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Sri Lanka explores the possibility of renegotiating US$ 480 MCC deal

Cash strapped Sri Lanka is now exploring the possibility of negotiating the US$ 480 Millennium Challenge Corporation (MCC) compact which was discontinued by the MCC board of directors on December 15 2020 following the opposition of SL ruling party hard core members.

Frontline envoy of MCC will be visiting Sri Lanka to restart negotiations and future arrangements to resume activities relating to the proposed MCC, a reliable official source closely connected to attract this investment said.

However there was no official confirmation from the Government or the US embassy in Sri Lanka due to difficulty in contacting relevant officials during the weekend.

There is renewed interest for the government to reopen the country for donor agencies following the sacking of two firebrand ministers Wimal Weerawansa and Udya Gammanpila strong opponents of the United States, informed sources said.

Finance Minister Basil Rajapksa recently highlighted at an official meeting that both local and foreign sources of revenue have been blocked, owing to the intermittent closure of the country due to Covid 19 and internal pressure of hardliners in the government.

He said that the country must be reopened as soon as possible to reactivate all modes of foreign exchange inflows into the country.

It has been revealed that the government was willing to work with MCC to satisfy its concerns.He recognised that there was no way to reduce the duration of the impact assessment process.

He explained that radical policy changes would not be possible, but were not necessary in order to ensure strong economic benefits from the programs.

Instead, existing laws allowed sufficient flexibility for new agricultural practices to be pursued, the Finance Minister said, adding that operations and maintenance expenses for projects that produced high returns would definitely be covered in order to ensure that the returns endured.

A mutual decision is essential to proceed with MCC compact development and the MCC team’s frank description of its minimum economic, environmental, and social requirements was important, a senior official said.

While the government would have liked to get started with MCC projects sooner, it now has decided to take a slower but more ambitious course.

The Government should continue to assist MCC in ensuring that it understands that MCC remains in its due diligence phase and that MCC will only invest in Sri Lanka when it is convinced that the investment will deliver sufficient returns in terms of poverty reduction and economic growth, he added.

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