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Source: Rodney J. Jaleco, abs-cbnnews.com

-- The Arroyo administration flunked anew the Millennium Challenge Corporation's (MCC) corruption test, perhaps adding a possible talking point when President Arroyo meets US State Secretary Hillary Clinton later this week.

Foreign Affairs Secretary Alberto Romulo quickly blamed "technicalities in evaluation" for the country's poor showing, which casts a cloud on prospects for winning up to $500 million in poverty- and corruption-fighting grants.

The Philippines has been working to win Compact Status since 2008. The country is more than half-way through the steps needed for signing a Compact Agreement with the MCC.

"The country data will help inform the decisions of the MCC Board of Directors at their quarterly meeting scheduled for December 9, when they select eligible countries," an MCC announcement today said.

The MCC board is headed by Mrs. Clinton.

The MCC is already investing over $5 million to develop three projects selected from an original list of five projects that the Philippines submitted for funding.

The projects are the rehabilitation and upgrading of four road networks that traverse the poorest regions of the country; expansion of an existing World Bank-supported program that promotes community improvements and livelihood opportunities in the poorest municipalities; and building a revenue information system to fight corruption and help government raise the resources needed to improve basic services.

However, the Philippines is competing with other Compact-eligible countries to win MCC funding.

‘Technicalities’
Romulo explained that the Philippine's failing grades was the result of the MCC's decision to move it from the list of Low-Income Countries (LICs) to the list of Lower Middle-Income Countries (LMICs), where standards are slightly higher.

He pointed out that the Philippines' Control of Corruption indicator actually improved from 39th to 33rd among LICs.

The MCC median indicators did increase in most categories but it appears to be unchanged in the corruption category.

In 2008, MCC officials told ABS-CBN News that the Control of Corruption indicator was "crucial", that it would be difficult to win additional funding even if the Philippines passed all other indicators, if it flunked the corruption test.

"We have to know the money will go where it's supposed to," one official said at the time.

Ironically, the Philippines passed the corruption test in Fiscal Year '08 - garnering a grade of 57% that was equivalent to 0.08 above the MCC median.

But former MCC CEO John Danilovich expressed their concern at the precipitous drop of the country's performance from the previous year.

That concern appeared to be well-founded because by the by Fiscal Year '09, the Philippines fell in the red in the Control of Corruption indicator. It got a grade of 47 percent, translated to 0.01 below the median.

For Fiscal Year '10 that dropped to 26%, equivalent to 0.20 below the corruption median.

RP’s failing grades
Where the MCC raised the standards, the Philippines also turned in failing grades for the first time in the areas of immunization rates, girls' primary education completion and business start-ups.

Aside from the Control of Corruption indicator, the Philippines continued to fail in health expenditures and primary education expenditures.

For the first time this year, the country also flunked the Rule of Law indicator, even though the median appears to be unchanged from last year.

Romulo preferred to look at the glass half-full. "The improvement in the country's income category is a clear reflection of the Philippine government's sustained commitment to economic and governance reforms," he said in a statement that was released almost simultaneously with the MCC's release of the country scorecards.

He cited the 2009 World Governance Indicators published by the World Bank Institute that showed an improvement in the country's corruption score from 22.2% to 26.1%.

Although the World Bank Institute is a major source of MCC's country scorecards, they also rely on other third-party sources.

"The Philippines remains hopeful that being placed in a higher income category will not derail its bid for an MCC full Compact grant in 2010," the DFA statement said.

Observers say the Philippine's poor showing is, to a large extent, the result of widespread public perception of graft and corruption, abuses and ineffective delivery of basic services.

Still hopeful
Romulo expressed the hope the Philippines will win Compact status this year.

But as if flunking the corruption test wasn't enough deadweight, the Philippines failed in more indicators than it has ever done since pursuing a Compact agreement.

President Arroyo will have a chance to win over Secretary Clinton when they meet later this week, perhaps her last chance to convince the US the Philippines deserves help.

Hurdling the MCC test has become a quest for the Arroyo administration, still hurting from reports of lavish dinners during the President's last trip to Washington DC and New York, lingering questions about alleged billion-peso deals in China and elsewhere, and expensive properties in the US and Philippines.

An MCC agreement could be seen as a US "seal of approval" for the Arroyo administration.

It's could be a last chance to prove her most rabid critics wrong in the last months of her administration - but this latest MCC report is making even that a distant dream.