Nepal’s MCC projects suspended following Trump executive order
KATHMANDU: In a significant setback for Nepal’s development agenda, projects under the U.S. aid agency Millennium Challenge Corporation (MCC) have been suspended for 90 days. The Ministry of Finance confirmed that the Nepal government received an email on February 14, 2025, alerting it to the suspension. The directive follows an executive order issued by then-US President Donald Trump on January 20, 2025.
The MCC projects were launched under an agreement signed between Nepal and the MCC on September 14, 2017. These projects were aimed at advancing infrastructure, education, and healthcare initiatives across the country. However, as stipulated by the recent executive order, all MCC-funded activities have been halted to prevent any further financial commitments or obligations.
The suspension is part of a broader U.S. policy review of foreign aid programs. In parallel, the U.S. government has already directed a 90-day suspension for projects under the United States Agency for International Development (USAID).
Following official correspondence from U.S. authorities, six ongoing USAID projects in Nepal have been cancelled. While the cancellation of USAID projects is definitive, the message regarding MCC emphasizes refraining from incurring any new obligations until further notice.
Officials suggest that the reasoning behind these measures is to reassess U.S. aid priorities and ensure that new commitments do not lead to long-term liabilities. The review comes amid broader geopolitical and fiscal considerations within the United States, prompting a temporary hold on international development engagements.
The suspension of MCC projects poses significant challenges for Nepal. Development initiatives critical to improving public infrastructure and social services are now in limbo, potentially affecting economic growth and overall progress. Local government representatives have expressed concerns over the delay, emphasizing that the interruption might slow down the pace of essential reforms and improvements.
In response, the Ministry of Finance has assured the public that efforts are underway to engage with alternative international partners and secure additional funding sources. As the situation continues to develop, stakeholders in Nepal and abroad await further clarification on the US policy shift, hoping for a prompt resolution that minimizes the impact on Nepal’s long-term development goals.
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