Temporary Suspension of MCC Activities
The US Embassy in Nepal has announced that payments and activities under the Millennium Challenge Corporation (MCC) have been temporarily suspended. The suspension follows an executive order issued by US President Trump on January 20, 2025, which imposed a 90-day pause on certain activities. The embassy stated that it will discuss the next steps with the Government of Nepal once the review process is completed.
Reason for the Suspension
On Tuesday, the Ministry of Finance informed us that the MCC had sent an email on February 14, 2024, notifying us of the suspension of activities funded by the MCC under the Nepal Compact. This decision aligns with the 90-day pause mandated by President Trump’s executive order. The US Embassy clarified that the MCC is adhering to the executive orders issued by President Trump and the guidance provided by the Office of Management and Budget (OMB).
US Embassy’s Statement
In response to a query from Onlinekhabar, the US Embassy stated, “As part of this compliance, MCC-related activities, including payments, have been temporarily suspended following the executive order issued by President Trump on January 20, 2025. These activities are currently under review.” The embassy further added, “The US government remains committed to its partnership with Nepal and will discuss the next steps with the Government of Nepal once the review process is completed.”
Details of the Nepal Compact
The Nepal Compact, signed between the Government of Nepal and the MCC on September 14, 2017, includes projects such as constructing transmission lines, substations, and road improvements. Under the agreement, the MCC has committed to providing a grant of 500 million (approximately NPR77 billion at the current exchange rate), while the government of Nepal will contribute approximately 195 million (around NPR 27.3 billion).
Progress of MCC Projects in Nepal
The Millennium Challenge Account (MCA) Nepal, responsible for implementing the projects, has already signed contracts for three 400 kV substations and an 18-kilometer transmission line. However, following the MCC’s communication to halt activities that create financial obligations for 90 days, the Ministry of Finance has confirmed that all related activities have been paused accordingly.
What’s Next?
The US Embassy has assured that it will engage in discussions with the Government of Nepal to determine the way forward once the review process is completed. The temporary suspension has raised questions about the timeline and progress of the MCC-funded projects in Nepal, which are critical for the country’s infrastructure development.