MCC Nepal compact: What is in the “interpretative declaration” endorsed by Nepal’s parliament?

NL Today

  • Read Time 3 min.

Kathmandu: In an apparent bid to give a face-saving way out to radical communist leaders, the ruling alliance on Sunday reached an agreement on attaching ‘interpretative declaration’ as a part of the Compact. Finance Minister Janardan Sharma had presented the declaration in the parliament. 

So what points does the declaration actually include? Here is the full text of the declaration endorsed by Nepal’s parliament.

Interpretative Declaration adopted by the House of Representatives at the ratification of the Millennium Challenge Compact signed on September 14, 2017 between Nepal, acting through the Government of Nepal, Ministry of Finance, and the United States of America, acting through the Millennium Challenge Corporation.


Bearing in mind the principles of international law including the principles of sovereign quality and territorial integrity of States and that of non-interference in the internal affairs of other states;

Nepal declares as follows:

1. Nepal declares that by being a party to the Compact, Nepal shall not be a part of any United States’ strategic, military or security alliance including the Indo-Pacific Strategy.

2. Nepal declares that the Constitution of Nepal, being the fundamental law of land, shall prevail over the Compact and other associated agreements.

3. With reference to Section 2.7, Section 5.1 (b) (iii), Section 5.1 (b) (iv) of the Compact, Nepal understands that these sections are intended to apply only for the use of the MCC Funding and Program Assets and that the provisions do not and shall not obligate Nepal to comply with the current or future United States’ laws or policies for any purpose other than the use of the MCC Funding. 

4. With reference to Section 3.2 (b) of the Compact, Nepal declares that the conduct of activities of Millennium Challenge Account Nepal Development Board (the “MCA-Nepal) shall be governed by the laws of Nepal and regulated by the provisions of the Compact. 

5. With reference to Section 3.2 (f) of the Compact, Nepal declares that MCC shall not have ownership over the Intellectual Property and that Nepal shall own and fully enjoy all the intellectual property created under the Compact program. 

6. With reference to Section 3.5 of the compact, Nepal declares that implementation letter under the compact shall be implemented within the scope of the compact. 

7. With reference to section 3.8 (a) of the compact, Nepal declares that, in addition, the audit of the activities and funds of MCA-Nepal shall be conducted by the Office of the Auditor General in accordance with the prevailing laws of Nepal. 

8. With reference to section 5.1 (a) of the compact, Nepal declares that, in addition to Nepal’s right to terminate the compact without cause by giving thirty (30) days’ prior written notice, Nepal has the right to terminate the compact by giving thirty (30) days’ prior written notice in case of activities/program under the compact violate Nepal’s laws or policies. 

9. With reference to Section 5.5 of the Compact, Nepal declares that provisions under the Compact which survive after the expiration, suspension or termination of the Compact shall only relate to the Compact Program and the use of MCC funding including for evaluation of the projects under the Compact, audits, and settlement of taxes.

10. With reference to Section 7.1 of the Compact, the programs under the Compact shall be implemented by complying with the Compact and in accordance with the domestic laws of Nepal. 

11. With reference to Section 8.1 of the Compact, Nepal declares that the electricity transmission project including all movable and immovable assets and land associated with the Project shall be owned by the government of Nepal or entities of the government of Nepal.

12. With reference to the letter dated September 8, 2021, received by Nepal from the Millenium Challenge Corporation, Nepal understands that the responses in the said letter shall aid in the interpretation and implementation of the Compact. 

Here is the MCC Nepal Compact signed between Nepal and USA :