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Trump’s FY27 Budget and the Future of US Foreign Assistance
The State Department has now signed more than 30 bilateral global health cooperation agreements, adding dozens of new deals with partner governments since our initial update and rundown of outstanding questions in December. And as the administration works to reorient the geographic focus of US assistance, the sweeping new agreements have reached the Western Hemisphere and the Indo-Pacific. Beyond signing additional agreements, the State Department published the official texts of five memoranda of understanding (MOUs) in response to a FOIA request, only to quietly disappear from the government's website. (Public Citizen maintains separate copies—along with other MOU-related documents from unofficial sources.)
Still, this new approach faces headwinds. Kenya—the first country to sign an MOU—saw its agreement stalled in court over data privacy concerns, though implementation planning is moving forward. Zimbabwe and Ghana have withdrawn from negotiations citing concerns over data and biological specimen sharing, and talks on the Zambia agreement reportedly stalled over a mining access agreement. Broadly, the potential linking of lifesaving assistance to unrelated policy goals is drawing scrutiny from governments, civil society, and congressional overseers alike.
The State Department is behind its ambitious self-imposed timeline. The America First Global Health Strategy set the goal of signing most agreements by the end of 2025 and beginning implementation in April 2026, but as August approaches, it’s unclear how many countries are primed to enter the next phase. This isn’t necessarily surprising—the speed and scope of this effort is unprecedented—but it leaves the near-term outlook for US health assistance in limbo. Implementation mechanisms for the earliest signed agreements are expected to come online in the coming months, marking the first test of the new vision for US global health assistance. The administration will likely deploy a variety of approaches to operationalize these deals but is expected to center performance-based mechanisms that link payments to outputs or outcomes. While the goal is to transition programming to governments, State has acknowledged that implementing the MOUs will require more than just government partners.
In the months ahead, the State Department's stated goals—increasing the volume of health spending channeled through government systems while simultaneously linking reductions in US health assistance with ambitious increases in partner country health spending—will be put to the test.
There is a lot to track, and it’s particularly challenging amid limited transparency. Here's where things stand, a few of the most consequential questions, and a preview of forthcoming CGD policy analysis focused on making government-to-government (G2G) assistance work.
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New regions, challenging contexts, and limited resources
The initial agreements were signed with African countries, all of which were major global health aid recipients, but newly announced MOUs expanded the footprint of the America First Global Health Strategy into the Western Hemisphere and the Indo-Pacific. In addition, the State Department has made commitments to supporting health in Fiji and the Philippines, but neither is party to a formal bilateral health agreement at this stage.
In almost all cases, the agreements represent major cuts to US funding when annualized and compared against recent years (more analysis of the co-financing commitments in the official MOU texts below). On average, MOU signatory countries will see a 58 percent cut relative to FY24 global health obligations.
The new wave of MOUs also brought in relatively higher-income countries: Botswana and Panama, an upper-middle-income country (UMIC) and high-income country (HIC), respectively, are on a three-year (rather than five-year) timeline. Some smaller commitments in UMICs in the Western Hemisphere make sense, especially where press releases for such agreements tout co-financed health security projects. Given the potential for health threats to spread from nearby allied countries, small but strategic investments make sense. But the rationale for spending PEPFAR money—the flagship US HIV/AIDS initiative—in a high-income country like Panama is less obvious. Panama has been a PEPFAR recipient for years, but when averaged over the three-year period, the agreement represents a 42 percent increase compared with total US health obligations in the country in FY24. From the outside, it is unclear what impact or leverage this $22.5 million US commitment over three years has, given that the government is already spending billions on health annually.
At the same time, the State Department has secured new agreements in several conflict-affected and complex contexts, where implementing a coordinated, multi-year health strategy aligned with the central government will be tough. In countries where the US faces a strained relationship and limited leverage, the State Department needs to be realistic about which outcomes are achievable on this time horizon. Niger and Burkina Faso have both signed MOUs, despite limited US engagement following recent political upheavals and pointed criticism of Western influence emanating from Niamey and Ouagadougou. Beyond the Sahel, conflict-affected South Sudan emerged from negotiations with a three-year agreement. Tanzania—where the US relationship with the government has been subject to scrutiny from policymakers amid democratic backsliding—has one of the largest agreements signed to date.
