The United States’ Millennium Challenge Corporation (MCC) voted to discontinue the US $480 million compact agreement with Sri Lanka, Daily Mirror learns.
The MCC board took this decision at its meeting on December 15. The MCC unit in Sri Lanka will also be closed accordingly.
However, a formal announcement in this regard is yet to be made on the withdrawal.
Sri Lanka remained on the agenda for this week’s meeting of the MCC board.
The previous Yahapalana government gave Cabinet approval for the MCC ahead of the 2019 presidential elections. However, the new government, formed after the elections, under President Gotabaya Rajapaksa decided to suspend the signing of the compact.
The MCC compact is a grant project that consists of two components — a transportation project and a land project. The $350 million transport is meant to increase the relative efficiency and capacity of urban and provincial transport infrastructure in the Western, Central, Sabaragamuwa and Uva Provinces.
According to the local proponents of the compact, the transport project will upgrade physical roadway networks, modernise traffic systems, and introduce policy and regulatory reforms.
The $67 million land project has an estimated economic rate of return of 30% over twenty years and aims to expand and improve existing Government of Sri Lanka initiatives to increase the availability of spatial data and land rights information. The project will initially focus on districts in the Central, North-Western, North-Central and Eastern Provinces.
However, the political forces that backed the present government were critical of the compact and insisted that it should be scrapped forthwith. They argued that the compact, particularly its land project, would impinge on Sri Lanka’s sovereignty.
It remained a hot political topic before and after the elections with some ruling party legislators calling for its abrogation.
The leaders of the present government also echoed similar sentiments.