MCC discontinues $480 million Compact deal with Sri Lanka

The Millennium Challenge Corporation (MCC) has decided to discontinue with a $480 million agreement with Sri Lanka.

The decision was reached at the quarterly meeting of the MCC Board of Directors, the MCC announced today.

The MCC said in a statement today that it has decided to discontinue the proposed compact with Sri Lanka.

The Board of Directors of the Millennium Challenge Corporation had in 2019 approved a five-year, $480 million Compact with the Government of Sri Lanka aimed at reducing poverty through economic growth. The Compact sought to assist the Sri Lankan 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.

However, the current administration refused to sign the agreement saying it was harmful to Sri Lanka’s sovereignty.

At its quarterly meeting on December 15, the Millennium Challenge Corporation (MCC) Board of Directors selected new countries as eligible for US Government grant assistance. The Board unanimously selected Sierra Leone for a new compact to reduce poverty through targeted investments that increase economic growth. The Board also unanimously selected Kiribati for an MCC threshold program—the agency’s smaller grant program focused on policy and institutional reform.

In addition, the Board unanimously approved a $23 million threshold program with the Solomon Islands. The MCC threshold program aims to assist the Solomon Islands Government in addressing the country’s biggest constraints to economic growth: management of natural resources in the logging sector and insecure access to land which limits tourism investment. This program takes an innovative approach tailored to the unique landscape in the region and integrates components of MCC’s strategic priorities, such as women’s economic empowerment and blended finance.

As part of the annual selection process, MCC’s Board of Directors reselected Benin, Burkina Faso, Côte d’Ivoire, and Niger as eligible for concurrent compact programs for regional integration; Malawi, Mozambique, Timor-Leste, and Tunisia for compact development; and Ethiopia, Kenya, and The Gambia for threshold program development. The Board also reaffirmed its support for continuing compact development in Indonesia, Kosovo, and Lesotho. (Colombo Gazette)

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