Kathmandu – The United States has suspended the Millennium Challenge Corporation (MCC) program in Nepal, according to the Ministry of Finance. Ministry spokespersons confirmed that the decision was taken after MCC officials notified them via email about the program’s suspension.

Impact of Trump Administration’s Policy?
The suspension comes amid U.S. President Donald Trump’s aggressive budget-cutting policy, which had already led to the shutdown of USAID programs in various countries. Though MCC was not initially mentioned in these cuts, its suspension in Nepal has raised concerns about its future.

MCC’s Infrastructure Investments in Nepal
The MCC compact in Nepal aimed to improve infrastructure, particularly in energy and road development. The agreement allocated $500 million from the U.S. and $197 million from Nepal to construct 300 km of electricity transmission lines, substations, and upgrade 77 km of roads.

Despite its ambitious goals, recent reports have revealed that only 0.5% of the allocated budget has been spent in the current fiscal year.

A Deal Marked by Controversy
Nepal signed the MCC compact in 2017, but it remained a highly controversial issue. Leftist parties strongly opposed it, claiming it was part of the U.S. Indo-Pacific Strategy and could undermine Nepal’s sovereignty.

The agreement was finally ratified by Nepal’s parliament on February 27, 2022, with a 12-point interpretative declaration clarifying that it was purely a developmental aid package. Implementation began only a year and a half ago.

A Strategic U.S.-China Battle?
The MCC compact became a geopolitical flashpoint, with China accusing Washington of imposing the deal on Nepal. Beijing has consistently criticized the agreement, viewing it as a U.S. effort to curb Chinese influence in Nepal.

After Nepal’s parliamentary approval of the MCC in 2022 under the Sher Bahadur Deuba-led government, U.S. strategic interest in countering Chinese influence in Nepal became more apparent.

Now, with the Trump administration’s shifting foreign aid priorities, the suspension of MCC raises more questions than answers. Will Nepal lose the largest U.S. grant in its history? Or is this just a temporary setback? The uncertainty continues.

U.S. Suspends MCC in Nepal