KATHMANDU: As US President Donald Trump’s administration has paused United States Agency for International Development (USAID) funding for three months, a significant impact has already been seen in Nepal.

Nepal is already facing the shockwave as USAID has put all projects on hold and started terminating contracts. On February 16,

Elon Musk-led United States Government Department of Government Efficiency (DOGE) announced the termination of $20M for “fiscal federalism” in Nepal and $19M for “biodiversity conservation” in Nepal.

Trump’s order to freeze resources for foreign aid programs for 90 days has paralyzed all USAID-funded operations and activities of government projects and NGOs in Nepal.

Musk, heading his drive to shrink the federal government, is overseeing foreign projects and scrutiny in USAID, which is increasingly seen as a devastating problem for Nepal. A major revamp has already been seen that will shrink the workforce and align spending with Trump’s priorities.

Uncertainty still lingers regarding USAID and U.S. foreign aid, and it may take weeks to months for clarity. Here is everything you need to know about USAID in Nepal, the impact of the aid freeze, U.S. grants at risk, USAID support, the growth of USAID aid since 2022, Nepal’s efforts to address the USAID fund freeze, and the controversies surrounding U.S. aid in Nepal, among all possible scenarios.

What Impact Has Nepal Seen So Far from the USAID Freeze?

The recent freeze on USAID aid is already having a significant impact on Nepal, halting vital projects, disrupting essential financial support, and casting a shadow over the future of key development initiatives.

The suspension has forced USAID and its partners to put numerous ongoing programs on hold, leaving both government-led efforts and over 300 NGOs in a state of uncertainty. Additionally, the cancellation of pre-scheduled visits from U.S. officials has further complicated diplomatic relations and slowed critical developmental engagements.
The impact is particularly severe in sectors directly dependent on USAID’s funding, including health, agriculture, environment and education. The USAID Health Direct Financing Project, signed in April 2023 with a budget of $25 million, was designed to improve healthcare services by providing financial support to Nepal’s federal Ministry of Health and Population, the Ministry of Social Development in Karnali Province, and three local governments in the same region. Now, with funding frozen, essential healthcare improvements are in jeopardy.

Similarly, the USAID Agricultural Direct Financing Project, a $21 million initiative launched in September last year, was aimed at enhancing food security by helping 69,000 households adopt modern agricultural technologies. This government-to-government agreement was expected to transform farming practices across 53,000 hectares of land, but with the aid freeze, its future remains uncertain.

The education sector, too, faces setbacks. In March 2024, the U.S. had pledged up to $85 million over five years for the USAID Education Direct Financing Project, an initiative focused on expanding access to quality education for marginalized youth and early grade students. The freeze has cast doubt on the implementation of this program, which was intended to support Nepal’s broader goal of improving reading skills for all children by 2030 as outlined in the School Education Sector Plan (2021-2030).
The consequences extend beyond these flagship projects. The USAID-funded Integrated Nutrition Program, a five-year initiative launched in January with a $72 million budget, has also been affected. The program was designed to address malnutrition and improve infant health in a country where nearly 50,000 babies under the age of one die annually. With its funding on hold, critical services such as breastfeeding support and food safety initiatives have been disrupted. Another major setback comes with the suspension of the Early Grade Learning Program (EGLP), which was set to operate in 48 districts until 2028.

The freeze is already straining Nepal’s development sector, affecting over 300 NGOs, consultancies, and nonprofits that have long relied on USAID funding. Some international NGOs, including the Asian Foundation, have also paused their ongoing projects due to the uncertainty surrounding U.S. financial assistance.
With Nepal having received $411 million in USAID support in the last fiscal year alone, the government is now scrambling to find alternatives. The Ministry of Finance has begun internal discussions on securing funding from other donor agencies to fill the gaps, while also considering reallocating resources from non-essential sectors to sustain critical programs. However, without immediate intervention, the aid freeze threatens to stall progress in key areas, leaving thousands of Nepalese vulnerable to its consequences.

Will USAID Continue Funding Nepal, or Are U.S. Grants at Risk?

