Washington — The U.S. Millennium Challenge Corporation (MCC) announced June 21 that it will lift suspension of its compact with Malawi, after a vote taken at the quarterly meeting of its board of directors.

MCC placed a hold on compact assistance to Malawi in July 2011 and formally suspended the compact in March 2012 because of a pattern of actions by Malawi’s government that was inconsistent with the democratic governance criteria MCC uses to select its compact partners.

Since President Joyce Banda’s inauguration in April, President Banda and her government have taken clear steps to reverse this pattern of actions, MCC said.

“In lifting the compact suspension, the MCC board recognizes that the government of Malawi has taken decisive action to restore democratic accountability, to demonstrate respect for the rights of individuals, and to implement sound economic management,” MCC Chief Executive Officer Daniel W. Yohannes said in a press release.

“As a result, I am pleased to move forward with this critical investment in Malawi’s energy sector. MCC expects Malawi to continue to demonstrate its clear commitment to strong democratic and economic governance,” Yohannes said.

The steps the Malawian government has taken have included efforts to improve the human rights environment and to ensure that laws and institutions support democratic rights and processes. The government has also demonstrated a commitment to providing accountability for the violent police response to demonstrations in July 2011. “These steps, and the resumption of sound economic policy, restore MCC’s confidence in Malawi as a compact partner,” MCC said.

The planned $350.7 million Malawi compact is expected to provide approximately $2 billion in benefits to an estimated 5 million Malawians. It intends to reduce energy costs to enterprises and households and improve productivity in the agriculture, manufacturing and service sectors by reducing power outages and technical losses, enhancing the sustainability and efficiency of hydropower generation and improving service to electricity consumers.

TERMINATION OF MALI COMPACT

At its meeting, the MCC board of directors also discussed the status of the Mali compact. On May 4, 2012, the board authorized termination of the $460.8 million compact because of an undemocratic change in government in Mali. MCC said it is taking necessary steps to safeguard and preserve compact investments and protect the safety and well-being of individuals affected by those investments.

The Mali compact will terminate no later than August 31, 2012.