The MCC discontinues USD 480 million compact with Sri Lanka, shifts to other eligible partners.

The Millennium Challenge Corporation (MCC) board decided to discontinue the proposed Rs. 89 billion MCC development assistance grant to Sri Lanka due to lack of partner country engagement, the US embassy in Colombo announced on Thursday.

“ The Rs. 89 billion approved for Sri Lanka will be made available to other eligible partner countries in need of grant funding to pursue their economic development priorities, reduce poverty, and grow their economies,” the statement added.

The statement further said : “ Country ownership, transparency, and accountability for grant results are fundamental to MCC’s development model. MCC has successfully partnered with nearly 30 countries worldwide on 38 grant agreements, totaling nearly $13.5 billion. These grants have lifted millions of people from poverty by catalyzing local and domestic investment.”

The statement further stressed that the United States would remain a friend and partner to Sri Lanka and will continue to assist Sri Lanka in responding to COVID and building its economy.

MCC of the US Government approved the grant to Sri Lanka at its board meeting held on the 25th of April 2019 in Washington D.C. subject to Congressional Notification.

On the request of former PM Ranil Wickremesinghe, the MCC had conducted an evaluation in terms of their investment criteria and selected Sri Lanka as a qualified country to receive grant funding under their Compact Investment Program.

Under the grant, MCC had agreed to kick off a USD 350 million transport project and a USD 67 million land project in Sri Lanka. The remaining USD 63 million was to be allocated to support technical assistance, feasibility and design studies, project administration, and monitoring and evaluation.

However, the proposed grant assistance agreement was met with strong disapproval from various parties citing that it adversely affects the sovereignty of the country as it would pave way for defense deals with the US.

Meanwhile, MCC has selected three new partners – Sierra Leone, Kiribati and Solomon Islands – for new compact partnership and threshold programs.

As a part of the annual selection process, Benin, Burkina Faso, Côte d’Ivoire and Niger have been reselected as eligible for concurrent compact programs for regional integration, while Malawi, Mozambique, Timor-Leste and Tunisia were reselected for compact development.

Further, Ethiopia, Kenya and Gambia were reselected for a threshold program development.

The statement said the MCC also reaffirmed its support for continuing development in Indonesia, Kosovo and Lesotho.

“MCC provides time-limited grants to developing countries that meet rigorous standards for good governance, from fighting corruption to respecting democratic rights, as evaluated by MCC’s scorecard. MCC takes a business-like approach, with bedrock commitments to data, accountability and evidence-based decision making.