After a months-long suspension, the United States has partially reinstated USAID funding for Pakistan, focusing on two priority projects – the Need-Based Merit Scholarship Program for university students and the FATA Infrastructure Program, which will remain active until June 2025.
The decision follows the earlier February 2025 freeze of approximately $845 million in U.S. development assistance under Executive Order 14169. That suspension had halted both direct government support and “off-budget” NGO programs, significantly affecting ongoing development efforts in Pakistan.
Currently, U.S. and Pakistani officials are engaged in intensive discussions to determine the future of aid flows. The Pakistani government has proposed a revised oversight framework where even NGO-directed USAID funds would be routed through federal ministries. Officials argue this would enhance transparency and allow Islamabad to better monitor where and how U.S. assistance is spent.
The U.S. side, meanwhile, is reviewing these proposals while ensuring that aid continues to align with its accountability standards.
USAID has been a longstanding partner in Pakistan’s development journey, with landmark agreements such as the Pakistan Enhanced Partnership Agreement (PEPA) in 2010 and a more recent five-year Development Objectives Assistance Agreement signed in 2023 worth $445.6 million. That deal, later amended to include an additional $407 million, supports climate resilience, governance reforms, and public health improvements.
The latest move suggests a cautious rebuilding of trust, though a full restoration of aid remains under negotiation, dependent on improved transparency and monitoring mechanisms.