Ray of hope falls on Sri Lanka for US$480 m MCC grant
A ray of hope has fallen on Sri Lanka following the positive sentiment expressed by a top US official that the Millennium Challenge Corporation (MCC) directors may determine next month to extend the US$ 480 million grant term if Cabinet approval is further delayed.
“The MCC Board will talk about Sri Lanka and try to understand why we have some challenges in getting the programme approved by the Cabinet in a timely manner,” MCC Resident Country Director Jenner Edelman told a forum in Colombo on Thursday.
The ‘Understanding the MCC Compact’ forum was organised by the Sri Lanka-US Business Council of the Ceylon Chamber of Commerce.
Cabinet approval for the MCC compact grant, the largest funding ever received by Sri Lanka, was held up following the objections raised by President Maithripala Sirisena, Finance Minister Mangala Samaraweera told a media conference.
It was earlier suspended in October last year soon after the political impasse instigated by the President and negotiations to resume the grant programme restarted after the Supreme Court ruling on the political changes in December 2018.
This grant will help to tackle weak transport infrastructure and weak land administration practices identified by the government and MCC as two binding constraints to economic growth in Sri Lanka.
Ms. Edelman further noted that MCC expects all of its country partners to remain committed to democratic governance, which includes respect for the rule of law, political rights and civil liberties for all.
She expressed the belief that certain matters already cropped up in the signing of the compact could be amicably settled through consultations, compromise and consensus with the government.
The MCC has no intension to impose any condition forcibly in implementing MCC compact, she said adding that they are flexible to accommodate any suggestions of the government before signing it.
She noted that the window to get off the compact was narrowing down, as Sri Lanka graduated to an upper-middle income status recently.
Measures will be taken to create awareness on the MCC programme among the people, she said adding that they are not forcing it on Sri Lanka.
‘The $350 million transport project has an estimated economic rate of return of 19 per cent and seeks to increase the relative efficiency and capacity of urban and provincial transport infrastructure in the Western, Central, Sabaragamuwa and Uva Provinces. ‘The transport project will upgrade physical roadway networks, modernise traffic systems and introduce policy and regulatory reforms, which will reduce severe traffic bottlenecks, create safer, more reliable public transportation and lower the transport costs required to connect people and goods with developing markets. The balance $67 million land project has an estimated economic rate of return of 26 per cent and will be utilised to expand and improve existing initiatives to increase the availability of spatial data and land rights information,” she added.