9th February 2025, Kathmandu
USAID (United States Agency for International Development) has been running 35 major projects in Nepal, totaling approximately $87 billion (around NPR 6.5 billion), under agreements with the Nepal government since 2022.
USAID $87 Billion Nepal Aid Suspension
However, after a decision from the U.S. government, the future of these initiatives is now uncertain. USAID has suspended financial assistance for these programs for the next 90 days.
Impact of the US Government’s Decision
This halt in aid is part of a broader decision by U.S. President Donald Trump, who, in his second term, ordered cuts to global foreign aid programs. The suspension includes programs funded directly through Nepal’s budgetary system and those in partnership with development agencies.
USAID officially informed Nepal’s Ministry of Finance that grants for four key types of programs have been paused, affecting areas like health, agriculture, and education.
Programs Delayed or Stopped
Some projects have already been active since 2022, set to continue until 2027. These include those that are linked to Nepal’s budget system, which will likely continue. However, programs funded by USAID, especially those set to complete by 2024, will face significant delays. The total value of these paused initiatives includes a variety of sectors, such as health and agriculture, crucial for Nepal’s development goals.
Challenges Faced by Nepal’s Government
Although Nepal’s own government funds will not be directly impacted, the suspension of USAID programs poses significant challenges.
The country relies heavily on foreign assistance for its development, especially for projects that need external financial support. With the suspension, many projects may be delayed or even halted, as the government will struggle to fill the gap left by the freeze.
Legal Actions and Ambiguity About the Future
USAID’s shutdown has sparked legal debates regarding its legality. While some key projects will continue under the U.S. State Department’s control, such as those related to health and energy, the future of many programs remains unclear. The suspension has left many stakeholders uncertain about how future projects will be managed, with no clear plan yet to address this issue.
USAID’s Contribution to Nepal’s Development
Since its establishment in 1961, USAID has played a significant role in Nepal’s development, particularly in sectors like health, education, and infrastructure.
However, President Trump’s administration has been critical of USAID’s operations, raising concerns about inefficiency and corruption. The suspension of aid is part of a broader review of U.S. foreign assistance priorities.
As Nepal grapples with the suspension of these programs, the future of key development initiatives is now uncertain, and many crucial projects depend on foreign aid. The country faces an uphill battle in continuing its development plans without this critical support.
For more: USAID $87 Billion Nepal Aid Suspension