The model proposed in the America First Global Health Strategy depends on a relatively effective state committed to health outcomes. If the underlying vision is to deepen collaboration and planning with country governments, how can the US do so effectively in contexts where the relationship is already strained, or where the central government has limited state capacity to meet joint health goals?
What the available MOU texts tell us
Five years (and especially three, in the case of some agreements) is a quick turnaround for country systems to reorient their spending, particularly following last year's deadly and disruptive aid cuts and cancellations. The pace of reductions—and which funding and functions partner governments are expected to absorb as US support sunsets—matters immensely to the sustainability of this shift and its on-the-ground impact. Year-by-year co-funding details are not available for all MOUs. Versions of the Liberia, Kenya, Cameroon, South Sudan, Côte d'Ivoire, and Uganda agreements circulated previously through unofficial channels, but the five texts posted earlier this year—Ethiopia, Kenya, Mozambique, Nigeria, and Uganda—are the first official MOUs the State Department has released publicly. With these texts in hand, we can trace the arc of commitments from the US and partner countries year by year, and the relative share of investment across the six core spending areas the agreements use.
There are several trends worth highlighting across the MOUs. Overall, although the agreements are roughly parallel in structure, they diverge in some important details, such as the pace of co-financing commitments, the size of each of the six core investment buckets, and the share allocated to disease-specific versus systems-level work. There is variation in specificity and in oversight mechanisms and governance—and some countries have seemingly secured specific carve-outs and priorities to be included in the text. These are sovereign governments with their own political incentives, institutions, disease burdens, and diplomatic relationships with the United States, so variation is to be expected and warranted, particularly in differently resourced settings. For example, Uganda and Nigeria's agreements prioritize faith-based providers and a more detailed health insurance expansion strategy.
The pace of US assistance reductions over the term of the MOUs also varies, with generally lower-resource settings like Mozambique or South Sudan seeing smaller-scale cuts relative to the agreement's 2026 investment. Likewise, some agreements outline ambitious increases in domestic health spending over just a few years while others seek to temper expectations. Whether these rates will be adjusted given that 2026 is well underway and no MOUs are yet operational is another point of uncertainty.
For all agreements, save the document publicly available for South Sudan, the text breaks out co-investments by year for each of six buckets, displayed in our chart as: surveillance and outbreak response, commodities, laboratory systems, frontline healthcare workers, data systems, and strategic assistance, which is generally the largest bucket. The terminology for these categories within each MOU varies, and these categories don't necessarily align with country budgets or US appropriations. Moreover, MOUs vary in their inclusion of traditional priority health-focus areas for the United States—which correspond with congressional spending directives—such as tuberculosis, malaria, and maternal and child health. That misalignment doesn't necessarily spell disaster, but it might complicate how these commitments are counted and investments prioritized.
The published texts expect countries to meet all process and outcome metrics each year to receive full disbursement. Some metrics are at the population level, making them particularly subject to external shocks. This is a worrying design choice if not thoughtfully implemented. An all-or-nothing threshold is a tough structure for countries managing complex, multi-disease health systems where outcomes may be influenced by factors beyond a government’s control—and if not clarified in implementation plans, it risks penalizing partial but significant progress. Every publicly available agreement includes specific penalty rates outlining how the US would reduce funding if a country fails to meet its co-financing commitments, along with a cap on US monitoring and oversight costs. Only the Nigeria MOU includes a provision that could allow for reciprocity if the US doesn't meet its commitments, though it is unclear how such a provision would be enforced. On the flip side, the MOUs include performance incentives for countries that exceed their targets, opening the door for additional assistance up to a cap. Whether those incentive ceilings are fully funded when the moment comes, and whether they prove large enough to matter in practice, is one area to watch.
We can anticipate the variation to widen in the yet-to-be-released implementation plans, where the rubber of these agreements will meet the proverbial road. The MOUs outline the contours of US health assistance, but the implementation plans will determine how the agreements function in practice.
What we (still) don’t know, and where CGD is focusing
As the first agreements move into the operational phase, several questions deserve sharper attention from the administration, Congress, and the broader policy community. These are the areas where we plan to focus CGD’s expertise and analysis in the months ahead.
