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US issues clarification on MCC ahead of its officials’ visit to Nepal

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In response to the letter of the Nepal finance minister seeking clarifications on provisions of MCC, Fatema Z Sumar, vice-president of the Department of Compact Operations in letter clarified that the Constitution of Nepal prevails over the MCC compact. 

In its 13-page response, MCC has clarified all questions asked by the Nepal Government and outlined that the MCC’s mission is to reduce poverty through economic growth in Nepal. 

It is a US aid project of $630 million, where MCC will provide a grant of $500 million and Nepal will bear $130 million.

$500 million goes to the energy sector and $130 million goes to the roads sector. 

Also read | Nepal Parliament to begin new session today, MCC on agenda

Responding to the most asked question on the relation of MCC and military alliance, Sumar said “the US law that governs MCC prohibits MCC from using funding for any military purpose; the compact is explicit about this legal prohibition. Therefore, there is no connection between the MCC Nepal Compact and any military alliance or defense strategy.”

Responding to a question if projects were selected under the US team’s priorities, “All projects funded by the MCC Nepal Compact were selected by the Government of Nepal, in consultation with Nepal’s private sector and civil society, as projects that are important for Nepal’s own economic growth.”

Nepal also questioned the need for parliamentary ratification of MCC to which the MCC said Nepal’s Ministry of Law, Justice and Parliamentary Affairs, concluded that, under Nepali law, parliamentary ratification is required for the compact to be such an international agreement.

Most importantly, the letter said that “The signed MCC Nepal Compact cannot be amended at this time.” 

The letter also sheds light on the controversy that has been making if MCC is part of the Indo-Pacific Strategy, “The MCC Nepal Compact is not an agreement under the Indo-Pacific Strategy. MCC compacts are agreements between MCC and the partner government.

The strong relationship between the United States and Nepal long pre-dates the Indo-Pacific Strategy.”

Nepal also addressed the need to clarify that if accepting MCC will impact the agreement that Nepal has reached with China’s BRI.  

“The MCC Nepal Compact does not affect or limit Nepal’s sovereign right to sign assistance or investment agreements with any other countries,” Sumar said in response. 

Sumar said the project that will benefit 23 million Nepalis has ‘no hidden agenda’ and that ‘there has been an increase of false and misleading statements about MCC’. 

The vice president is scheduled to arrive in Nepal on Thursday and is expected to meet Prime Minister Sher Bahadur Deuba and other political party alliance leaders in Kathmandu. 



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