The decision to cancel the grant from being offered to the South Asian island nation was announced as part of MCC’s latest decisions concerning its grant assistance programmes.

“At its quarterly meeting on December 15, the MCC Board of Directors selected new countries as eligible for U.S. Government grant assistance,” the US foreign aid agency said in a statement.

“The Board discontinued the proposed compact with Sri Lanka.”

The MCC had earlier announced it would offer Sri Lanka a grant to carry out projects targeting the transport sector and land administration – a move critics said would affect the country’s territorial integrity.

Sierra Leone and Kiribati had been chosen as the next beneficiary countries of similar grants focused on policy reforms and reducing poverty, MCC noted.

MCC’s board had also approved a USD 23 million threshold program with the Solomon Islands.