Millennium Challenge Corporation of US asks Sri Lanka to whip its economy into shape

Mar 31, 2005 (LBO) – The Millennium Challenge Corporation has asked Sri Lanka to whip its economic plan into suitable shape to access funds in its US$ 1 bn kitty.

In 2003, Sri Lanka was among a first batch of 16 developing and least developed countries selected to apply for funding from the Millennium Challenge Account (MCA).

Selected again for 2005, Sri Lanka submitted an economic plan last November, seeking about US$ 248 mn to fund a cluster of 12 rural development projects.

Plans to set up industrial units for the apparel sector providing employment in under-developed areas were also submitted, but Sri Lanka has been asked to show proof of poverty reduction.

“We measure policies and all are linked to poverty reduction. Our most important measure of policy is corruption and investment in human capital,” Chief Executive Officer of the MCA, Paul Applegarth said in Colombo on Thursday.

Though Sri Lanka does well in over 50 percent of the MCC’s economic indicators, ranked against the other eligible countries, it is yet to clinch a deal with the US Fund.

“We are looking to see if there has been enough out of the box thinking. There needs to be better focus. The plan needs to create a fundamental change,” Applegarth said.

The indicators deal with issues like political rights, rule of law, civil liberties, health and education expenditure, fiscal policy and economic growth.

The visiting chief of the MCC is in Sri Lanka to review the country’s proposals for funding with government officials.

So far, Madagascar has been the only country to sign a US$ 110 mn, four year compact with the MCC, covering property rights, the financial sector and its agriculture business.

The Fund is expected to grow to US$ 1.5 bn this year.