Trump shock wave hits Nepal

President Donald Trump has reversed climate action, vaccine funding and research and in a move that directly impacts Nepal, cut US funding for gender rights and reproductive health. 

Pulling out of the Paris climate accord and increasing fossil energy production and use will further accelerate melting of Himalayan glaciers threatening food production and increasing flood risk.

But a more direct and immediate impact will be the life or death of mothers, infants and cluster — reversing Nepal’s dramatic gains in reducing maternal and infant mortality rates.

Kul Chandra Gautam, former UN Assistant Secretary-General and Deputy Executive Director of UNICEF took to X:  ‘Trump and the world’s richest man Elon Musk were mercilessly gutting an agency helping the world's poorest’.

He added: ‘It's a reminder of Stalin's great purges when thousands of staff R fired, official website abruptly disabled & humanitarian & development aid to world's poorest halted at a whim … (Trump and Musk) are mercilessly gutting an agency helping the world's poorest.’

The US Agency for International Development (USAID) is defunct and the staff and contractors suspended worldwide. The official website of USAID Nepal is inaccessible and it has placed its staff on indefinite leave.

Many organisations working in the social, environment and free media space have been severely impacted with officers working from home until further notice. 

Read also: How USAID cut affects Nepal, Kishor Pradhan

USAID was one of the biggest benefactors for women and gender rights activities in Nepal, and is understood to have spent $151.1 million in the country in just 2024.

Since 2000, USAID has delivered Rs196 billion to support development projects in Nepal. Of this over $1.5 billion was allocated across multiple sectors such as empowerment of women and children, humanitarian aid, health, education.

At the 2024 Nepal Investment Summit, the DFC, the U.S. International Development Finance Corporation, committed more than $270 million in projects across the country to support various economic initiatives as well as the marginalised and women. USAID and Nepal in 2022 signed a five-year Development Objective Agreement worth $659 million.

While much of the funding was spent on staff salaries and other administrative costs, it was still crucial support for fieldwork. Experts interviewed for this report did not want to be quoted by name, but said they were concerned that the fund freeze could seriously undermine Nepal's development trajectory.

The four key programs of the USAID in Nepal relate to improving women’s health, supporting women farmers, expanding access to quality education for marginalised youth including girls and directly financing projects promoting gender equality and women empowerment.

Given that America was also funding agencies like the Global Alliance for Vaccines and Immunisation (GAVI), WHO, and UNICEF, Nepal’s successful immunisation, maternal and child health, healthcare systems and nutrition programs will also be indirectly hit.

The 2022 Demographic and Health Survey of Nepal records 21 neonatal deaths for every 1,000 live births, highlighting continued challenges in maternal and infant health. USAID had in response allocated $72 million to reduce mortality rates and enhance overall healthcare access.

Read also: Saving one Nepali mother at a time, Aruna Uprety

Following Trump’s executive order, all agencies responsible for administering foreign development assistance were required to immediately halt new funding and obligations. The Office of Management and Budget (OMB), in coordination with the Secretary of State, is to conduct a thorough evaluation of each program’s efficiency and relevance to US foreign policy.

This review process is to determine whether programs should be resumed, modified, or terminated. Funding may resume during the 90-day review period if assessments justify its continuation, with final decisions requiring approval from the Secretary of State and the OMB Director. The Secretary of State can also grant specific waivers to exempt critical programs from the pause.

This has put Nepal essentially in a ‘wait and watch’ mode, say insiders as the pause has not put forward any criteria for evaluation and review of their projects.

Some specific programs that the US decides are important may receive exemptions or have their funding resumed sooner than three months, but nothing is certain.

Writing for the Nepal Economic Forum this week, SujeevShakya said: ‘The uncertainties prevailing in terms of the possibility of review and resumption or the permanent halt of the activities have been a bigger concern in the development fraternity. In case this is a permanent stop of US aid to the world, then it may also trigger a trend of other countries following the suit… The latter part of 2025 will see the impact of aid freeze playing out.’

The outlook for gender-related projects in Nepal depends heavily on the results of this review and the political climate in the United States.

In the short term, organisations may need to seek alternative funding sources or scale down operations. In the medium term, if the freeze is lifted, there may be a period of recovery and rebuilding as projects resume and attempt to regain momentum.

However, prolonged funding disruptions could lead to long-term setbacks in gender and women-related programs and efforts in Nepal.

The Nepal government is exploring alternative funding sources to mitigate the effect by engaging with international donors, including diplomatic discussions between Nepal and the United States but without much success. Some experts suggest that the freeze maybe the shock the government needs to carry out its responsibility of protecting its citizens.

The NGO Federation of Nepal, an umbrella organisation of Nepali NGOs, has expressed concerns about the significant impact on US-funded projects and programs, particularly those related to child health, nutrition, environment, and climate change.

The federation has highlighted the loss of jobs and the potential long-term setbacks in development efforts. The USAID funds as many as 300 NGOs, non-profits and consultancies in Nepal, all of which are directly affected by the cuts.

Given the recent news about the alleged misuse of USAID funds and President Trump's remarks, it seems increasingly likely that the 90-day review period might be extended. This situation serves as a stark reminder for our country to take greater responsibility for our own development. It's high time we reduce our dependence on grants, which are often mired in controversies and lack proper transparency.