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* US$ 480 Million to be given by the MCC to Sri Lanka is a grant, not a loan, the US Ambassador clarifies
Tue, Jul 30, 2019, 07:54 pm SL Time, ColomboPage News Desk, Sri Lanka.

July 30, Colombo: The United States Ambassador to Sri Lanka Alaina B. Teplitz asserts that the Millennium Challenge Corporation's US$ 480 million aid was a gift to Sri Lanka from the people of the US and not a loan.

US Ambassador to Sri Lanka Alaina B. Teplitz has sent a letter to President Maithripala Sirisena clarifying the agreement on the grant, state-run Independent Television Network reported.

Ambassador Teplitz has said that the agreement is transparent and is designed to foster the prosperity the President seeks to deliver to the people of Sri Lanka.

The Ambassador noted that the agreement has a five-year term and will not establish any permanent institution or agency.

The development agreement consists of projects focused on two key economic issues: transportation and land management.

With regard to transportation, the assistance is targeted at increasing traffic problems in Colombo and Kandy. After compact projects are completed, urban Sri Lankans will have easier and safer commutes to work. Commuters will be able to get from central Colombo to the new expressways much quicker. Due to heavy traffic congestion, it takes nearly as much time to get from Pettah to the Southern Expressway as it takes to get to Galle once you reach the expressway.

Improvements in over 205 kilometers of roads in Colombo will significantly reduce the severe traffic congestion that is currently prevailing during peak hours of travel. Travel time within the capital will be reduced by approximately 40 percent. By refiguring bus routes and timings, compact projects will improve bus services, which half the population relies on to get to work, especially the poor, she noted. Transportation project benefits will also reach rural citizens, who will see their products go from farm to market more quickly as upgrades improve travel time on portions of the Central Ring Road by approximately 35 percent during peak periods of travel.

The Ambassador stated that the US is extending development assistance to Sri Lanka since independence from Britain and the US government is committed to safeguard transparency of deals.

Highlights of MCC Compact as stated by the U.S. Embassy:

  • The Government of Sri Lanka and MCC together identified weak transport infrastructure and weak land administration practices as two binding constraints to economic growth in Sri Lanka.
  • To address these constraints, the proposed compact consists of two projects: a transportation project and a land project. The total budget for the compact is $480 million.
  • The $350 million transport project has an estimated economic rate of return of 19% 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, modernize traffic systems, and introduce policy and regulatory reforms.
  • These investments will reduce severe traffic bottlenecks, create safer, more reliable public transportation, and lower the transport costs required to connect people and goods with booming markets.
  • The $67 million land project has an estimated economic rate of return of 30% 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.
  • Land activities will help the Government create an inventory of state lands, modernize methods of valuing lands, strengthen tenure security for smallholders, women, and firms, and digitize deeds records so that they are less vulnerable to damage, theft, and loss.
  • Together, the two projects are projected to benefit 11.3 million people, which accounts for 54% of Sri Lanka's population.
  • The remaining $63 million will be used to support technical assistance, feasibility and design studies, project administration, and monitoring and evaluation. These funds will help the Government to effectively design, implement, manage, and monitor the compact program.

The Government of Sri Lanka will establish a local entity staffed by Sri Lankans to coordinate implementation by the ministries and departments mentioned above. This entity will be accountable to a Sri Lankan Board of Directors comprised of eight government officials and three representatives from the private sector and civil society

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