Apr 26, Colombo: The Millennium Challenge Corporation (MCC) of the US Government has approved a five-year grant of $ 480 million to Sri Lanka at its quarterly meeting held on the 25th of April 2019 in Washington D.C.
At the meeting, the Board of Directors learned about progress on the agency's concurrent regional compact development and approved the proposed compact with Sri Lanka.
Pending congressional notification, the MCC Sri Lanka Compact is expected to be signed in the near future, the MCC said in a release.
MCC also recognizing the tragic events that took place on Easter Sunday offered its deepest condolences to the people of Sri Lanka.
The MCC Sri Lanka Compact is designed to expand economic opportunities and reduce poverty through economic growth.
The compact aims to promote an environment that supports equity and freedom for the Sri Lankan people as the Government of Sri Lanka maintains its commitment to democratic institutions, pursues sound economic policies, and invests in the welfare and health of its people.
The Compact seeks to assist the Sri Lanka Government in addressing two of the country's binding constraints to economic growth: (1) inadequate transport logistics infrastructure and planning; and (2) lack of access to land for agriculture, the services sector, and industrial investors.
The Compact will be composed of two projects: a Transport Project and a Land Project.
The Transport Project aims to increase the relative efficiency and capacity of the road network and bus system in the Colombo Metropolitan Region and to reduce the cost of transporting passengers and goods between the central region of the country and ports and markets in the rest of the country.
The goal of the Land Project is to increase the availability of information on private land and underutilized state lands or all land in Sri Lanka to which the Government is lawfully entitled or which may be disposed of by the Government ("State Lands") in order to increase land market activity. The Land Project would increase tenure security and tradability of land for smallholders, women, and firms through policy and legal reforms.
MCC will fund the compact entirely through grants which do not need to be repaid rather than loans.
The MCC suspended the compact last year after the abrupt dismissal of Prime Minister Ranil Wickremesinghe by the President Maithripala Sirisena in October 2018 raised doubts about the future of democracy in the island.
The U.S. government approved resuming the Millennium Challenge Corporation aid to Sri Lanka in February this year after the Prime Minister was reinstated in December 2018.