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HONOLULU (Pacific Islands Report, Jan. 6) – The United States government, through its "Millennium Challenge" program, has approved a five-year US$65.7 million compact with Vanuatu.

The agreement is expected to bring major resources into Vanuatu, considered an impoverished nation, for the development of roads, warfs, an airstrip and other infrastructure aimed at future economic development.

The program, operated by the Millennium Challenge Corporation set up two years ago by U.S. President George Bush to help poor countries, hopes to increase average income per capita by 15 percent within five years and directly impact the lives of more than 65,000 of the rural poor in Vanuatu.

Presently, approximately half of Vanuatu’s citizens live in poverty.

According to a news release by the agency’s board, it is hoped that the compact will be signed with the Vanuatu government in February.

The Millennium Challenge Corporation (MCC) was established in 2004 to administer funds for the government program. The U.S. Congress provided nearly US$1 billion in initial funding and $1.5 billion last year. The President has requested an additional US$3 billion for fiscal 2006 and pledged to increase annual funding to US$5 billion in the future.

Vanuatu identified costly and unreliable transportation infrastructure as a major impediment to economic growth. To overcome this constraint, the Compact consists of up to eleven infrastructure projects—including roads, wharfs, an airstrip and warehouses—that will help poor, rural agricultural producers and providers of tourist related goods and services reduce transportation costs and improve access to transportation services.

The Compact also includes an institutional strengthening component and policy reform initiatives to ensure the sustainable operation and maintenance of Vanuatu’s entire transport infrastructure network, not only those assets built or rehabilitated with MCC funds.

"Congratulations to the people and Government of Vanuatu for completing an ambitious and transformative Compact," said MCC CEO Ambassador John Danilovich. "The ni-Vanuatu have developed a results-oriented program that will improve the lives of the rural poor by giving them access to increased economic activity through improved roads and transportation infrastructure. This Compact is a testament to Vanuatu’s commitment to good governance and desire to chart their path to economic development."

The Millennium Challenge Corporation is managed by a Chief Executive Officer appointed by the President and confirmed by the Senate and overseen by a Board of Directors composed of the Secretary of State, the Secretary of Treasury, the U.S. Trade Representative, the Administrator of USAID, the CEO of the MCC and four public members, appointed by the President with the advice and consent of the Senate. The Secretary of State is the Chair of the Board and the Secretary of Treasury is the Vice Chair.

Since its establishment last year, MCC has signed Compacts totaling more than US$900 million with five nations, Madagascar, Honduras, Cape Verde, Nicaragua, and Georgia. MCC is also actively engaging with other MCA-eligible countries in Compact negotiations.

January 6, 2006

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