USAID's Rs. 18 billion grant to be disbursed soon

Kathmandu, Apr. 16

After about one-and-a-half months of the ratification of the Millennium Challenge Corporation (MCC)'s grant assistance, the United States of America has decided to provide US$ 659 million (Rs. 79.71 billion) grant support to Nepal for development programmes identified by the latter.

Cabinet had decided to accept the support on Wednesday.

The development assistance will be provided to Nepal through the USAID over five-year period, and Rs. 18 billion of it will be disbursed immediately. According to the Ministry of Finance (MoF), a meeting will be held within a week to release the money.

This is the largest ever grant support extended to Nepal by the USAID. "It is the largest grant support provided to Nepal by any donor agency. Nepal had obtained a large-scale loan support prior to this," said Ishwori Prasad Aryal, Chief of the International Economic Cooperation Coordination Division at the MoF.

This support marks a significant shift in Nepal-USA cooperation as the grant will be mentioned in the annual budget of Nepal and the financial activities will be audited by the Auditor General here.

So far, the US grant support has been mobilised by the USAID in the areas prioritised by it. "This is a framework agreement and we will jointly select the programmes primarily in the social sectors like education, health, disaster management and utilisation of natural resources," said Aryal. Infrastructure development in these areas could also be developed through the grant, he added.

According to him, the details of programmes and implementation modalities are being finalised and the MoF will soon publish it.

Representatives of Nepal government and USAID had rigorous discussions for about eight months to finalise the modality of the framework of the support.

The support will be provided to Nepal from 2022 to 2027. Meanwhile, the MoF said that the USAID could increase the support and make it US$1 billion.

In 2019/20, the USA had provided about Rs. 15.5 billion support to Nepal. Earlier in February, Nepal had ratified the US$ 500 million MCC grant for Nepal Compact that would be mobilised in the development of cross-border transmission lines and upgrading of national highways.

The MCC is a five-year grant and in case of inability to spend it, the remaining support would be returned to the USA.

According to USAID's Country Development Cooperation Strategy 2020-2025, it will make significant investments to increase self-reliance, prosperity, and inclusiveness that will advance Nepal's development trajectory and allow it to make impressive development gains.

It includes building capacity and institutions necessary the journey to self-reliance, and advancing federalism, democracy and human capacity. 

Published in The Rising Nepal daily on 17 April 2022.