Foreign Aid Rescissions and The Ongoing Crisis of Delivery

Last week, Congress passed a rescissions package clawing back nearly $8 billion in funding for foreign assistance approved by lawmakers earlier this year. Aligning with an award termination process that fell particularly heavily on development spending outside of health and humanitarian operations, the largest (absolute) cuts were to the Economic Support Fund and Development Assistance accounts—$4.2 billion between them. Humanitarian Assistance accounts lost $1.3 billion out of an initial $7.2 billion budget, while global health was largely spared thanks not least to pushback from members of Congress: a $500 million cut from a $10 billion base. But those numbers (still) underestimate the scale of the crisis facing US foreign assistance, where the immediate challenge is delivery, rather than dollars to spend.

The rescissions cemented some significant and damaging cuts. Not least, they cut the International Organizations and Programs budget to zero, ending support for voluntary contributions to a range of international organizations and UN agencies including UNICEF and the UN Development Programme. On the other hand, beyond a $125 million cut to the Clean Technology Fund, international financial institutions including the multilateral development banks weren’t even in the original administration rescissions package, and nor were the Development Finance Corporation and the MCC.

And regarding global health, it is good news that Congress specifically preserved PEPFAR funding—while adding language intended to preserve other HIV/AIDS funding as well as support for tuberculosis, malaria, nutrition, and maternal and child health. Were this to translate into programs operating as they should, the number of lives at risk from the disruption of the US foreign assistance program would be very significantly reduced. Around 85 percent of the estimated mortality prevented by US assistance in 2024 was due to HIV, tuberculosis, malaria, nutrition, and child health programs.

The overall picture is not that positive, however. Even in HIV/AIDS, where disruption has been comparatively minimal, the cuts and delays in in funding mean that more than 100,000 oral pre-exposure prophylaxis (PrEP) treatments—a daily pill that prevents HIV transmission—have been missed due to commodity shortages and service delivery constraints. In countries including Sudan and Uganda, AIDS deaths have resulted from terminated and delayed funding.

Furthermore, a number of lifesaving awards have been cancelled across the range of the global health portfolio including those focuses in areas lawmakers fought to safeguard. US support for global vaccination efforts through Gavi were a central component of its child health efforts, and vaccination programs supported by the US have been responsible for about half a million lives saved each year, but the administration has withdrawn support from the alliance.

And there have been cuts in areas of global health investment that Congress did not ringfence as well, including global health security, reproductive health, and neglected tropical diseases. Meanwhile, a number of humanitarian operations have been shut down, particularly in Yemen and Afghanistan. And most worrying of all, there is no sign of significant new awards covering ongoing humanitarian emergencies since the January foreign assistance pause.

This last issue reflects a broader problem across the US assistance program as a whole. The unobligated balance in the bilateral economic assistance categories at the end of March was approximately $27 billion. The rescissions package covers about $6 billion in bilateral economic assistance spending. That implies the need to obligate at least $21 billion in order to use the remaining budget after rescissions (possibly more, given the “de-obligations” caused by award cancellations). But there is little sign of any significant foreign assistance obligations since March.

Meanwhile, there will be (but aren’t yet) 718 Department of State staff tasked to support the program formerly managed by USAID. That’s about six percent of USAID staffing, compared to perhaps 62 percent of the program that remains. This while dealing with the State Department shedding 15 percent of its existing staff, building up functions and capabilities in a new institution undergoing its own reorganization, and coping with the backlog created by the almost-complete halt to all foreign assistance contracting since the administration came to office and an ongoing crisis in disbursing on overdue obligations. To add further to the challenge, about 500 of the 836 USAID awards transferred to State will expire by the end of the fiscal year—September 30^th.

Next year, while the sums to be spent on foreign assistance are considerably smaller in the budget proposed by the administration, the FY26 draft spending bill from the House Appropriations Committee is larger than the post-rescissions FY25 budget. Indeed the House’s economic assistance funding proposal looks considerably higher than the post-rescission total for that account.

While this a further hopeful sign that considerably fewer than a million lives may be at risk and that a broader assistance program might continue, it suggests the delivery problem is one that will keep on growing after the end of the fiscal year. Even if the administration’s proposed FY26 budget was enacted, State Department contracting officers will still be responsible for about $260 million of awards each, compared to $65 million per contracting officer at USAID in 2022, risking that the delivery crisis may be joined by a crisis of mismanagement and poor oversight.

Capitol Hill’s demand that funding is retained for global health including maternal and child health should put more pressure on the administration to reverse course on the Gavi cuts, reactivate lifesaving programs like the maternal and child health supply chain project that was providing the basic medicines and equipment to keep new mothers and newborns alive across a range of countries, and restart the projects providing tuberculosis treatment in countries including Bangladesh as well as South Africa. But if Congress wants to minimize lives lost and sustain the programs it protected from rescissions, it also needs to urgently intervene to ensure the US government delivers the programs it has financed.

With many thanks to Justin Hurley and Erin Collinson for data and advice and Justin for the chart.