USAID funding to Nepal faces significant uncertainty under U.S. President Donald Trump’s administration. Many ongoing projects in Nepal do not align with Trump’s policy priorities, raising the possibility of permanent funding cuts. His administration views USAID as being misused by liberal groups and organizations linked to George Soros, alleging that funds have been directed toward communist, liberal, and LGBTIQ-related initiatives.

Trump has suspended all foreign aid, including congressionally appropriated assistance, disrupting thousands of non-profits, businesses, consultants, NGOs, and INGOs worldwide. This blanket suspension is expected to deeply impact Nepal, particularly projects emphasizing gender, equity, inclusion, and accessibility (GEIA)—principles that are at odds with Trump’s conservative agenda.
The 90-day executive order freezing foreign assistance has already halted USAID-supported projects in Nepal, with no clarity on future grants. Trump’s ‘America First’ policy has shaken recipient countries, and Nepal is no exception.

One pressing concern is whether Nepal’s 5-year Country Development Cooperation Strategy, set to end in 2025, will proceed as planned. If a new post-2025 strategy is formulated, it is highly unlikely that the Trump administration will support initiatives based on GDEI principles, which have traditionally been people-centered rather than political.
Many conservatives in Washington believe that USAID funds in Nepal have been misused, making it highly probable that most funding—except for a few major projects—will face severe cuts.

How much aid has USAID provided to Nepal?

Since 1951, USAID has provided $1.5 billion in aid to Nepal. In recent years, the funding breakdown includes $105.94 million for 2020-21 and $125 million for 2018-19. In 2022, USAID and Nepal signed a five-year Development Objective Agreement worth $659 million.

How Has USAID Aid Grown in Nepal Since 2022?

In May 2022, the Nepal government, through the Ministry of Finance, and the United States, through the USAID, signed a five-year Development Objective Agreement worth $659 million (NRs 79.71 billion).

This agreement outlines key areas of U.S.-Nepal cooperation, focusing on strengthening democratic governance, promoting enterprise-driven economic growth, and enhancing resilience in communities most vulnerable to natural disasters and climate change. The funding supports Nepal’s long-term goal of graduating to a middle-income country.

Partnering with the Nepal government, civil society, and the private sector, U.S. assistance is designed to drive sustainable development. The funds are transparently recorded in the Nepal government’s Red Book and implemented through both on- and off-treasury modalities. USAID collaborates with line ministries to develop and implement projects in accordance with Nepal government rules and regulations.

What Are the Remarkable and Memorable Accomplishments of USAID in Nepal?

USAID has been instrumental in shaping Nepal’s development trajectory, contributing to some of the country’s most dramatic and transformative successes. Its work began with critical infrastructure projects, such as laying Nepal’s first roads and installing the country’s first telephone exchange, which laid the foundation for modern connectivity and transportation.
In the health sector, USAID’s efforts stand out, particularly its role in combating malaria. The Malaria Control Program, initiated in 1954 (then under USOM), was a groundbreaking project aimed at controlling the disease, primarily in the Terai region. This initiative, followed by the launch of the National Malaria Eradication Program in 1958, nearly eradicated malaria from the country. These efforts transformed the Terai (Madesh), previously an uninhabitable region, into a fertile agricultural heartland that thrives to this day.

The agency’s impact extended to education and public health. USAID played a key role in increasing literacy rates across the country and drastically reducing child mortality through various health
programs. These achievements contributed to building a healthier and more educated society.

Nepal has achieved remarkable progress in reducing maternal mortality, significantly supported by USAID’s health initiatives. Its programs have reached over 90 percent of Nepal’s children with lifesaving vitamin A supplements, preventing thousands of deaths annually among children under the age of five.

USAID’s efforts to combat HIV, initiated in 1993, have been instrumental in supporting Nepal’s national HIV response. These initiatives have developed tailored programs for key populations and individuals living with HIV, contributing extensively to reducing the epidemic’s impact and improving lives.
USAID’s influence was also crucial during Nepal’s crisis and political transitions time also. The agency actively supported peace-building efforts and the establishment of democratic systems during turbulent times, ensuring a more stable governance structure. From capacity building to disaster response and agricultural development, USAID has left an indelible mark on Nepal.

Why Is Some USAID Funding in Nepal Controversial?

