Aid to PakistanPakistan currently faces severe economic challenges, including low foreign reserves, a depreciating currency and high inflation of 38% as of June 2023. These issues have significant implications for poverty in the country. Aid to Pakistan has played a crucial role in addressing these economic difficulties and reducing poverty in the past. According to a congressional research service report from last month, Pakistan is experiencing a “[poly-crisis]” that encompasses politics, economy and security. These economic challenges not only hinder Pakistan’s development but also contribute to deepening poverty levels.

US Aid and its Impact on Poverty Alleviation in Pakistan

Historically, U.S. aid has alleviated poverty in Pakistan through various sectors such as health care, infrastructure development and agriculture. For instance, U.S. economic assistance in the 1960s supported the implementation of the “Green Revolution,” leading to higher-yielding varieties of crops like wheat and rice and improved agricultural productivity. This aid contributed to increased agricultural productivity, improved livelihoods and a subsequent reduction in poverty. GDP rate increased to 10.4 in 1965.

From 2002-2010, the U.S. provided significant financial assistance to Pakistan, primarily addressing terrorist threats and security concerns. This aid not only contributes to poverty reduction but also helps create jobs, stimulate economic growth and alleviate food insecurity.

Between 2001 and 2018, the poverty rate in Pakistan saw a significant decline, with more than 47 million Pakistanis lifting themselves out of poverty due to the expansion of off-farm economic opportunities and increased remittances. Aid to Pakistan has been a key driver of this positive change, contributing to poverty reduction and sustainable development. By increasing aid to Pakistan, the U.S. can fulfill its humanitarian obligations while also assisting in alleviating the deepening crisis within the country by fulfilling its commitment to goal 1 of U.N. SDGs like ‘Zero Poverty.’

The Borgen Project sought the expertise of Dr. Farhat Asif, an international affairs expert and founder of the Institute of Peace and Diplomatic Studies (IPDS), Islamabad. Dr. Asif highlighted how supporting an economically stable Pakistan aligns with U.S. foreign policy interests, particularly in terms of poverty alleviation and humanitarian commitments.

Supporting Pakistan aligns with American values of promoting economies on the brink of default and fostering democratic communities. Aid contributes to improving well-being, reducing poverty and enhancing access to health care, education and basic services.


One significant aspect Dr. Asif mentioned is that economic stability enables Pakistan to invest in modernizing its security infrastructure, enhancing intelligence capabilities and improving counter-terrorism capabilities. This not only counters extremist groups operating within Pakistan but also ensures regional stability. Counter-terrorism is a mutual interest between the U.S. and Pakistan and sustained U.S. support becomes crucial, especially when Pakistan lacks the financial stability to fund new security projects. A prosperous Pakistan indirectly helps the U.S. achieve its counter-terrorism goals and provides a secure environment for businesses.

Increase in FDI

A thriving economy fosters a safe business environment and attracts foreign direct investment (FDI). As per Dr Farhat, ‘’As Pakistan’s economic stability improves, it becomes an increasingly attractive market for U.S. businesses seeking to invest, benefiting both countries. FDI not only improves bilateral trade but also leads to job creation and contributes to poverty reduction. Aid plays a vital role in revitalizing economic stability and bringing certainty to the market.’’

Regional Stability

The stability of Pakistan is crucial for regional security, considering its location in a volatile region with borders shared by Afghanistan, Iran and India. Instability within Pakistan could have spillover effects on neighboring countries and negatively impact regional security. By promoting economic stability through aid, internal conflicts can be reduced, peace can be fostered and overall regional stability can be achieved. Dr. Farhat explained that this is a significant concern for the U.S., as a stable Pakistan reduces the risk of conflicts escalating, provides a favorable environment for diplomatic engagement and negotiations and helps the U.S. address terrorism proliferation and critical regional issues such as border-fencing and the Afghan peace process.

Moral Imperative

Additionally, supporting Pakistan aligns with American liberal values of supporting economies on the brink of default and fostering democratic communities of peaceful coexistence. Aid can help stabilize and strengthen Pakistan’s economy, improving the well-being of its people, reducing poverty and enhancing access to health care, education and basic services. Aid becomes a moral imperative to assist Pakistan, considering its status as a foremost victim of terrorism. Supporting Pakistan’s development aligns with the United States’ commitment to SDGs like zero poverty.

History of US Aid to Pakistan

Throughout history, the U.S. has provided significant financial and military aid to Pakistan. The Kerry-Lugar-Berman Act passed in 2009 aimed to provide a long-term, civilian-focused assistance package of $7.5 billion to Pakistan, supporting economic development, education, health care and governance reforms. While security assistance was suspended in 2018 due to concerns, recent years have seen renewed engagement and assistance between the U.S. and Pakistan, particularly in economic cooperation, energy projects and education through organizations like USIP and USAID.

Notably, recent USAID programs like the Pakistan Reading Project (PRP), the Pakistan Agricultural Technology Transfer Activity (PATTA) and the Pakistan Regional Economic Integration Activity (PREIA) have aimed to improve education, agricultural productivity and trade competitiveness, respectively, contributing to Pakistan’s economic growth and stability.

The PRP, worth 164.7 million dollars was initiated in 2013 and ending in 2023, aims to improve the reading skills of 1.3 million children in grades one and two across Pakistan. It also supports teacher training, curriculum development, community engagement and policy reform to enhance the quality of early-grade education.

