The Sri Lankan government has decided not sign the MCC agreement with the US without Parliamentary approval after a special panel appointed by President Gotabaya Rajapaksa found the deal could open the island nation to security threats and undermine its sovereignty. Under the agreement, the MCC, a bilateral United States foreign aid agency which partners with developing countries, would grant Sri Lanka USD 480 million to upgrade its transportation infrastructure and improve land management system.
The special panel, in its interim report to Prime Minister Mahinda Rajapaksa, said, "There were clauses and conditions that would negatively affect national goals/objectives, sovereignty as well as the national security along with sections and provisions that would be unfavourable for the constitution of Sri Lanka and the legal frame work of the country."The government, citing the committee recommendations, said it was important to obtain public and parliamentary approvals before the agreement could be signed.
The government's Information Department said further discussions with the US government were planned for changes to the agreement. Before the presidential election in 2019, the then Maithripala Sirisena government had approved the draft of the MCC agreement. The agreement allotted funds for agriculture, irrigation, anti-corruption units, education, energy and power, finance and enterprise development, health, land rights and access to land, transportation infrastructure water supply and sanitation. However the then Opposition dubbed it as a sellout of Sri Lanka's sovereignty to the US. After assuming office in November last, President Rajapaksa appointed a panel of academics to review the agreement.