USAID halts funding to Bangladesh

Dhaka, January 27 — The United States Agency for International Development (USAID) on Saturday suspended its funding to the Muhammed Yunus-led interim Bangladesh government after President Donald Trump suspended all foreign aid for 90 days.

This follows the State Department's "stop-work" order on Friday, halting all existing foreign assistance and pausing new aid under Trump's new executive order from Jan 20, which withheld support to US-backed global aid programs. Only Israel and Egypt have been excluded from the list.

According to NPR, a memo signed by Secretary of State Marco Rubio stated that the government-wide comprehensive review of all foreign assistance shall be completed within 85 days, and a report shall be produced for the Secretary of State's consideration and recommendation to the President.

Citing Trump's executive order on "reevaluating and realigning" foreign aid, USAID issued a statement to its partners in Bangladesh diretcing them to immediately stop any work performed under its contract.

"This letter serves as a directive to all USAID/Bangladesh implementing partners to immediately stop, cease, and/or suspend any work performed under your respective USAID/Bangladesh contract, task order, grant, cooperative agreement, or other acquisition or assistance instrument," the developmental agency said.

"Partners shall take all reasonable steps to minimize the incurrence of costs allocable to their awards. Partners shall not resume work under their awards until notification has been received in writing from the contracting/agreement officer that this award stop-work order/suspension has been canceled," it added.

Notably, Trump in his executive order claimed that foreign aid provided by the US was "not aligned" with America's "interests and vaules."

"The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values.  They serve to destabilize world peace by promoting ideas in foreign countries that are directly inverse to harmonious and stable relations internal to and among countries," the White House said.

"It is the policy of United States that no further United States foreign assistance shall be disbursed in a manner that is not fully aligned with the foreign policy of the President of the United States," it added.

USAID's decision to suspend financial assistance to Bangladesh could have dire consequences for the Yunus-led government.

According to USAID, its program in Bangladesh is the largest in Asia, encompassing key global food security and health initiatives, along with critical democracy, governance, education, and environmental projects.

It is also the largest donor to Bangladesh's humanitarian assistance portfolio, which addresses the Rohingya refugee crisis.

International funding has been crucial to aid programs, helping the country navigate economic turmoil and manage the Rohingya crisis, as well as restore stability to its key textile industry.

Last year, the Yunus administration requested $5 billion in financial aid from international lenders to stabilise its shrinking foreign exchange reserves. It had also sought a $4.7 billion bailout from the IMF.

Notably, in September 2024, the US had committed $202 million in aid to Bangladesh. This followed a 2021 agreement in which USAID had pledged $954 million in assistance between 2021 and 2026, of which $425 million had already been disbursed.

—(with inputs from agencies)