The proposed Millennium Challenge Corporation’s (MCC) US$ 480 million grant to Sri Lanka will help rebalance its sources of development finance as well as country’s geopolitical interest away from the perceived dependence from China, Executive Director at Lakshman Kadirgamar Institute Ganeshan Wignaraja said last week.
He said, Sri Lanka is heavily reliant on various sources of development finance mainly because the country is grappling with the balance of payment and budget deficit crisis. In such a context, he said it is quite risky for an upper middle country like Sri Lanka to heavily rely on two or three countries that provide development finance as it makes the country vulnerable to external shocks if there is a problem in any source country.
“For an instance, China is going through a growth deceleration and its growth is no longer the historic 10-12 % level anymore. Furthermore, China is also in the midst of trade tensions with the United States, as result, the supply chain in China is probably taking a hit,” he told a seminar held under the theme ‘Separating the Baby From the Bathwater: Evaluating the Millennium Challenge Corporation-Sri Lanka Compact’, at BMICH. The seminar was organized by the Pathfinder Foundation.
He said further a developing country like Sri Lanka should diversify its sources of finance for better economic management.
Highlighting more pressing issues that have hampered the growth of the country to a great extent , he said it is essential to improve the agriculture productivity especially in the North and North Central provinces in Sri Lanka or upgrade the irrigation needs in these areas, by infusing latest technology and management practices.
“Overall, I feel there are major benefits from this project for Sri Lanka and for economic development in the next five years and beyond,” Wignaraja said.
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