The US government has permitted select activities under the Millennium Challenge Corporation Nepal Compact to resume while its foreign assistance review is ongoing.

According to MCA-Nepal, the allowed work includes launching critical procurements and necessary operational activities. “This allowance does not indicate any specific outcome of the review,” MCA-Nepal said in a statement.

MCA-Nepal said it remains committed to transparency and is closely coordinating with the Millennium Challenge Corporation and the government of Nepal to ensure compliance while awaiting updates on the foreign assistance review from the Trump administration.

On February 18, the Ministry of Finance issued a statement stating that the MCC had notified the Nepal government that payments related to activities funded under the Nepal Compact were halted, in compliance with a 90-day freeze imposed by an executive order of the US President Donald Trump on January 20.

According to the ministry, an email from the MCC dated February 14, informed Nepal that ongoing projects under the compact would be affected by the payment suspension. Nepal had signed the MCC Compact on September 15, 2017, which was ratified by Parliament in February 2022.

The compact includes construction of a 315-km, 400kV transmission line and road upgrades. The MCC allocated $500 million for the projects, while the Nepal government committed an additional $197 million. A portion of the $500 million was earmarked for road upgrades. Recently, the MCC board had approved an additional $50 million for the compact.

Initially, the US government had only notified Nepal of the aid pause for USAID, not MCC. The US side insisted that Trump’s executive order was unlikely to impact the Nepal compact.