The controversy surrounding some of USAID’s funding in Nepal stems from a combination of political, social, and operational challenges. The Trump administration’s freeze on USAID aid created sudden turmoil in Nepal’s NGO sector, which has long relied on such funding as a lifeline. With operations suspended, many NGOs have faced financial crises, leading to layoffs, budget cuts, and pleas for donations or alternative funding from European, Scandinavian, Australian, and other donors. While USAID’s initiatives addressing poverty, health, hunger, and environmental protection are widely acknowledged as essential, the abrupt cessation of stable funding has triggered real humanitarian challenges in Nepal.
However, criticism has also emerged over USAID-funded programs perceived as having ambiguous or controversial purposes. Initiatives such as promoting “feminist foreign policy in Nepal,” LGBTIQ parade in Kathmandu, funding journalist in the name of the fact-checking, media funding though NGOs, and “developing democracy” have been seen by some as vehicles for societal discord. Additionally, wildlife conservation projects, including those protecting tigers and leopards, have drawn backlash due to attacks on locals near protected areas, further souring public sentiment.

USAID funding for NGOs has heavily focused on protected conservation and parks areas and the growing population of tigers and leopards, leading to significant controversy. Fatal tiger attacks have prompted Nepal to consider drastic measures, such as relocating or “giving away” these animals. Despite government efforts to manage their numbers, USAID-funded NGOs and organizations like WWF have lobbied against downsizing these wildlife populations. This lobbying has faced criticism as wild life growing attacks and killed on children, women, and other residents near protected areas continue, creating a deeply negative perception among affected communities and victims’ families.
Conservative groups and some of the Hindu leaders in Nepal accuse USAID of undermining social harmony, intensifying the debate about its role and objectives in the country in recent days.

Why Are NGOs and INGOs Unpopular and Controversial in Nepal?

Nepal’s aid-dependent system has fostered a parallel structure of NGOs and INGOs that often bypass the state, leading to widespread public skepticism. With over 120 INGOs and nearly 60,000 registered NGOs, these organizations have collectively spent about three trillion Nepali rupees in the past six years. However, their impact on the ground is widely criticized. While the elite often champion these organizations, the general public perceives them as ineffective and self-serving.

Criticism arises from several factors. A significant portion of the funds received—whether through multilateral, bilateral, embassy, or direct channels—lacks transparency and accountability. The Social Welfare Council, responsible for oversight, has become a hub of corruption, allowing mismanagement to flourish. Much of the funding is spent on administrative costs, lavish events in luxury hotels, and superficial programs, with little tangible progress in critical areas such as education and health. Ironically, these are the sectors where NGOs and INGOs channel the most funds, yet they remain some of Nepal’s most underdeveloped areas.

Many NGOs have become personal ventures, prioritizing individual or family gains over societal benefit. They are often accused of focusing on paper-based accomplishments rather than real-world impact. Their absence during crises, such as recent floods, has further fueled public anger. Social media users frequently question the whereabouts of these organizations during times of actual need.

Moreover, NGOs and INGOs have faced backlash for promoting agendas perceived as undermining Nepal’s social harmony and identity. Initiatives like religious conversions, secularism, feminist foreign policy debates in luxury settings, and LGBTIQ events are criticized for catering to foreign interests rather than addressing grassroots issues like poverty, education, and women’s empowerment.

The growing unpopularity of these organizations stems from their perceived disconnect from the needs of ordinary Nepalis. While they excel in spending millions on conferences, resorts, and glossy reports, their inability to deliver meaningful change has led to public demands for stricter regulation. Many Nepalis call for an end to foreign-funded programs that weaken the state, exploit societal vulnerabilities, or erode Nepal’s cultural and national identity.

What Can Be Gained from the End of USAID Funding, and How Can the Government Respond?

Nepal need not overly worry about the cessation of USAID funding except in core areas like health and critical sectors. The government should immediately reallocate its budget to cover the affected sectors, prioritizing public welfare in crucial areas. A comprehensive review of the lessons learned from decades of foreign aid dependence and the NGO-INGO nexus is essential to develop a sustainable and self-reliant development model.

