The following excerpt is from an op-ed written by Rishi Gupta, Assistant Director at the Asia Society Policy Institute in New Delhi, and published in The Print.

The U.S. has suspended its development assistance to Nepal under the Millennium Challenge Corporation. This comes in the backdrop of President Donald Trump’s executive order, ‘Reevaluating and Realigning United States Foreign Aid’, on 20 January 2025—the first day of his second term in office. 

Under the MCC programmes, the U.S. had agreed to provide aid for constructing “approximately 300 kilometres of high voltage power lines, equivalent to one-third the length of Nepal, including a link to the Indian border to facilitate electricity trade”, and improving road infrastructure in the Himalayan nation. 

While Nepal’s Ministry of Finance—the nodal agency that manages funds received under the MCC—has reportedly confirmed that funds from the U.S. have been halted, the U.S. Embassy in Nepal is also reported to have said that “as part of this compliance, MCC-related activities, including disbursements, have been temporarily paused in accordance with the executive order issued by President Trump on January 20, 2025, and are under review.” 

In 2017, the U.S. government’s MCC signed a $500 million compact with Nepal. From the beginning, the deal had run into political hiccups, delaying its ratification in the Nepali Parliament by five years. The compact was finally ratified in 2022 after a political upheaval within the ruling alliance—the Nepali Congress, the Communist Party of Nepal-Maoist Centre (CPN-MC)—and opposition from other parties sitting on the other side of the aisle. But there was equal pressure from the country’s northern neighbour, China, which advised Nepal against it. 

Read the full op-ed here.