MCC grant will assist SL to address constraints to growth: US envoy

By Nishel Fernando 
The United States plans to become an equal partner to Sri Lanka from a donor by assisting the island nation to address the binding constraints to economic growth through Millennium Challenge Corporation’s (MCC) US $ 480 million grant.

US Ambassador to Sri Lanka and the Maldives Aliaina Teplitz reiterated that MCC’s US $ 480 million is a grant to Sri Lanka and not a loan as cited in certain media reports.
“It’s a gift from the people of the United States, not a loan. Not a loan that might mortgage the future of this country,” she said. 

Teplitz made these remarks addressing the third annual general meeting of the Sri Lanka-United States of America Business Council in Colombo, last Tuesday. 

The board of directors of MCC recently approved a five-year US $ 480 million compact for the Government of Sri Lanka, which is aimed at reducing poverty through economic growth. 
“Now that we are almost a quarter of the way through the 21st century, it’s time to work our partnership expanding beyond that of a donor towards an equal partnership,” Teplitz said.

Since Sri Lanka’s independence, the US has furnished over US $ 1 billion in grants and direct development funds to Sri Lanka. Sri Lanka also has a massive US $ 2.3 billion trade surplus with the US, with the US being the largest bilateral trade partner.

She noted that the development needs in transportation and land administration have been identified as most significant binding constraints to economic growth in Sri Lanka.

She also stressed that both the Sri Lankan government and US collaboratively developed the proposed agreement, with significant input from the private sector and civil society, including the Ceylon Chamber of Commerce. 

Under the proposed agreement, US $ 350 million is to be allocated for transport projects, which include advanced traffic management system activity, bus transport service modernisation activity and central ring road network activity.

According to a study carried out by the University of Moratuwa, there were 1.9 million trips per day along the main corridors connecting Colombo and its suburbs, which is projected to increase up to 4.5 million trips a day, by 2035.

The economic cost of lost time as a result of longer commutes was estimated at Rs.400 billion per annum in 2014 and was projected to increase up to Rs.1.8 trillion in 2020.

“A company – both SMEs and large businesses – might be transporting products to markets or bringing goods to ports or even taking tourists to visit attractions. Their bottom lines depend on a well-functioning road network, as does the peace of mind of just about anyone driving on the Colombo roads,” Teplitz pointed out.

Meanwhile, the US $ 67.3 million land project consists of five activities that seek to improve access to private and state land, provide more uniform valuation of land and assist the government in improving the land policy and governance framework under which land is managed and administered.

A key component of the project is to develop a parcel fabric map that covers up to 28 percent of the land area of Sri Lanka, focused on seven districts in the Central, North Western, North Central and Eastern Provinces. 

Eventually, this is expected to help the government to identify which state lands are underutilised and available for investment and which lands are in active use.

“With better land information systems, for example, future Sri Lankan governments will have an improved fix on the size of the state lands, those vested with various ministries and departments, as well as a clear picture of the value of these lands,” Teplitz noted.

Together, the two projects are estimated to benefit 11.3 million people or 54 percent of Sri Lanka’s population.

She emphasised that the Sri Lankan government retains oversight and control of all aspects of the proposed projects from roads undergoing improvement to every aspect of the effort to digitise land records and to produce accurate land surveys. 

Once the compact is signed between MCC and Sri Lanka, the government is expected to establish a local entity staffed by Sri Lankans to coordinate with ministries and departments for a five-year period for project implementation.  

The 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.

Elaborating further on how the United States would benefit from such projects, the ambassador said, “A thriving, growing Sri Lanka will be a more dynamic market for the United States goods and services. We are, after all, already Sri Lanka’s largest trading partner and number one export destination. 

An expanding economy spells growing business opportunities and the chance to eliminate poverty. It means win-win for our countries.”

Teplitz stressed that the United States doesn’t promote commerce by subsidising state-owned companies or by making backroom deals unlike certain countries.

“The United States promotes business by helping to improve economies, creating more opportunities for the private sector to compete and more opportunities for communities to become prosperous,” she said.