US Millennium Challenge Corporation (MCC ) grant of US$ 480 million to Sri Lanka may not be available for much longer although the new government is yet to convey its final decision to MCC authorities in Washington following the release of the special committee study report on the draft agreement.

The MCC Board of Directors will be meeting next week in Washington to arrive at a decision on the Sri Lanka issue but the government is still in two minds in accepting the grant, official sources said.

The Cabinet is expected to reach a consensus as to whether it is feasible to approve it or not under the present foreign reserve position, a senior official closely connected to the negotiations divulged. 

The MCC Board held its last meeting for the year 2019 on December 09 and reviewed the performance to select and deselect countries that are eligible for assistance in 2020.

While its decision is still to be made public, Sri Lanka was not in the list of countries in the MCC 2020 scorecard released recently, a senior official said adding that any further delays in ratifying the agreement in parliament will result in the termination of the US grant.

However, according to unconfirmed reports, the MCC Board had decided to postpone the grant until they had time to evaluate the performance of Sri Lanka’s new government.

The US Embassy in Colombo in a statement noted that the parliament will have ample opportunity to review the MCC grant assistance agreement once it is signed.

"Consistent with the MCC worldwide policy in all partner countries, once the grant assistance agreement is signed, the Government of Sri Lanka will send it to Parliament for approval," it said.

“Parliamentary review and approval are required by MCC to ensure the grant assistance agreement has the support of the Government and the people,” it added.

The US Embassy said the MCC pact will directly benefit over 11 million Sri Lankans and meaningfully stimulate economic growth. It is a substantial grant of over 5 years, equivalent to US$ 22.43 for every Sri Lankan.

Meanwhile, Deputy Assistant Secretary of State for South & Central Asian Affairs Jonathan Henick stated that the United States hopes that the substantial American grant of US$ 480 million to Sri Lanka will be a success.

He noted that the grant would benefit millions of Sri Lankans by reducing traffic congestion.

The Deputy Assistant Secretary said: “As Indo-Pacific countries, the United States and Sri Lanka are both interested in freedom of navigation, maritime security, countering violent extremism, and other issues that ensure that the Indo-Pacific region continues to be peaceful, prosperous, and stable.”

The larger part of the MCC Compact, the US$ 350 million transport project, focuses on modernising bus transport and improving traffic management systems, which would contribute towards crucial improvements in public transport and provide tangible benefits to the poor.

A small land project, envisaged amounting to US$ 67 million, seeks to improve the land administration policy in Sri Lanka. Specifically, it seeks to map and survey state lands, strengthen government capacity and provide help with the digitisation of deeds.