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-----Original Message-----
From: [log in to unmask] [mailto:[log in to unmask]] 
Sent: Tuesday, June 20, 2006 2:17 PM
To: [log in to unmask]
Subject: Millenium Challenge Statement On Gambia's Suspension

Millenium Challenge Corporation
 
June 16, 2006
 
We wish to inform you of the Millennium Challenge Corporation (MCC) Board of
Directors decision to suspend The Gambia's eligibility for Millennium
Challenge Account (MCA) assistance.
 
Under MCC's Policy on Suspension and Termination of Assistance and/or
Eligibility for Assistance, MCC may suspend or terminate eligibility for
assistance if the MCC Board of Directors makes a determination that one of
three circumstances occurred, including that a country has engaged in a
pattern of actions inconsistent with MCC selection criteria.
 
Over the past six months, MCC has witnessed a troubling pattern of policy
slippage by the Government of The Gambia that is inconsistent with the MCA
selection criteria.  The third-party institutions that collect the indicator
data used in MCC's eligibility criteria have documented evidence of growing
human rights abuses, increased restrictions on political rights, civil
liberties and press freedom, as well as deteriorating economic policies and
anti-corruption efforts.  This erosion of commitment and performance has
resulted in declines on two indicators already reported: Political Rights
and Trade Policy.  In addition, preliminary data suggest pending degradation
of The Gambia's performance on six additional indicators in future fiscal
years: Voice and Accountability; Civil Liberties; Control of Corruption;
Regulatory Quality; Cost of Starting a Business; and Fiscal Policy.  The
declines are summarized in the enclosed attachment. (see below after the
statement)
 
As a result of this decline in overall performance on the MCA selection
criteria, the MCC Board of Directors decided to suspend The Gambia's
eligibility for MCA assistance.  The Gambia was formally notified of this
suspension and the basis for it, on June 16, 2006.
 
Under the MCC Policy on Suspension and Termination of Assistance and/or
Eligibility for Assistance, the Board of Directors may reinstate eligibility
for a country that was subject to a suspension if it is determined that the
country has taken corrective action or has demonstrated a sufficient
commitment to correcting each condition for which led to suspension.
 
MCC officials are available to meet at your convenience to discuss this
suspension.   If you or your staff would like to arrange a meeting, please
contact Jake Stefanik at (202) 521-3856.
 
Sincerely,
 
 Frances C. McNaught
Vice President
Congressional and Public Affairs
 Enclosure
THE GAMBIA'S POLICY PERFORMANCE AND POTENTIAL REFORMS
 
The following is an overview of The Gambia's declining performance on MCA
selection criteria.  This analysis is drawn from the third-party
institutions that provide the basis for the MCC indicators.  To consider
reinstatement, the Board will look for concrete actions that demonstrate the
Government of The Gambia's commitment to reform in the policy areas where
there have been declines.
 
Civil Liberties (Freedom House)
The Gambia's decline in Civil Liberties is predominantly due to a documented
trend in violations of press freedoms and human rights.  A 2004 law forced
media outlets to reapply for their licenses and established harsh sentences
for all press offenses, while changes in the criminal code enable the state
to confiscate any publication deemed seditious without judicial oversight.
Since then, there have been multiple documented cases of unexplained arrest
and detention of journalists, as well as threats, arson attacks, or official
raids on independent media sources.  There are also increased reports of
arbitrary arrests and torture by the security forces.
 
Political Rights (Freedom House)
The Gambia's Political Rights score declined in 2006 from a 4 to a 5 (with 1
representing "most free" and 7 representing "least free"). As presidential
elections approach, the government has placed growing restrictions on the
movement and activity of opposition political parties and their leadership,
prohibiting them from holding public gatherings and arresting key opposition
leadership on charges of subversion. Legal provisions in official records
enable the National Intelligence Service to search, arrest, or detain people
without a warrant, and this practice has been repeatedly but selectively
applied to opposition figures.  Freedom House and other third- party
indicator institutions are concerned that this chain of individual actions,
in conjunction with a documented deterioration of press freedom, may
constitute an effort to subvert the electoral process. 
 
Voice and Accountability (World Bank Institute)
The decline of this indicator is evident in six of its sub-components and is
likely due to the cumulative result of the situations described above.  The
third-party institutions which provide this data have registered significant
declines in press freedom, human rights, freedom of assembly, openness and
transparency, and political competition.  Access to information also remains
problematic, as current state-security laws serve as a blanket restriction
on freedom of information. 
 
Control of Corruption (World Bank Institute)
In 2005, The Gambia registered significant declines on the World Economic
Forum's "corruption in export and import permits," "corruption in
procurement," "corruption in judicial decisions," "corruption in public
utilities," and "corruption in the police force" indicators.  These are all
important subcomponents of MCC's Control of Corruption index. 
 
Regulatory Quality (World Bank Institute)
The Gambia's score will likely decline in future fiscal years due to the
government's lack of progress in implementing a privatization program,
increasingly centralized economic policy making, unnecessary business
licensing, and labor market inflexibility.
 
Cost of Starting a Business (World Bank Group/International Finance
Corporation)
Preliminary data from the IFC strongly suggest that The Gambia will fail
this indicator in Fiscal Year 2007 (FY07). It is estimated that it costs 222
percent of average per capita income to register a business in The Gambia.
 
Trade Policy (Heritage Foundation)
The Gambia's Trade Policy score declined in 2006 from 3.5 to 4.5 (with 1 as
"very low levels of protectionism and 5 as "very high levels of
protectionism") because of increasing evidence of non-tariff barriers and
fraud, and delays in customs administration.
 
Fiscal Policy (International Monetary Fund)
The Gambia is in imminent danger of failing the Fiscal Policy indicator in
FY07.  The fiscal deficit will likely be somewhere between 4.5 - 7.5 percent
of Gross Domestic Product in 2006, placing The Gambia well below the median
in its income peer group. Poor performance in this area is attributable to
high levels of government expenditure, Central Bank financing of
extra-budgetary expenditures, unreliable statistical reporting, and lack of
fiscal transparency.
 
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