The PATTA program, an 8.2 million dollar project which started in 2017 and ended in 2021, aimed to increase smallholder farmers’ access to affordable, appropriate and effective agricultural technologies that could boost productivity and incomes. It also facilitated partnerships between local technology manufacturers, distributors and service providers to create a sustainable market for agricultural innovations. It helped 147,910 small farmers to adopt new technologies.

In addition, the PREIA program, implemented from 2015 to 2020, focused on enhancing Pakistan’s trade competitiveness and integration into regional and international markets. It supported policy reforms, trade facilitation, private sector engagement and women’s economic empowerment to foster economic growth and stability.

Lastly, since the 1950s through USAID to Pakistan, the Fulbright program, initiated in the 1950s, continues to offer fully funded opportunities for unprivileged Pakistani students to study in the U.S. The program has created a network of around 37,000 Fulbright Alumni working in various sectors in Pakistan.

Way Forward

Overall, aid to Pakistan plays a vital role in addressing economic challenges, reducing poverty and promoting sustainable development. By increasing aid, the U.S. can fulfill its humanitarian obligations, contribute to poverty alleviation and potentially advance its own strategic interests related to counter-terrorism, regional stability and promoting democratic values. The continued support of the U.S. through aid programs is crucial in helping Pakistan overcome its economic challenges, stimulate growth and improve the well-being of its people. 

– Sarmad Wali Khan
Photo: Unsplash

U.S. humanitarian aid to Pakistan
On January 4, 2018, U.S. president Donald Trump’s administration announced that it would cut military aid to Pakistan on the grounds that Pakistan has not been doing enough to combat the more than 14 terrorist organizations operating within its borders. Many of these organizations support international terrorist operations and carry out attacks within the borders of Pakistan.

The United States is concerned with the operations being carried out against its forces in Afghanistan, which borders Pakistan. The mountainous border is porous and is a haven for terrorists. Some regions are officially governed by the Pakistani government but under the de facto control of the terrorists. North and South Waziristan are the most contested territories.

The Pakistan government recently launched a military operation in North Waziristan to liberate the area from the terrorist organizations that controlled it. The continuing success of this operation could hinge on the possible $900 million cut in military and security aid from the United States. However, the Trump administration has made it clear that the cuts would not affect U.S. humanitarian aid to Pakistan.

The United States has been aiding Pakistan for many decades, with a focus on humanitarian aid and economic development. In the 1960s and 1970s, economic aid helped to build two major hydroelectric dams. During the 1980s and the early 1990s, the United States helped to build a large power station and Lahore University for Management Science. These are only a few examples of early and continued non-military aid to Pakistan.

Currently, most of the U.S. humanitarian aid to Pakistan is delivered by USAID. According to USAID, more than $7.7 billion has been spent on non-military aid to Pakistan. The United States government has budgeted $344.5 million in humanitarian aid to Pakistan for 2018. USAID projects in Pakistan focus on six major areas: energy, economic and agricultural growth, democratic and societal resilience, education and gender equality. Examples of USAID work in these areas are:

  • Energy
    USAID energy projects have been successful because they are multifaceted. Not only do they increase the power output of the existing infrastructure, the funds also help repair it. The most important projects are the repairs of the hydroelectric dams. Repairing these dams increases their electrical output and increases the efficient use of water from rivers and reservoirs.
  • Economic and Agricultural Growth
    Agriculture contributes to 24.7 percent of Pakistan’s GDP. Up to 40 percent of the working population is employed by the agricultural sector. USAID has helped improve the agricultural sector by helping small and medium farms gain access to financing. They have also introduced new crops or modified versions of existing crops. A similar approach is used to help the private sector.
  • Reliance
    USAID has worked hard to increase access to common markets, education and government in an attempt to solidify social engagement. They have also worked to rebuild areas destroyed by internal conflict and help displaced families. Helping society function smoothly helps people feel that they are part of something bigger and are not being left behind. This helps to stabilize the fragile democratic government of Pakistan.
  • Education
    USAID has provided more than 18,000 scholarships for higher education over the last eight years, built or repaired over 1,300 schools since 2011 and increased the quality of basic education across the country.
  • Health
    U.S. humanitarian aid to Pakistan has helped to build two new hospitals in the last five years. USAID projects have helped over 9.4 million women and children. Working with the government of Pakistan, USAID plans to increase funding for women’s and children’s healthcare through 2025.
  • Gender Equality
    USAID has helped form a registration of 496,000 women to promote voting rights, awarded 6,000 college scholarships to women and improve the care and representation of gender-based violence.

U.S. humanitarian aid to Pakistan has been effective. Over the last three years, the country’s GDP has grown by an average of 4.6 percent and 2017 saw a 5 percent industrial growth rate. Other social issues such as gender equality will take much more time to show major results. The most important milestone came in 2013, when Mahmoon Hussain was elected president of Pakistan and Asif Ali Zardari stepped down. The role of the president of Pakistan is mostly ceremonial; however, this was the first time that a democratically elected president served a full term in Pakistan. Hopefully, with time Pakistan will begin to transition and will be seen as a pillar of stability and peace in the region rather than a place of instability and violence.

– Nick DeMarco

Photo: Flickr