KATHMANDU, FEBRUARY 6

The United States of America has given Nepal a deadline of February 28 to secure parliamentary ratification of the Millennium Challenge Corporation deal.

Acting Chief Executive Officer of MCC Mahmoud Bah wrote a letter to Prime Minister Sher Bahadur Deuba and his coalition partner CPN-Maoist Centre Chair Pushpa Kamal Dahal on February 3, warning that Nepal could lose $500 million MCC grant if it failed to endorse the deal by February 28. Copies of the letter written on behalf of Deuba and Dahal and MCC's reply to that were leaked to media outlets today.

Deuba and Dahal had written a joint letter to the MCC on September 19, asking the US government to give up to five months to secure the ratification of the deal.

In response, MCC wrote on February 3: 'Without action on your part by February 28, the MCC Board will discuss its next step at its March 2022 meeting, including whether to continue with the compact.'

In the absence of parliamentary ratification, it is within the board's authority to discontinue Nepal's eligibility to receive the $500 million from the United States grant under the MCC compact.

Such a decision will end MCC's partnership with Nepal, the MCC stated in its letter.

The MCC added that it believed that continuing with the compact was Nepal's sovereign choice.

Political forces in the country, including ruling coalition partners, remain divided over the deal, with Deuba wanting to ratify the deal and Dahal and CPN (Unified Socialist) Chairman Madhav Kumar Nepal wanting to amend the deal before its ratification.

The US has said that amendment to the MCC deal is not possible at this stage.

In the September 29 joint letter, Deuba and Dahal had said, 'Detailed discussions were held and we conveyed our commitment to ratification during the recent visit of Fatema Z Sumar, vice president, Compact Operations.

The newly formed coalition government is making all efforts possible to that end.'

They assured the US side of the government's interest in securing the MCC grant and implementing it for the economic development of Nepal. They said in up to five months, they would dispel misunderstanding and apprehensions surrounding the MCC compact.

They said they would jointly request the speaker to table the MCC deal in the House of Representatives.

A version of this article appears in the print on February 7, 2022, of The Himalayan Times.