The Department of Government Efficiency, led by Elon Musk, cut an estimated $329 million in humanitarian aid to Nepal from the U.S. Agency for International Development. The closure of USAID operations in Nepal resulted in an estimated 30,000 direct job losses.

USAID cuts in Nepal eliminated support for early grade reading across all 35 districts, teacher training, and the review and refunding of educational materials. After major cutbacks in 2025, USAID's remaining functions were transferred to the United States Department of State.

"Everyone went through denial first that this was even happening, to just deep grievance at how it was being done." Basnyet said. She reflected on the challenge of adapting professional skills to a new economic reality following the withdrawal of federal aid.

"How do you use all of the skills and the experience you’ve gained in different ways to create an environment where you still felt like you had dignity, second life, all of the knowledge and relationships, within a really short period of time?" she asked. Basnyet co-founded Aadyanta Advisory, a Nepal-based strategic advisory firm, last year.

Aadyanta Advisory supported nearly 400 young Nepali innovators and founders over the course of one year. Basnyet described her transition from government service to private enterprise as a continuation of her development goals.

"I’m still continuing to do the same work, which is basically advocating for locally led, globally connected economic development efforts, stronger partnerships, private sector engagement, and how development happens in this country," Basnyet said. "I’m doing much of the same work, but now as an entrepreneur."

Amir Thapa, executive director of AmCham Nepal, noted the historical reliance on foreign assistance. "Back in the day, I think our relationship was so dependent on development grants," Thapa said. "There was so much assistance that was coming from the states, and that was the expectation."

Thapa indicated that business leaders viewed the reduction in aid as a catalyst for private sector growth. "When USAID was gone, we took that as an opportunity because we knew that there is going to be a void to create a partnership with the private sector here in Nepal," he said. AmCham Nepal had 42 members two years ago and has 72 members today.

"We lack employment creation out here," Thapa said. He emphasized the potential for technology firms to address this gap.

"The role of U.S. companies is really important in order to create those jobs, and the tech sector has been doing that," he said. "Nepalese youngsters are hungry." In 2025, Nepal exported about $1 billion in information technology products.

Why It Matters

The termination of USAID operations marks a shift in the bilateral relationship between the United States and Nepal, which began when the United States became Nepal’s first bilateral aid donor in 1951. The loss of 30,000 jobs and the elimination of educational support across 35 districts affect a population where more than 40% are between the ages of 16 and 40.

The transition of USAID functions to the Department of State and the subsequent rise in private sector membership in organizations like AmCham Nepal illustrate a structural change in how development occurs in the country. With a GDP per capita of $1,447 and a ranking of 124th out of 145 countries by the Harvard Kennedy School Growth Lab, the capacity of the private sector to replace public aid remains a central factor in Nepal's economic trajectory.

Timeline

The United States became Nepal’s first bilateral aid donor in 1951. Nepal established its multiparty democracy in the 1990s. Stuti Basnyet served as the acting program office director for USAID in Nepal starting in 2024.

Stuti Basnyet co-founded Aadyanta Advisory, a Nepal-based strategic advisory firm, last year. Through 2025, Nepal approved nearly 7,500 foreign investment projects worth about $5.5 billion.

What's New

Research titled "An Interview with Mr. Sriranjan Lacoul, Director General, Department Of Electricity Development (DOED), Government of Nepal" was published in 2009 in Hydro Nepal: Journal of Water, Energy and Environment.

How Sources Differ

Hydro Nepal: Journal of Water, Energy and Environment published research titled An Interview with Mr. Sriranjan Lacoul, Director General, Department Of Electricity Development (DOED), Government of Nepal in 2009.