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What happens to Nepal’s MCC deal after House dissolution? Here are 3 possibilities

File: Nepal’s Minister for Finance Gyanendra Bahadur Karki and MCC Acting CEO Jonathan Nash sign agreement in the Treaty Room of the US Department of State, Washington, on Thursday, September 14, 2017.

Kathmandu, December 24

The Millennium Challenge Corporation deal signed between the governments of Nepal and the United States in 2017 to receive USD 500 million grant from the American government was already in a serious problem.

Now, the changing political environment in Nepal is likely to delay its implementation further. Many fear the US government will withdraw from the Nepal compact as Nepal takes time to endorse it in Parliament, a prerequisite to implementing the deal.

There are three possibilities; two of them are likely to further block the deal’s implementation whereas one could be supportive.

  1. After the split in the ruling Nepal Communist Party, the Dahal-Nepal faction is making efforts for the reinstatement of the House of Representatives dissolved by Prime Minister KP Sharma Oli. The camp plans toppling the Oli government after House reinstatement. Because the new party of Dahal-Nepal camp will not have a majority in the House, it needs the support of other parties including the main opposition Nepali Congress to form the government. If this happens, the MCC deal is unlikely to be implemented because most leaders of the Dahal-Nepal camp want the deal revised before the implementation.
  2. If the House is reinstated and if the Oli camp partners with the main opposition Nepali Congress, it will be easy for the government to endorse the deal because both the Oli camp and the opposition party are willing to implement it.
  3. If the House is not reinstated and the country heads towards the elections next year, the deal will not be implemented until then. Even after that, it is uncertain because no one knows which party wins the elections. By then, the US might withdraw the deal because it has already said it is not an ‘open-ended offer’.

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