The government has started the ground work to expedite projects under the Millennium Challenge Corporation (MCC) by allocating necessary funds in the annual budget for the next fiscal year.

At a time when the temporary suspension of US funding has cast uncertainty over the successful implementation of projects under the MCC Compact in Nepal, the Ministry of Finance (MoF) has been considering giving continuity to these projects by mobilizing financial resources on its own. An official at the MoF said the ministry has started discussion with stakeholders including other donor agencies to manage necessary funds for this purpose.

By sending an email to the MoF on February 14, the Washington DC-based MCC Headquarters said the projects under the US-funded 'Millennium Challenge Corporation' (MCC) in Nepal have been suspended for 90 days. The projects have been suspended temporarily as per the executive order of US President Donald Trump dated January 20, 2025.

Initially, it was agreed that USD 500 million shall be provided in grants to Nepal while the government was supposed to bear USD 130. Just in January 2025, the MCC Board of Directors approved an additional $50 million citing an increased cost in funding for the Nepal Compact, bringing the total value to $747 million.

Nepal and the United States signed the MCC Compact on September 14, 2017. The Compact came into force on August 30, 2023. The Compact aims to increase domestic electricity consumption by improving the availability and reliability of electricity in Nepal's grid, expand and strengthen Nepal's high-voltage electricity transmission network to support new hydropower investments, and facilitate increased power trade between Nepal and India.

Additionally, the Compact aims to maintain road quality across Nepal's strategic road network through the Road Maintenance Project. However, the decision of the US government to suspend MCC has cast uncertainty over these projects.

The government is expected to take projects to completion through budgetary programs. Abiding by the budget ceiling of Rs 1.9 trillion set by the National Planning Commission (NPC), the government has started drafting the budget for the upcoming fiscal year 2025/26.

The MoF has assigned the responsibility of coordinating the budget writing to Shree Krishna Nepal, head of the Budget Division. The members include Head of the Foreign Division Dhani Ram Sharma, Head of the Revenue Division Uttar Kumar Khatri, Head of the Administration Division Than Prasad Pangeni, Deputy Director General of the Inland Revenue Department (IRD) Tirtha Chiluwal, and Joint Controller General Sushila Aryal.