The US had withheld the funds last year after President Maithripala Sirisena sacked his former ally Prime Minister Ranil Wickremesinghe
Sri Lanka will accept a $480 million dollar grant from the US to improve infrastructure and traffic management, officials said Tuesday, after President Maithripala Sirisena withdrew his opposition.
"This is a great victory for the government and augurs well for the future," Finance Minister Mangala Samaraweera said in a statement after the cabinet formally approved accepting the Millennium Challenge Corporation Grant.
The US had withheld the funds last year after Sirisena sacked his former ally, Prime Minister Ranil Wickremesinghe, and called snap elections, prompting a constitutional standoff.
Sirisena's shock move — which followed a host of personality and political clashes since they formed a coalition in 2015 — was later ruled unconstitutional by the Supreme Court, which restored Wickremesinghe's government.
But tensions between the two remained and Sirisena had resisted signing off on the funds, which the government had been banking on to improve traffic in the congested capital Colombo and its suburbs.
Sirisena is not a candidate at the November 16 presidential elections and must leave office as soon as a winner is elected.
Tourist hotspot Sri Lanka is heavily dependent on foreign aid and loans. Economic growth slowed to 1.8 percent in the last quarter of 2018 due to political instability.
It took a further hit earlier this year after local jihadists carried out suicide bombings against three hotels and churches, killing at least 269 people.