Millennium Challenge Corporation (MCC) Controversy in Nepal

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping developing countries to fight against poverty through economic development. Compacts are large, five-year grants for countries that pass MCC’s eligibility criteria.

The Millennium Challenge Corporation (MCC) is an independent U.S. foreign assistance agency that has the goal of reducing poverty in developing countries through supporting economic growth. Since its creation in 2004, MCC has supported development programs in 43 low- and lower-middle-income countries. MCC projects span many sectors of development, including global health.

During the recently concluded Standing Committee meeting of the ruling Nepal Communist Party, leaders appeared sharply divided over whether the federal parliament should ratify the United States’ Millennium Challenge Corporation’s Nepal Compact.

A section of party leaders strongly stood against parliamentary ratification of the compact, arguing that the MCC is part of Washington’s Indo-Pacific Strategy, which has military components that are aimed at countering China, a friendly neighbour.

They have opposed the compact’s requirement of House approval, as the compact says that it would prevail over Nepal’s existing laws in case of conflicts. (Source:

Facts Circulating Around

  • Nepal is one of the poorest countries in Asia (Says MCC).
  • MCC forms partnerships with some of the world’s poorest countries, but only those committed to good governance.
  • The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping developing countries to fight against poverty through economic development.
  • Compacts are large, five-year grants for countries that pass MCC’s eligibility criteria.
  • Threshold Programs are smaller grants awarded to countries that come close to passing these criteria and are firmly committed to improving their policy performance.
  • Nepal is the only country in South Asia that MCC provided fund. Sri Lanka is in the pipeline after Nepal.
  • MCC supports goes to construct about 300km 400 KV transmission lines from Lapsiphedi – Galchhi- Damauli – Sunawal corridor along with 3 substations and maintenance of about 300 km Roads in various alignment of Mechi, Koshi, Sagarmatha, Tribhuvan Rajpath and East west highway.
  • MCC will provides grant of USD 500 million and Nepal bears USD 130 million for this $630 million project where USD 500 million goes to Energy sector and $130 million goes to Roads sector.
  • Then joint-secretary Baikuntha Aryal and Jonathan Nash, acting chief executive officer of the MCC, in September 2017 signed an agreement in the presence of then-minister for finance Gyandera Bahadur Karki and US Deputy Secretary of State John J Sullivan in Washington.

Questions & Answers

  • What happens when the cost exceeds for the selected projects? So, in that case, the Office of MCC in Nepal will coordinate with other partners with that matter. So our question what are those and who are they?
  • MCC says that they do a partnership with the countries that are pooer. And help developing things are good governance, economic freedom and investing in their citizens? So this 5 years compact program for what? Tuition classes for the Nepali politicians?
  • The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004, applying a new philosophy toward foreign aid. It is an independent agency separate from the State Department and USAID. (So what is Bilateral aid agency?) – (having or relating to two sides; affecting both sides.) and this can be described differently in a different situation.
  • Is there any possibility of termination? (Yes) it is, country representatives can do more work on that.
  • Why this Signing is required in Nepal? (Development is real and required but can’t we proceed with the development without them?
  • What is the design of the MCC framework?
  • What are the possibilities of Planting US military bases in Nepal? If that is so why is that necessary in Nepal to do that project?

So What are the Selection Indicators or Eligibility Criteria for MCC?

Indicator Category Source
Civil liberties  Ruling justly Freedom House
Political rights Ruling justly Freedom House
Voice and accountability Ruling justly World Bank Institute
Government effectiveness  Ruling justly World Bank Institute
Rule of law Ruling justly World Bank Institute
Control of corruption Ruling justly World Bank Institute
Immunization rate Investing in people World Health Organization
Public expenditure on health Investing in people World Health Organization
Girls’ primary education completion rate Investing in people UNESCO
Public expenditure on primary education Investing in people UNESCO and national sources
Natural resource management Investing in people CIESIN/Yale
Inflation rate Economic freedom International Monetary Fund WEO
Trade policy Economic freedom Heritage Foundation
Land rights and access index Economic freedom IFAD / IFC
Regulatory quality  Economic freedom World Bank Institute
Fiscal policy  Economic freedom national sources, cross-checked with IMF WEO
Business start-up  Economic freedom IFC

So where MCC has impacted

MCC has invested more than $13 billion in compact and threshold programs worldwide that support country-led projects in areas like:

  • agriculture and irrigation
  • anti-corruption
  • education
  • energy and power (generation, distribution, and transmission)
  • finance and enterprise development
  • health
  • land rights and access to land
  • transportation infrastructure (roads, bridges, ports)
  • water supply and sanitation (Source:

So these are the things with MCC, that you need to know. What do you think about this signing? Is it good or is it bad? There are so many things circulating around. As per the goals, this looks amazing deal for the country like Nepal but if they can’t take the stand on they are capable to do it then this will be the same thing.

Your habit won’t change this way, you need to be strong and motivated to do things by yourself. Although this is a good deal still country should do a thing on their own by removing unnecessary things from the country.

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