US Withdraws $39M Aid for Nepal’s Key Development Projects

KATHMANDU: The US government has withdrawn $39 million (Rs 5.39 billion) in aid for Nepal's efforts to conserve biodiversity and implement fiscal federalism. The move affects Bangladesh, Serbia, Cambodia, and India, among other countries, and is part of a broader attempt to reduce millions of dollars in foreign aid in several areas.

The funding cuts were announced by the US Department of Government Efficiency (DOGE) on X, stating that Nepal would no longer receive $20 million for fiscal federalism and $19 million for biodiversity conservation. These funds were part of a larger aid package that also included $40 million for gender equality programs and $47 million for improving learning outcomes in Asia.

The measure is part of an examination of overseas initiatives funded by American taxpayers. Earlier, previous US President Donald Trump signed an executive order requiring an assessment of all U.S. aid programs funded by or through the U.S. State Department and the U.S. Agency for International Development (USAID). This study has caused numerous projects all across the world to be canceled or put on hold.

The funding cuts will also affect governance, democracy promotion, and social development initiatives in other nations. In addition to Nepal, millions of dollars have been removed from a number of development projects in Bangladesh, India, Cambodia, and Serbia.

Furthermore, the decision to discontinue these funds will have a significant negative impact on up to 300 NGOs, consultancies, and organizations that have been directly receiving aid from USAID. These organizations will experience funding difficulties that will affect their ongoing operations and projects for a minimum of three months.

The termination of funding for federalism and ecological projects in Nepal marks a change in the objectives set by US foreign aid. In as much as this ruling is expected to affect governance and conservation efforts in Nepal, the government alongside foreign partners might have to explore other sources of funding to sustain the projects.