USAID programs in Nepal suspended following US President Trump’s executive order

KATHMANDU: With U.S. President Donald Trump’s recent executive order, all programs in Nepal funded by American grants have been suspended. The United States Agency for International Development (USAID), which has a five-year strategic partnership with the Government of Nepal, informed the Ministry of Finance, NGOs, and non-profit organizations about the suspension of all grant-funded programs until further notice.

On Saturday, USAID addressed a letter to Dhaniram Sharma, the head of the International Economic Cooperation Coordination Division of the Ministry of Finance, stating that all programs under U.S. grants (both government-to-government and agreement-based) have been temporarily halted.

The letter detailed that programs under USAID Nepal’s grants, cooperative agreements, and other assistance frameworks—covering critical areas such as health, education, agriculture, and inclusive policies—have been immediately suspended. According to a ministry official, the suspension is for an initial 90-day period, after which further decisions will be made.

In 2023, the United States provided $68 billion in financial aid to 176 countries, with Nepal ranked 16th on the recipient list. Under a 2022 five-year strategic agreement between the Ministry of Finance and USAID, Nepal was set to receive $659 million (NPR 79.71 billion) in grants for various programs.

MCC Projects: Uncertainty Prevails

The Millennium Challenge Corporation (MCC), a separate initiative, is currently under implementation. Despite the 2017 agreement between the Government of Nepal and MCC, the project began execution on August 30, 2023. With a total budget of $697 million (NPR 92 billion), the U.S. contributes $500 million while the Nepal government provides $197 million.

Although the U.S. announced an additional $50 million for MCC in December 2024, Nepalese officials remain uncertain about whether President Trump’s decision will impact MCC projects. An MCC Nepal representative stated that as the program aligns with broader U.S. interests, it is unlikely to face suspension.

USAID’s Suspension Affects Over 300 Organizations

USAID operates through NGOs, INGOs, and non-profit organizations. The NGO Federation of Nepal confirmed receiving an official notice of the suspension on Sunday, January 26, 2025. The letter instructed organizations to halt programs, refrain from transportation-related expenditures, and avoid entering new agreements with suppliers for 90 days. However, it did not address employee salaries.

Federation President Ram Prasad Subedi mentioned that the suspension would directly impact programs for at least three months but left room for possible continuation of grants afterward. The letter also noted that decisions on future funding would be based on performance evaluations after the suspension period.

Subedi expressed concern that over 300 organizations in Nepal would be affected, noting, “While it is unlikely that aid to a least-developed country like Nepal would be fully stopped, certain projects might face discontinuation.”

Trump Administration’s Foreign Aid Policy

The U.S. Department of State announced that the decision to suspend foreign development aid was made immediately after President Trump signed the executive order for foreign aid reassessment on January 22, 2025. Secretary of State Marco Rubio directed agencies to halt new and existing grant disbursements until a comprehensive review is conducted.

The directive states that no new funds will be allocated until existing grants and proposed aid programs are reviewed and approved. It emphasizes ensuring that foreign aid aligns with President Trump’s foreign policy goals and serves the U.S.’s strategic interests.

Humanitarian aid, including emergency food assistance and military funding for Israel and Egypt, remains unaffected by the suspension. However, the decision has raised concerns about worsening crises in regions like Gaza, Sudan, and others facing famine and humanitarian challenges.