Kathmandu, July 3: The government has informed the donor country, the USA, that the Millennium Challenge Corporation (MCC Compact) was now on hold. With the expiry of deadline to endorse the compact by the parliament two days back, the Finance Ministry wrote a missive to the US in this regard.

The delay in the endorsement of the MCC compact by the parliament was the effect of intra-party wrangling in the ruling Nepal Communist Party.

Now, with the pending of huge assistance, Nepal is likely to witness negative impacts on its development projects.

Finance Minister Dr Yubaraj Khatiwada said the ongoing budget session of the federal parliament was prorogued due to COVID-19. So the US was informed that the MCC compact aimed at development of energy and transport sectors could not be endorsed by the parliament at present. He however said government was for the implementation of MCC compact.

Also the Minister for Communications and Information Technology and government spokesperson, Minister Khatiwada said, "It can be discussed that some points in the MCC compact could have been presented differently. But, the disputes still persisting over some points of the compact affect trust on and perspective towards Nepal government." He suggested that some of the issues could be sorted out through letters of exchange.

Talking to the National News Agency (RSS), Minister Khatiwada further said the endorsement of the MCC pact was delayed also because of the lack of preparatory works for its implementation owing to the COVID-19 pandemic.

Although the budget had incorporated some activities for the implementation of the compact, the difference within the ruling party halted it, pointing out the need of approval first by the parliament for undertaking the activities.

Earlier, the standing committee of the NCP had witnessed severe difference over the MCC pact resulting to the formation of a team to study its broader impact. The study team comprised senior leader Jhalanath Khanal, leader Bhim Bahadur Rawal and Foreign Ministry Pradeep Kumar Gyawali. The team later submitted the report to the party leadership, urging for some amendment before its passage by the parliament.

The MCC compact consist of Rs 51 billion assistance by the US government to Nepal for energy and transportation sectors.