On March 2, 2006, the United States of America, acting through the Millennium Challenge Corporation (MCC), signed a Compact Agreement with the Government of Vanuatu to provide a grant of approximately $65.7 million. The Compact “entered-into-force” on April 28, 2006.
The five-year Compact program addresses the country's poor transportation infrastructure. Consisting of eleven infrastructure projects—including roads, wharfs, an airstrip and warehouses—the program aims to benefit poor, rural agricultural producers and providers of tourist related goods and services by reducing transportation costs and improving the reliability of access to transportation services.
The goal of the Compact is to have a transformative impact on Vanuatu's economic development by increasing average income per capita by 15 percent within 5 years and directly impacting the lives of more than 65,000 poor, rural inhabitants—almost a third of the entire population.
Millennium Challenge Account (MCA) Vanuatu's program consists of two principal components:

• Civil works for the reconstruction of priority transport infrastructure on eight islands, covering roads, wharfs, an airstrip, and warehouses; and
• Institutional strengthening efforts and policy reform initiatives in Vanuatu's Public Works Department, including: provision of plant and equipment for maintenance; introduction of service performance contracts; establishment of local community maintenance schemes; and introduction of user fees. These efforts aim to ensure the sustainable operation and maintenance of Vanuatu's entire transport infrastructure network, not only those assets built or rehabilitated with MCC funds.

The Compact also includes approximately $5.0 million for Program administration, oversight, and Monitoring and Evaluation. At the time of our assessment, MCA Vanuatu had established its operational structure consisting of the following.

• A steering committee to oversee MCA Vanuatu’s responsibilities and obligations under the Compact. The Steering Committee is comprised of both government and non-governmental stakeholders.
• A Program Management Unit that is responsible for day-to-day management responsibilities for implementation of the Compact. The management team will ultimately be composed of the following members: Managing Director, Economist, Engineer, Environmental and Social Impact officer and one Support Staff.