US partially resumes USAID funding to Pakistan after February freeze

The United States has partially reinstated United States Agency for International Development (USAID) funding to Pakistan, months after freezing hundreds of millions of dollars in assistance.

According to sources who spoke with Nukta, Islamabad has received grants under two programs: the U.S. Need-Based Merit Scholarships for Pakistani University Students (Phase II) and the FATA Infrastructure Program.

The two projects are now funded through June 2025.

The resumption follows the February 2025 suspension of approximately $845 million in development aid under an executive order.

The freeze targeted government-to-government and off-budget projects, including those where USAID directly funds non-governmental organizations (NGOs) operating in Pakistan.

Sources familiar with the matter said officials from the U.S. Embassy in Islamabad and Pakistan’s Economic Affairs Division (EAD) have been engaged in ongoing discussions over a broader revival of USAID initiatives.

These discussions, the sources said, are aimed at addressing structural concerns related to transparency and fund monitoring, particularly for grants sent directly to NGOs.

The Pakistani government has reportedly proposed a new mechanism for USAID assistance to NGOs, where funds would be routed through relevant government ministries.

Officials argue this would improve oversight and align development aid with national priorities.

Currently, ministries have limited visibility into the total U.S. grants being given to NGOs or the identity of implementing partners.

USAID and Pakistan have maintained a longstanding development partnership.

In 2010, both countries signed the Pakistan Enhanced Partnership Agreement (PEPA) to formalize their cooperation in the development sector.

More recently, in 2023, the two sides signed a five-year Development Objectives Assistance Agreement (DOAG) worth $445.6 million.

That agreement aimed to support climate-resilient economic growth, inclusive governance, and improved health outcomes in Pakistan.

Also in 2023, an amendment to PEPA brought in an additional $407 million to further support Pakistan’s development agenda.

Although only two programs have so far resumed, the move signals renewed U.S. engagement in Pakistan’s development sector, and potentially a broader economic partnership on the horizon.