Nepal and US consider one-year extension for MCC compact implementation

Nepal and the United States are nearing an agreement to extend the Millennium Challenge Corporation (MCC) compact implementation period by up to one year to ensure project completion.

The proposed "no-cost extension" would allow projects to continue for an additional 12 months without increasing the overall budget, according to sources at the Ministry of Finance reported by OnlineKhabar. The current five-year timeline, which began when the compact entered into force on August 30, 2023, is presently set to conclude in August 2028.

The extension is being considered following several disruptions, including a U.S. review of foreign assistance after Donald Trump's return to the White House and delays caused by major floods in the Trishuli River. Finance Ministry sources told OnlineKhabar that both sides have reached an in-principle understanding to ensure the program is successfully implemented as an exemplary project.

Finance Minister Swarnim Wagle recently discussed the matter in the United States with Jason Small, the acting vice president of the MCC. While the Millennium Challenge Account Nepal (MCA-Nepal) has submitted an extension proposal to the Ministry of Finance, the ministry has not yet presented the request to the Cabinet for formal approval.

If the Cabinet decides to move forward, the MCC Board could consider Nepal's request during its scheduled meeting in December. OnlineKhabar noted that the U.S. fiscal year 2026 appropriations law already contains provisions allowing for a one-year extension for compacts with Nepal, Indonesia, Kosovo, and Senegal, subject to fund availability and congressional notification.

Background

The MCC compact entered into force on August 30, 2023, more than six years after Nepal and the United States originally signed the agreement. Under the standard terms of the compact, all projects must be completed within a strict five-year window.