The government must establish flexible policies to encourage private investment, mobilize Nepali diaspora contributions, and attract foreign investments in significant projects like hydropower, agriculture, and IT. It should also focus on halting the flow of “dirty money” through NGOs and INGOs and prioritize initiatives that promote long-term development, economic growth, and creative work instead of unnecessary debates and activities in luxury settings. Policies should be designed to ensure that wealthier corporations contribute to social welfare, such as mandating a percentage of profits for poverty alleviation.

To reduce foreign aid dependence, Nepal must create a business-friendly environment and foster self-sustaining development models. Privatization should focus on sectors with immense growth potential, accompanied by flexible policies that attract domestic and foreign investments. The government must focus on leveraging national resources for investment rather than seeking grants. Healthcare, especially in urban areas, must be made more accessible through innovative and locally sustainable approaches.

The disruption caused by USAID funding cutbacks highlights Nepal’s vulnerability to external decisions, which can trap the country in a cycle of dependency and some may use in manipulation. The affected NGOs must adapt by diversifying their operations and becoming self-reliant if their causes and work are truly impactful. This reliance on foreign aid has often led to misuse by powerful elites in Nepal for many decades, resulting in superficial solutions that fail to address grassroots needs.

Many NGOs prioritize profit and personal gains over genuine contributions to Nepal’s development, public well, culture, traditions, and societal needs. Expensive conferences, reports, and foreign technicians often consume aid money, leaving little for tangible development. Nepal must move away from imitating foreign models and instead embrace its own originality, focusing on indigenous solutions like local governance systems and community-based development and management approach.

Nepal’s development should be guided by its unique culture, traditions, and lifestyle, rather than relying on foreign-funded organizations that often fail to align with the country’s needs. Institutionalizing good governance, make attractive foreign and domestic investment, fostering prosperity, and prioritizing the nation’s originality can pave the way for a sustainable future. The government should reject dependency on foreign aid and NGOs, instead empowering Nepal to thrive through its own resources and initiatives. Only solutions rooted in Nepali soil and tailored to its people can ensure lasting progress.

Is George Soros’ Open Society Nepal Involved in USAID Funding? Impact, Allegations, and Controversies

There is no direct evidence of USAID funding Open Society Nepal. However, Open Society Foundations (OSF) has been actively funding various organizations, including media outlets and civil society groups in Nepal.

The Trump administration has expressed skepticism about potential links between USAID and the George Soros-founded Open Society Foundations. Soros, a vocal critic of Trump, has become a key target of conservative scrutiny, particularly amid the administration’s freeze on USAID funding.
USAID has provided $270 million to the East-West Management Institute, an organization that has partnered with Open Society Foundations. However, on February 12, 2025, Open Society denied receiving direct USAID funding or influencing the agency’s financial decisions.

While no official records confirm USAID funding for Open Society Nepal, some affiliated organizations have benefited. For example, the Anti-Corruption Action Centre, linked to Soros, has listed USAID as its largest donor, receiving 20.7% of its funding.

Active in Nepal since 2007—following the country’s decade-long Maoist insurgency—Open Society Foundations has supported initiatives in education reform, media, investigative journalism, human rights, and justice for conflict victims. The organization’s media investments and broader influence are now under heightened scrutiny by the new administration.

Many media outlets and organizations in Nepal have received Open Society funding for projects related to education, climate justice, community activism, and support for marginalized communities—many of which conflict with the Trump administration’s conservative policy agenda.

What Steps Is Nepal Taking to Address the USAID Fund Freeze?

The Nepal government remains hopeful about continuing USAID-funded projects, but securing these funds has become increasingly difficult. Many of Nepal’s projects do not align with former U.S. President Donald Trump’s foreign policy agenda or conservative priorities, leading to speculation that a significant portion of USAID funding may be permanently cut.
To mitigate the impact, the government is exploring alternative funding sources, though reallocating domestic resources remains a challenge due to limited financial capacity. Nepal has approached other donor agencies, but no immediate replacement for USAID’s financial assistance has been secured.
In response to USAID’s 90-day funding freeze, Nepal’s Finance Ministry has instructed project-implementing partners to halt certain USAID-funded projects under the May 2022 Development Objective Agreement, affecting multiple sectors. The government is closely monitoring developments and assessing potential long-term impacts, but no clear alternative funding solution has emerged.

