The Trump administration’s decision to halt foreign aid funding has begun to reveal its impact on Nepal, a country heavily reliant on international assistance for development and humanitarian efforts. U.S. Secretary of State Marco Rubio issued a directive suspending all foreign aid except for emergency food assistance and military aid to Israel and Egypt, triggering a ripple effect across nations, including Nepal.
Immediate Repercussions in Nepal
The United States Agency for International Development (USAID) and its partners have put numerous ongoing projects on hold. Programs in health, education, agriculture, water, and sanitation—sectors where USAID has been the leading donor—are among those affected. Additionally, pre-scheduled visits by U.S. officials have been canceled, leaving a cloud of uncertainty over future collaborations. USAID’s temporary suspension of activities for a minimum of 90 days has created anxiety among its partners and stakeholders.
The directive also halts new funding obligations and extensions of existing agreements, impacting flagship initiatives like PEPFAR (President’s Emergency Plan for AIDS Relief) and other key health and development programs in Nepal. Although salaries and administrative expenses are temporarily covered, the lack of operational funding has created significant challenges for organizations.
Impact on Nepal’s Development Goals
Nepal signed a five-year $658 million strategic partnership with USAID in 2022 to address pressing issues such as disaster resilience, democratic governance, and climate change. However, the suspension puts these commitments at risk. Nepal is ranked among the top 20 recipients of U.S. foreign aid, and the freeze could severely hinder progress in critical areas like public health, education, and disaster management.
One major project under scrutiny is the Millennium Challenge Corporation (MCC), a $697 million infrastructure and energy development initiative. Although initially considered exempt from the freeze, its future now seems ambiguous, with Nepalese officials unsure about its continuation under the revised U.S. foreign aid policy.
Broader Implications for Vulnerable Nations
The Trump administration’s executive order to review foreign assistance reflects a shift in U.S. policy priorities. This move, which aims to ensure alignment with U.S. interests, has drawn criticism from international organizations like Oxfam. They argue that the suspension could have “life-or-death” consequences for countries like Nepal, where external funding is vital for combating poverty, improving healthcare, and responding to natural disasters.
The pause on USAID’s operations has also raised concerns among Nepal’s NGO sector. According to the NGO Federation of Nepal, over 300 organizations rely on USAID funding, and many are now facing operational disruptions. Program evaluations over the next three months will determine whether funding resumes, but the current freeze delays critical progress.
Uncertain Future
The freeze reflects a broader trend of the Trump administration’s disengagement from multilateral agreements and global commitments, including the Paris Climate Accord and the World Health Organization. For Nepal, a least-developed country grappling with the challenges of climate change and economic recovery, the freeze underscores the fragility of aid-dependent development.
Nepal’s government and civil society must now navigate this uncertain landscape, seeking alternative funding sources and bolstering resilience to mitigate the impact of suspended aid. The situation remains fluid, and the coming months will be critical in determining the trajectory of Nepal’s development and its partnerships with the United States.
