The United States Assistance Mission (USAID), which has a 5-year strategic partnership of 79 billion 71 million rupees with the government of Nepal, has written to the Ministry of Finance, non-governmental organizations and non-profit companies and informed that all programs run on grants have been suspended for the time being.
With the executive order of US President Donald Trump, all the programs run with US grant support have been suspended in Nepal. The United States Assistance Mission (USAID), which has a 5-year strategic partnership with the Government of Nepal, has written to the Ministry of Finance, non-governmental organizations and non-profit companies and informed that all grant programs have been suspended for the time being.
USAID wrote a letter addressed to Dhaniram Sharma, head of International Financial Assistance Coordination Division of the Ministry of Finance on Saturday. In the letter, it is mentioned that all the programs (JTUG and contracted) which are being operated with the US grant have been suspended.
'Programs under the USAID/Nepal agreement, grants, cooperation agreements and other aid instruments have been immediately stopped/suspended,' the letter says, 'Programs in 4 sectors, including health, education, agriculture and inclusive policy, which are operated according to the USAID/Nepal agreement, have been immediately suspended. An official said that the grant has been suspended for 90 days for the implementation of President Trump's decision and what will happen after that.
In 2023, the United States provided 176 countries with financial support equal to 68 billion US dollars. Nepal is on the 16th place in the list of countries that the US provides aid to. In the five-year strategic agreement between the Ministry of Finance and USAID in 2022, it is mentioned that 659 million US dollars (79 billion 71 million rupees) will be received. Various programs are running under this grant.
Similarly, the Millennium Challenge Corporation (MCC) is a separate program. Although there was an agreement between the government and MCC on August 29, 074, the project was implemented from August 13, 2008. In the initial agreement, it is mentioned that the American government will spend 500 million dollars and the Nepal government will spend 197 million dollars in the 697 million dollars (about 92 billion) project.
Last December, the US government announced an additional 50 million dollars for the project. According to the officials of Nepal government, it is not clear whether MCC will be affected by the latest action of the US. It is not clear whether the projects under the Millennium Challenge Corporation (MCC) will be affected by the latest decision of the US government.
"MCC is a program that is run according to the broad interests of America, so it does not seem that Trump's latest decision will affect it," MCC Nepal source said, "There is no information about stopping the program until Sunday." However, there is a kind of confusion.'
USAID has also been mobilizing grants through NGOs/ INGOs, non-profit companies, etc. According to NGO Federation of Nepal, the umbrella organization of non-governmental organizations, USAID has already sent formal correspondence regarding the suspension of grant support for now.
'Referring to the decision of yesterday Saturday (January 25, 2025), a letter came to you today Sunday (January 26, 2025) to postpone the program. It has been asked not to do any program within 90 days, not to spend on transportation and other topics, not to contract even if the supplier company is chosen. But nothing has been said about the salary of the employees," said Federation President Ram Prasad Subedi, "This will affect our programs for at least three months. Subedi informed that the letter also mentions that the grant will be given/not given based on effectiveness after three months. Subedi also says that it is natural to look at the effectiveness of the investment of previous programs when the government of one party leaves and the new government of another party comes.
Although I do not think that the subsidy given to an underdeveloped country like Nepal will be completely stopped, it cannot be predicted. However, some can be stopped," he added, "this decision seems to affect the programs of more than 300 organizations."
As soon as Trump returned to the White House, it was decided to immediately suspend foreign development grants and it will be canceled after a 90-day review, according to the US Ministry of State. USAID has written a formal letter to all agencies in Nepal within 24 hours of the decision.
President Trump signed an executive order on foreign aid reassessment last Monday. Then, Secretary of State Marco Rubio instructed subordinate agencies to suspend the current foreign aid and new grant distribution.
"Until the review and approval of the proposed new aid or the existing grant, no new fund shall be committed for the extension of the existing grant or new grant," said the instruction given to the employees under the ministry.
It is mentioned in the directive that "since it is impossible for the US government to get all and sufficient information to determine whether or not foreign aid policies and interests are effective, all grants in accordance with President Trump's foreign policy have been suspended." The directive states that a comprehensive review of foreign aid will be conducted to ensure that it meets President Trump's foreign policy goals.
Earlier, Secretary of State Rubio said that US spending abroad should ensure that America is made "stronger, safer or more prosperous". Aid for emergency food aid and military funding to Israel and Egypt has not been withheld. The directive, which came at a time when there was a ceasefire between Israel and Hamas, is seen to make humanitarian aid in the Gaza Strip and the famine crisis in various countries, including Sudan, more dire.
