The Department of Government Efficiency, led by Elon Musk, cut $329 million in humanitarian aid to Nepal by slashing funding from the U.S. Agency for International Development (USAID). The reduction, effective since 2024, led to an estimated 30,000 direct job losses and halted foundational educational programs across Nepal’s 35 districts, according to Stuti Basnyet, former acting program office director for USAID in Nepal, as reported by fortune.com.
Basnyet described the initial reaction to the cuts as disbelief followed by deep grievance. The closure of USAID forced the loss of support for early grade reading, teacher training, and educational material funding. Faced with this challenge, Basnyet sought to rebuild these services and create new opportunities without the steady aid that had been provided since 1951, when the U.S. became Nepal’s first bilateral aid donor.
The aid cuts have accelerated a shift toward Nepal’s private sector to fill the void left by USAID’s withdrawal. Nepal, classified as a lower-middle-income country with a GDP of $1,447 per capita, now faces the task of leveraging private enterprise to sustain economic growth and social development. This transition marks a significant change in how Nepal addresses education and employment challenges amid reduced foreign aid.
Basnyet emphasized the need to harness existing skills and relationships to maintain dignity and progress despite funding losses. The shift away from reliance on U.S. aid underscores the growing importance of Nepal’s domestic private sector in driving the country’s economic future, according to fortune.com.