Module 8 · Unit 3 of 6
Conditions Precedent
Conditions precedent are legal requirements written into the compact and supplemental agreements. Each one must be satisfied before MCC can disburse funds. This unit explains what they are, where they come from, and how the MCA manages them.
Module 8 · Unit 3 of 6
What is a condition precedent?
A condition precedent (CP) is a specific obligation that must be fulfilled before MCC is permitted to make a disbursement. CPs are legally binding — not advisory targets — and they gate the release of compact funds.
There are two types of conditions precedent.
One-time obligations that must be met before the first disbursement of program funding can be made. They typically relate to the MCA establishing its structures, governance documents, and foundational operational plans. Once satisfied, initial CPs do not recur.
Conditions that must be met before every disbursement throughout the compact term. They set the continuing baseline of compliance that MCC requires before releasing funds each quarter. An unsatisfied ongoing CP blocks disbursement regardless of how well other areas are performing.
Examples of typical initial CPs include: the Fiscal Accountability Plan approved by MCC, the Procurement and Grants Plan Package approved, and the MCA’s governing documents legally established. Typical ongoing CPs include: a completed Disbursement Request delivered, satisfactory program progress confirmed, and the M&E Plan current and complied with.
Module 8 · Unit 3 of 6
Where CPs come from
Conditions precedent are not invented during implementation. They are negotiated at compact signing and written into the compact and the Program Implementation Agreement (PIA).
CPs reflect MCC’s fiduciary and policy requirements — the baseline of legal and operational readiness that the partner country and MCA must demonstrate before receiving each tranche of funding. They are not arbitrary: each one corresponds to a specific accountability or risk management purpose.
Some CPs are triggered by specific project milestones rather than general program status. For example, a project involving the resettlement of affected people may have a CP requiring that a Resettlement Action Plan be approved before a related works contract can begin. Project-specific CPs like these are directly relevant to the project teams working on those activities.
Understanding your project’s conditions precedent from the start of your assignment is part of your role as a project team member. CPs that are discovered late — when the QDRP is being prepared — create avoidable pressure on the entire program.
Module 8 · Unit 3 of 6
CP examples: initial vs. ongoing
The following examples are drawn from real compact documentation. Select each item to see the plain-English description, responsible party, and what satisfies it.
The compact has entered into force in accordance with its terms. This is typically the first CP — until the compact is legally in force, no other compact obligations or CPs can be satisfied.
What satisfies it: Legal entry into force, confirmed through formal exchange of diplomatic notes or equivalent process as specified in the compact.
The MCA has developed and MCC has approved a Fiscal Accountability Plan — the manual governing financial management, cash management, accounting, and reporting for all MCC funding and the country contribution.
What satisfies it: Written MCC no-objection or approval of the Fiscal Accountability Plan (or an interim version acceptable to MCC).
The partner country government has legally expanded the MCA’s mandate to cover the compact program scope, and has provided MCC with copies of all relevant decrees, legislation, bylaws, and governance documents. The MCA has developed and adopted the HR Manual, which has been approved by MCC.
What satisfies it: Copies of all governing documents delivered to MCC; MCC confirmation that the mandate has been appropriately expanded.
The MCA has made progress, satisfactory to MCC, on implementing the projects and activities for which funding is requested — including progress on each of the principal implementation plans. This CP must be met before every disbursement throughout the compact term.
What satisfies it: MCC’s determination, based on QDRP review, that satisfactory progress has been made. This is a judgment MCC makes — not a threshold the MCA self-certifies.
The M&E Plan, once adopted, is current and updated. The MCA is in substantial compliance with the requirements of the M&E Plan, including any applicable reporting requirements for the disbursement period. This CP applies once the M&E Plan has been approved.
What satisfies it: Submission of a current ITT as part of the QDRP, and MCC’s determination that the MCA is meeting its M&E obligations.
Module 8 · Unit 3 of 6
Tracking and reporting CPs
The CP Report is a required component of every QDRP. It provides MCC with a current snapshot of the status of each condition precedent.
For each CP, the report indicates one of three statuses:
| Status | Meaning |
|---|---|
| Satisfied | The condition has been met. For initial CPs, this is a permanent status once achieved. |
| Pending | The condition has not yet been met. Pending CPs are a risk to disbursement and require active management. |
| Waived / Deferred | MCC has formally agreed, in writing, to waive or defer the condition. This is MCC’s decision — not the MCA’s. |
Project staff should notify their director immediately when a CP related to their project area is at risk of not being met on time. The CP Report must reflect the actual current status — not an optimistic projection.
Discovering at QDRP preparation time that a CP has not been satisfied — when it should have been — is avoidable. Each project team member should know which CPs apply to their area and maintain awareness of their status throughout the quarter.
Module 8 · Unit 3 of 6
Waivers and deferrals
In some circumstances MCC may agree to waive or defer a condition precedent. Understanding what this does — and does not — mean matters for how the MCA manages its obligations.
MCC can waive a CP where it is satisfied that the underlying purpose of the condition is being met even if the specific documentary requirement has not been completed. MCC can defer a CP where the timing is genuinely justified and the condition will be met at a later point.
A waiver or deferral requires a formal written request from the MCA and must receive MCC’s written approval. They are not automatic, and they are not the MCA’s decision to make.
A waiver or deferral adjusts the timing of when a CP must be satisfied — it does not eliminate the underlying obligation. If a condition is deferred, it must still be satisfied by the agreed revised date. The fundamental compact obligation remains.
Where the MCA believes a CP cannot be satisfied by its required date, the correct approach is to raise it early with the Resident Country Mission and Country Team — before the QDRP is submitted, not at the moment of submission. Early communication gives MCC and the MCA time to agree on a path forward.
Module 8 · Unit 3 of 6