In a significant setback to Nepal’s development initiatives, the United States has officially terminated 34 USAID-funded projects worth approximately $329 million (Rs46.12 billion). According to multiple media reports from the U.S., this decision follows a global review of USAID funding by the Trump administration.
The move affects various sectors, including healthcare, agriculture, education, and disaster risk reduction. Additionally, the reimbursement and procurement process for the $500 million Millennium Challenge Corporation (MCC) Nepal Compact has also been disrupted. The MCC, a key U.S.-funded initiative, was set to invest in Nepal’s infrastructure, with the Nepali government contributing $197 million.
Major Projects and Programs Affected
Among the projects terminated are crucial initiatives such as:
Healthcare:
USAID Health Direct Financing Project, HIV prevention, and maternal and child nutrition programs.
Agriculture:
USAID Agricultural Direct Financing Project and climate-smart farming initiatives.
Education:
USAID Education Direct Financing Project and efforts to expand access to education.
Disaster Risk Reduction:
Earthquake hazard risk assessment and air pollution control programs.
Social Welfare:
USAID Inclusive Policy Direct Financing Project and gender-based violence prevention efforts.
According to sources, 83% of USAID projects globally have been cut, with only a few remaining under State Department oversight. The impact extends beyond government-funded programs, affecting around 300 non-governmental organizations (NGOs), consultancies, and nonprofits in Nepal.
U.S. Government Justification and Legal Challenges
On March 11, U.S. Secretary of State Marco Rubio announced the sweeping cuts, citing inefficiency in foreign aid spending. He credited the Department of Government Efficiency (DOGE), a new administrative arm established by former President Donald Trump, for conducting the review.
“The 5,200 contracts that are now canceled spent tens of billions of dollars in ways that did not serve, and in some cases harmed, the core national interests of the United States,” Rubio stated on social media platform X (formerly Twitter).
However, a federal judge, Amir H. Ali, ruled that the administration overstepped its authority in freezing foreign aid funds allocated by Congress. The ruling casts uncertainty over the future of these terminations and may lead to legal challenges against the decision.
Background on Nepal’s USAID Partnership
The U.S. and Nepal have maintained a longstanding development partnership. In 2022, USAID signed a five-year Development Objective Agreement (DOGA) with Nepal, committing $659 million in aid. Many projects under this agreement were already in progress or about to launch when the termination was announced.
Nepal’s Finance Ministry confirmed on January 26 that four major USAID-funded projects had been put on hold. Officials expressed concerns over the sudden halt, particularly regarding health and education programs that directly benefit vulnerable communities.
Nepal’s Development at Crossroads
With the loss of USAID funding, Nepal faces significant challenges in sustaining ongoing initiatives. The sudden termination of projects supporting earthquake recovery, health services, and education could slow progress in critical sectors.
The situation remains fluid, with possible negotiations or legal interventions that may alter the outcome. The Nepalese government is expected to explore alternative funding sources and diplomatic channels to mitigate the impact of these cuts.
For more updates on Nepal’s development and international relations, visit Nepal Monitor.
