The US government has communicated its blanket decision to put on hold US-funded Millennium Challenge Corporation (MCC) projects for 90 days.

In an email sent to Nepal's Ministry of Finance on February 14, the Washington DC-based MCC Headquarter said the projects under the US-funded 'Millennium Challenge Corporation' (MCC) in Nepal have been temporarily suspended.

The Ministry of Finance (MoF) made public the US correspondence on Tuesday, stating that they had received a letter asking to temporarily halt the implementation of MCC-funded projects. The Government of Nepal had signed an agreement with the US government authorities on 14 September, 2017 to implement the MCC project.

In its press statement, the MoF has stated that all the payments related to the MCC have been suspended for 90 days as per the executive order of US President Donald Trump dated January 20, 2025.

Shyam Prasad Bhandari, spokesperson for the MoF, confirmed that the MCC fund has been suspended for now. According to him, the MCC authority sent an email to the International Economic Cooperation Coordination Division of the MoF in this regard. "While we are aware of this temporary measure, further policy details regarding the MCC are still unknown," he said.

With the decision of the US government, the MoF had earlier instructed project-implementing partners to halt the implementation of certain USAID-funded projects for 90 days. At least four major government-implemented projects in partnership with USAID—focused on health ($25 million), agriculture ($21 million), education ($85 million) and inclusive policy—have been temporarily stalled, disrupting initiatives to improve health outcomes, boost food security and expand quality education.

On Sunday, the US government further cancelled $39 million in aid allocated for Nepal’s federalism and biodiversity conservation projects. In addition, funding for around 300 NGOs, consultancies and nonprofits has already been frozen, affecting diverse sectors in Nepal.

Although the MoF officials have been reiterating that the US government’s new move might not affect the MCC related projects, the recent decision has raised the possibility of reviewing the MCC by the US government. The MCC has mainly focused on constructing high-powered transmission lines and maintenance of a section of road under East-West Highway.

On August 31, 2023, the Government of Nepal (GoN) and the US-funded MCC officially launched the MCC Nepal Compact Program, a program jointly funded by the GoN and the US government. The program is co-funded by the US Government’s grant of USD 500 million and the GoN’s contribution of USD 197 million.

By Rajesh Khanal