WASHINGTON: The United States has drastically cut its long-term foreign aid contracts by 92 percent, in a bid to save about USD60 billion in development and humanitarian programs, the US State Department announced on Thursday, February 27, 2025.

On his first day in office, President Donald Trump signed an executive order to temporarily freeze all US foreign aid for 90 days. This was to give his administration time to review overseas spending and remove programs that did not align with his AMERICA FIRST policy.

A federal judge had ordered the Trump administration to resume aid payments, but the government ignored the order for nearly two weeks. On Tuesday, the judge gave them less than two days to comply. However, the Trump administration quickly filed an emergency request with the US Supreme Court, which issued a temporary hold on the judge’s order late Wednesday.

A State Department spokesperson said that after a review led by USAID and overseen by Secretary Marco Rubio, the government decided to eliminate nearly 5800 contracts worth USD54 billion. This amounts to a 92 percent reduction in foreign aid agreements.

The review mainly focused on long-term foreign aid contracts managed by the US Agency for International Development (USAID). It also examined over 9100 grants worth USD15.9 billion, ultimately leading to a 28 percent  reduction, cutting 4,100 grants valued at USD4.4 billion.

“These necessary cuts will help agencies focus on essential programs, improve efficiency, and better align spending with the administration’s America First priorities,” the spokesperson said.

USAID provides humanitarian aid in about 120 countries, funding health and emergency programs. Some critical programs were not cut, including food aid, life-saving medical treatments for diseases like HIV and malaria, and support for Haiti, Cuba, Venezuela, and Lebanon.

Late Wednesday, US Supreme Court Chief Justice John Roberts issued a temporary stay, giving the Trump administration more time to argue against unfreezing around USD2 billion in overdue foreign aid payments.

USAID Layoffs and Budget Cuts

USAID, which was created in 1961, had over 10000 employees before the freeze. The budget cuts led to widespread concern and frustration among staff. The agency announced on February 23 that it would lay off 1600 employees in the US and place most remaining staff on administrative leave.

During his campaign, Trump vowed to reduce federal government spending. He put his top donor and advisor, Elon Musk, in charge of the newly created Department of Government Efficiency (DOGE) to oversee budget cuts.

Trump has criticized USAID, calling it RUN BY RADICAL LUNATICS, while Musk referred to it as a CRIMINAL ORGANIZATION that needed to be dismantled. Speaking at Trump's first cabinet meeting on Wednesday, Musk defended the budget cuts, saying, “If we don’t do this, America will go bankrupt.” He also said that he had received death threats and criticism for his role in the program.

One-third of DOGE employees resigned in protest on Tuesday after Musk sent a mass email to two million federal workers, demanding they justify their jobs or face termination. Some cabinet members reportedly expressed frustration over these emails, but Trump insisted his team was fully supportive of Musk’s efforts.

On February 26, Trump signed another executive order giving DOGE more authority to review federal spending, including contracts, grants, and loans. The order also implemented a temporary freeze on all government-issued credit cards for 30 days, except for critical services such as disaster relief.