In a major setback for Nepal’s infrastructure development, the United States has suspended its $500 million Millennium Challenge Corporation (MCC) grant, putting key energy and road projects at risk.
The MCC compact was signed on sept 15 2017 and it was designed to improve Nepal’s power transmission and road network, critical for economic growth. The grant would have funded the construction of a 400 kV transmission line and highway upgrades, easing transportation bottlenecks and boosting electricity trade.
However, on February 14, Nepal’s Finance Ministry received official notice from Washington that the funds had been put on hold.
The MCC grant has been a hot topic in Nepal, with some people against it because they're worried about national sovereignty. Even with that, the agreement was approved by Nepal’s Parliament in 2022, and everyone thought the projects were going ahead.
Now, with the funds frozen, Nepal’s government has to figure out what to do next. With the 90-day hold on the funds, they’ll have to look for other ways to fund these projects and maybe try to smooth things over with the U.S. so the impact on their plans is less.
