The United States will resume its funding for two major infrastructure projects in Nepal that were earlier put on hold after President Donald Trump suspended all foreign development assistance, authorities said on Monday.

U.S. government aid agency the Millennium Challenge Corporation agreed in 2017 to provide $500 million to fund a power transmission line and road improvement project in the Himalayan nation, one of the world's poorest countries.

But the projects were put on hold after Trump in January ordered a 90-day pause in foreign development assistance on the day he returned to the White House, pending a review of its efficiency and consistency with U.S. foreign policy.

A statement from Nepal's finance ministry said the U.S. government had completed the review of the assistance under the MCC Nepal Compact for these projects.

"Information has been received that the implementation of the MCC Nepal Compact has been recommended," the statement said without providing details.

The transmission line was meant to promote power trade between Nepal and neighbouring India.

The U.S. embassy in Nepal confirmed the development in a post on its official X handle, adding that the project "supports prosperity and regional energy security by building electricity transmission infrastructure and improving the road network".

The finance ministry made no reference to seven other projects in the field of education, health, agriculture and statistics that were also funded by the U.S. Agency for International Development (USAID) and were stalled in February.

The funding cuts by the Trump administration have effectively shut down USAID, leading to the firing of thousands of its employees and contractors.

The MCC grant sparked street protests in 2022, with Nepal's opposition parties saying it would undermine sovereignty as Kathmandu would not have sufficient control over the projects.

By Gopal Sharma