US gives major blow to Bangladesh amid tussle with India; all funding under USAID suspended

WASHINGTON: The United States has stopped funding to the Bangladesh government. The United States Agency for International Development (USAID) has stopped funding to the government of Muhammad Yunus in the wake of President Donald Trump’s 90-day freeze on all foreign aid.

All existing foreign aid has been suspended under the new order. Aid under a new executive order issued after Trump took office on January 20 has also been temporarily suspended. Only Israel and Egypt have been excluded from the list.

The memo signed by the Secretary of State states that a comprehensive government-wide review of all foreign aid will be completed within 85 days and a report will be submitted for the Secretary of State’s consideration and recommendation to the President.

In light of the President’s order to stop foreign aid, USAID has sent a message to Bangladesh asking it to immediately stop any work being carried out under the USAID/Bangladesh contract.

Bangladesh is the largest recipient of USAID’s assistance in Asia. These include global food security, health initiatives, democracy, governance, education and environmental projects.

The Yunus government had requested $5 billion in financial assistance last year from international lenders to stabilize foreign exchange reserves. Bangladesh had also sought a $4.7 billion bailout from the IMF. The US had promised Bangladesh $202 million in aid in September 2024. This was under a 2021 agreement that promised $954 million in aid between 2021 and 2026. Of this, $425 million had already been disbursed to Bangladesh. The US has dealt a major blow to Bangladesh, which has strained ties with India after it granted asylum to former Prime Minister Sheikh Hasina.