Health projects (other than water and sanitation) were included in four pacts and four threshold agreements with seven countries. The financing of these projects represented a different part of the overall funding of each agreement, ranging from 0.4% of Namibia`s compact funding to 36% of Indonesian threshold funding (see Table 2).22 Some examples of health projects are: it is a standard guarantee that is characteristic of international aid agreements that are used to ensure that subsidies are used exclusively to achieve the pact`s objectives and do not fall into the wrong hands. However, another part of the ruling party, led by Prime Minister KP Sharma Oli, has defended the pact and wants the current session of the House of Representatives to ratify it. Nepal`s Primary Congress also voted in favour of immediate approval of the agreement. While it is important for Sri Lanka to consider all the modalities of implementation of the pact, it is equally important to consider the benefits that could be lost if the government continued to delay the approval of the agreement. Water and wastewater projects were included in nine pacts and a threshold agreement with ten countries. As a percentage of total country funding, support for these projects ranged from 2% of Ghana`s compact funding to 100% of Zambia`s compact funding (see Table 2). Some examples of water and sanitation projects supported by the MCC are: late last month, Sri Lanka`s cabinet of ministers approved, in a major step forward, the implementation of the $480 million Millennium Challenge Corporation (MCC) grant and published the final draft public grant agreement for review. The GCC pact does not say it must be ratified by Nepal`s parliament. However, the text of the agreement stipulates that in the event of a conflict requiring parliamentary ratification, the provisions of the pact will prevail over the laws of Nepal under the Treaty Act of Nepal. The GCC is the first grant agreement that requires Parliament`s approval. However, it is also the largest grant agreement ever signed by Nepal.
The document makes it clear that the Sri Lankan government is “the primary responsibility for monitoring and managing implementation” of projects, and legal advice signed by the Sri Lankan GA must be sought before the agreement enters into force. The main points of contention are: where does the money go and what does this funding mean? In accordance with the draft publicly available agreement, the MCC is providing this grant to address two of the “binding constraints” that Sri Lanka imposes on economic growth: (a) inadequate infrastructure and transport logistics planning and (b) lack of access to land for agriculture, services and industrial investors. But since then, the agreement has been frozen. Since the organization traditionally only funds low- and low-middle-income countries, Sri Lanka`s recent middle-income status has jeopardized the eligibility of the MCC grant, unless the agreement is signed before 2020, as the country is not on the organization`s 2020 scorecard. MCC appropriations, first funded by Congress in 2004 at $994 million, peaked at $1.75 billion in 2006 and 2007. Since then, MCC`s mediocre funding has fluctuated somewhat, although it has remained stable in recent years, at around $900 million per year (see Chart 1). As in the previous two years, the current government has proposed a reduction in appropriations for CCMs in the GJ 2020). So far, Congress has rejected proposals to cut spending.17 Nepal was the first South Asian country to qualify for the pact after meeting 16 of the 20 political indicators. In September 2017, Secretaries of State Baikuntha Aryal and Jonathan Nash, Chief Executive Officer of the MCC, signed an agreement in Washington in the presence of Gyandera Bahadur Karki, then Minister of Finance, and U.S. Assistant Secretary of State John J Sullivan.