The MCC project in Nepal has been “temporarily” halted

The United States government has announced its decision to halt all projects sponsored by the Millennium Challenge Corporation (MCC) for a period of ninety days.

On February 14, the Washington, DC-based MCC Headquarters emailed Nepal’s Ministry of Finance to inform them that the US-funded “Millennium Challenge Corporation” (MCC) projects in Nepal had been temporarily halted.

The US correspondence was made public by the Ministry of Finance (MoF) on Tuesday, when they said that they had received a letter requesting a temporary halt to the implementation of projects funded by the MCC. On September 14, 2017, the US government and the Nepali government inked an agreement to carry out the MCC project.

According to the MoF’s press release, all MCC payments have been halted for ninety days in accordance with US President Donald Trump’s executive order dated January 20, 2025.

The MCC money has been temporarily halted, according to MoF spokesperson Shyam Prasad Bhandari. He claimed that in this respect, the MCC authority emailed the MoF’s International Economic Cooperation Coordination Division. “Although we are aware of this short-term action, we do not yet know any other policy information pertaining to the MCC,” he stated.

The MoF had previously directed project-implementing partners to suspend the execution of specific USAID-funded projects for ninety days in accordance with the US government’s decision. Initiatives to enhance health outcomes, increase food security, and broaden high-quality education have been hampered by the temporary halt of at least four significant government-implemented projects in collaboration with USAID. These projects are focused on health ($25 million), agriculture ($21 million), education ($85 million), and inclusive policy.

The US administration also canceled $39 million in aid for Nepal’s federalism and environmental conservation initiatives on Sunday. Furthermore, funding for some 300 nonprofits, consultancies, and NGOs has already been suspended, impacting a variety of Nepali industries.

Even though MoF officials have repeatedly stated that the US government’s recent action may not have an impact on projects related to the MCC, the latest decision has increased the likelihood that the US government will review the MCC. Building powerful transmission lines and maintaining a portion of the East-West Highway have been the MCC’s primary priorities.

The MCC Nepal Compact Program, which is jointly supported by the US government and the Government of Nepal (GoN), was formally launched on August 31, 2023. The GoN has contributed USD 197 million while the US Government has granted USD 500 million to the program.