MCC discontinues $480mn compact deal with Sri Lanka

The Millennium Challenge Corporation (MCC) has decided to withdraw its USD 480 million compact deal with Sri Lanka.

The decision was reached during the quarterly meeting of MCC’s Board of Directors on December 15.

Issuing a statement yesterday (16), the MCC announced that the Board has discontinued the proposed Compact with the island nation.

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.

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.

Meanwhile, the Board has 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.

“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,” the statement said.

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