congress, which is expected by August.”

“In the meantime, the Philippine government and the MCC are completing the necessary internal processes ahead of formal negotiations and the targeted signing of the threshold agreement in September,” Go said.

He said the proposed $60-million MCC grant “will support policy and institutional reforms in identified priority areas over a five-year period.”

Unlike loans, grants do not require repayment by recipient governments. A smaller-scale MCC threshold program is designed to help countries undertake policy, regulatory, and institutional reforms that could pave the way for larger development assistance programs in the future.

“Importantly, the threshold program also serves as a critical stepping stone toward qualifying for a future MCC compact program,” Go noted.

Compacts are five-year, full-scale grants provided to eligible countries to fund specific programs aimed at reducing poverty and promoting economic growth.

It was during the Benigno Aquino III administration, from 2011 to 2016, that the Philippines last secured an MCC compact grant worth $434 million. It funded projects to modernize business processes, rehabilitate roads, and support community-driven development efforts.

Go said the Philippines seeks to sustain its partnership with MCC as it pushes for reforms that will “strengthen the country’s energy sector and support long-term economic growth.”

US Deputy Secretary of State Christopher Landau, who also presides over MCC’s board, said the new program would strengthen the Philippines’ energy security, encourage more US private-sector investment, and support long-term economic growth.

Prior to the program’s approval, discussions between MCC and the Energy Regulatory Commission (ERC) focused on regulatory modernization, digitalization, tariff analysis, consumer protection, records management, and measures to address longstanding bottlenecks in the power sector.

Recent MCC-ERC engagements also covered reforms involving rate resets, tariff regulation, power supply agreement (PSA) approvals, capital expenditure (capex) applications, market monitoring, and broader operational efficiency improvements, the regulator disclosed in earlier social media posts.

The Philippines was first selected by MCC to develop the current threshold program in December 2023 and was reselected in December 2024 before receiving final board approval on June 24.

The new grant marks the Philippines’ second threshold program with MCC. The first, implemented from 2006 to 2009 during the Arroyo administration through the now-defunct US Agency for International Development (USAID), focused on improving fiscal policy and strengthening the government’s anti-corruption efforts.

MCC documents showed that the earlier program provided training, technical assistance, and information technology (IT) systems to investigators, prosecutors, revenue officials, and anti-corruption agencies.

More than 3,000 government personnel underwent specialized training, while the program exceeded all nine of its performance targets, including improvements in corruption convictions, tax administration, and anti-smuggling enforcement.