Meanwhile, Nepal faces a deepening budget crisis, recently halting NPR 13.55 billion worth of development projects due to financial constraints. Finance Minister Bishnu Poudel has canceled old contracts, frozen 25% of remaining government funds, and ordered ministries to cut non-essential spending.
Nepal’s economic struggles predate the COVID-19 pandemic, with persistent issues like low growth, high unemployment, a balance of payments deficit, a ballooning trade deficit, and rising inflation. With foreign aid and grants crucial for Nepal’s economy, the USAID freeze has only intensified existing financial pressures.

How was USAID formed?

USAID was created on November 3, 1961, by President John F. Kennedy through an executive order following the passage of the Foreign Assistance Act on September 4, 1961. This act reorganized U.S. foreign aid programs and consolidated multiple agencies into one to oversee economic assistance and international development efforts.

What is USAID, and what does it do?

USAID, an independent U.S. government agency responsible for administering civilian foreign aid and development assistance. It funds programs in global health, education, economic development, disaster relief, and governance. USAID funds programs related to disease prevention, food security, small business financing, disaster relief, human rights, independent media, free elections, and governance reforms.

How much foreign aid does the U.S. provide, and what is USAID’s share?

In the 2023 fiscal year, the U.S. disbursed $72 billion in foreign aid, with USAID overseeing around $43.79 billion—about 60% of total U.S. foreign assistance.

Which countries receive the most U.S. aid?

Top recipients of U.S. aid in 2023 included Ukraine, Ethiopia, Jordan, the Democratic Republic of Congo, Somalia, Yemen, Afghanistan, Nigeria, South Sudan, Syria, Nepal, Uganda among others.

Why did President Trump pause most U.S. foreign aid?

On January 20, 2025, President Trump issued an executive order implementing a 90-day pause on most foreign aid, arguing that such programs destabilize world peace by promoting ideas contrary to U.S. interests.

What impact does Trump’s foreign aid freeze have on USAID?

Trump’s near-total freeze on foreign aid includes plans to reduce USAID’s workforce from 10,000 to just 300. Ongoing legal and political battles are being fought to save the agency, but its survival in its previous form appears unlikely.

Why do conservatives oppose USAID?

Many conservatives view USAID as promoting a globalist and liberal agenda, opposing its work in areas such as birth control, LGBTIQ+ rights, women’s empowerment, secularism, and climate change. Trump’s administration favors shifting foreign aid control to the State Department.

Is USAID Facing Permanent Closure?

Yes, the United States Agency for International Development (USAID) may be on the verge of permanent closure as the Trump administration signals a drastic shift in its foreign policy approach. President Trump’s agenda is fundamentally different from the current scale and scope of USAID’s operations.

Trump has criticized the agency, calling it radical lunatics,” while Elon Musk, head of the Department of Government Efficiency (DOGE), has labeled USAID “a criminal organization.”

The Trump administration’s recent actions suggest a move toward permanently dismantling USAID as an independent entity unless the courts intervene. However, even if a court ruling prevents its immediate dissolution, the administration may continue to defund the agency and render it nonfunctional. There is also speculation that a new agency could be formed to align with the administration’s priorities, allowing Trump to make his own appointments and set new policies.

Amid efforts by Trump and Musk to reshape the U.S. government, USAID has become a primary target. Their push to dismantle or weaken the agency is already having a profound impact on the global scale in all sectors.

Although USAID accounts for less than 1% of the federal budget, the U.S. provides approximately $72 billion in aid to 180 countries. While USAID has faced criticism in the past, it has also played a crucial role in addressing global challenges such as pandemics, public health crises, starvation, HIV/AIDS treatment, child education, anti-corruption initiatives, refugee resettlement, and the fight against child sex trafficking. Its potential closure raises serious concerns about the future of international aid and humanitarian efforts worldwide.

What is the future of USAID under the Trump administration?

With Trump’s focus on an “America First” foreign policy, USAID faces significant cuts and restructuring. The agency’s future remains uncertain, as legal and political battles continue over its funding and operations.