What are the right contexts for G2G—and where might precious resources be spent most effectively?
There is immense variation across MOU signatories. Some have received direct assistance—from the US and other donors—in the past. Others are conflict-affected and may have limited ability to influence health outcomes or suffer strained relations with the United States. State Department officials have acknowledged that few countries will receive on-budget assistance in the near term, but the current approach doesn't articulate how or why direct government assistance is being deployed in one context and phased out in another. Appropriations law requires State to share its framework for G2G eligibility, and demonstrating impact—including a clear-eyed account of where G2G isn't right—will be critical to winning over G2G skeptics.
What should be the backstops and mechanisms to preserve lifesaving assistance where G2G isn't right, or when countries don't meet their goals?
Countries that don't sign an MOU, withdraw, or are unable to deliver (for example, due to conflict) during the MOU period could face abrupt loss of US support. Such cases need a defined backstop to deploy lifesaving health assistance. Will the State Department stand up structured transition frameworks in such cases?
We asked this question in our last blog, but don't yet have a clear answer. The State Department has continued to spend global health money during this interim period before the agreements come online—and officials have recently confirmed that several additional countries may sign on to MOUs. But beyond the formal bilateral health cooperation agreements, more than 70 countries total are apparently developing implementation plans with the US government, including places where the US has a small funding envelope. These non-MOU implementation agreements suggest the State Department is willing to construct lighter-touch or unique arrangements, but the criteria for using those rather than full MOUs are not public. It is also unclear what happens when a country falls out of compliance with an MOU. Does support step down in tranches, end immediately, or shift to a parallel implementing channel while withholding funds from the original recipient?
Just as the State Department should outline eligibility and selectivity for direct mechanisms, it should also spell out its approach in contexts not covered by an agreement, and in cases where countries miss targets but a clear humanitarian or strategic case for continuing assistance remains.
Are the co-financing targets reasonable, and how should the State Department approach tough fiscal realities to achieve sustainable transition?
Co-financing mechanisms have policy merit. However, strict accountability instruments in foreign assistance only function when partner governments have the fiscal space to honor their commitments, and that performance can be reasonably attributed to government action rather than external actors or events.
Many of the largest partner countries are negotiating implementation from fragile fiscal positions. Debt service is consuming revenues across sub-Saharan Africa, growth projections in the latest IMF outlook have been revised downward for several signatories, and active or recent conflicts continue to place demands on national budgets. Partner countries are being asked to ramp up domestic health spending when fiscal space is already constrained.
If a country misses a co-financing target because of currency depreciation, a debt restructuring, or a shock to commodity revenues, as of now, the agreement would potentially trigger a US cut—and people could lose access to critical services. Designing implementation plans with sufficient flexibility for global events will be essential—as will how the State Department counts additional domestic health expenditure.
How have other donors grappled with these questions?
This administration is building the plane while flying it. But other donors have decades of experience navigating many of the trade-offs the MOUs are trying to manage, and their track records offer clear lessons.
Gavi and the Global Fund both have policies around co-financing in the health sector and have navigated complex sustainability and graduation questions for years. The multilateral development banks work closely with country governments, including in health, to advance their development priorities while incentivizing reform. The Millennium Challenge Corporation developed selection criteria, monitoring, and evaluation protocols, and has two decades of experience navigating the ups and downs of government partnerships. USAID's Fixed Amount Reimbursement Agreements with governments show how direct investments can be tied to verified outputs.
None of these institutions operate their programs rigidly. All of them build in flexibility for a variety of shocks, and all of them invest in infrastructure needed to make programs function. My CGD colleagues have written about each of these approaches, with more to come. Standing up more than 30 bilateral agreements simultaneously is no doubt a herculean effort—but other institutions and outside expertise can be a huge resource.
Stay tuned
The bilateral MOU push is the most consequential restructuring of US global health policy since the establishment of PEPFAR. The design choices made now will shape whether the MOUs deliver, and the subset that graduate into full G2G programs will set precedent and path dependency for direct assistance for years to come. In the weeks and months ahead, CGD will publish a series of dedicated analyses on the design and implementation decisions most likely to shape outcomes. Sign up here to have them delivered to your inbox.
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