Availability of MCC Grant Not Open-ended: United States

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Availability of MCC Grant Not Open-ended: United States

June 30: After further delay in the parliamentary ratification of the MCC Compact, the US Embassy in Kathmandu said that the United States cannot wait Nepal for a long time to decide on the fate of the agreement. Issuing a press statement on Monday, the embassy it is up to Nepal to decide to accept or reject the USD 500 million Millennium Challenge Corporation (MCC) grant.

‘The United States is aware that parliament has not yet ratified the MCC Compact.  Ratification is the next step needed to proceed with the USD 500M grant, which the two countries signed in September 2017 and which Nepal committed to ratify by September 2019.  Delaying ratification is delaying the benefits of more jobs and increased economic growth for nearly 23 million Nepalis.  Accepting this grant is Nepal’s choice but the availability of the funding is not open-ended.  Tangible, near-term steps in Nepal are necessary to ensure the continued viability of the programme,” the embassy stated.

With the parliamentary approval, the implementation (entry into force) of MCC agreement should have been started from today. However, due to a sharp polarisation within the ruling Nepal Communist Party (NCP) over the issue, the agreement has not been sanctioned by the parliament.

The statement has mentioned parliamentary ratification as an important factor to take the grant process ahead and that concrete steps are needed in Nepal to ensure the continuity of the project.

Moreover, the US also reminded the involvement of past governments and major political parties in bringing the MCC agreement to Nepal. “The government of Nepal and MCC have worked together continuously since 2012 under multiple governments, representing all major political parties, to develop the compact programme,” reads the statement.   

Finance Minister Dr Yuba Raj Khatiwada talked to US Ambassador to Nepal Randy Berry and MCC Resident Director for Nepal Troy Koforth last week in a bid to extend the deadline of MCC Compact implementation.

According to a source at the Ministry of Finance, the decision to extend the deadline has not been finalised yet. "Some technical issues need to be resolved but the proposal to extend the deadline will be prepared soon," a senior official at the ministry said.

Millennium Challenge Account (MCA) Nepal, which is implementing the projects under the agreement in Nepal, also issued a press release on Monday stating that the Nepal Compact implementation needs to be reconsidered due to the Covid-19 pandemic and delays in the parliamentary approval process.

"We are facing a situation where the implementation of the compact cannot start on the pre-determined date. All other preconditions, including parliamentary approval, need to be done as soon as possible to enter the compact's implementation date and take the programme forward,” the statement said.

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