NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, March 4, 2013

Since U.S. lawmakers failed to reach a deal on March 1 to avert $85 billion in across-government budget cuts, the global aid community has been nervously awaiting the impact on development business.

Sequestration will reduce fiscal 2013 funding for the State Department and U.S. Agency for International Development by roughly $2.6 billion overall and cut foreign assistance by close to $1.7 billion, USAID spokesman Kamyl Bazbaz told Devex on March 1, the day a long-dreaded $85 billion budget cut, also known as sequestration, begins to take effect.

A 5-percent cut will now be applied to many government programs, most notably, for the aid community, to the State Department’s global health programs, a reduction of $411 million from a sequestrable base amount of $1.9 billion, according to a March 1 notice by the White House Office of Management and Budget. Other large DOS accounts include international peacekeeping, embassy security and construction, contributions to international organizations, migration and assistance, and international narcotics control and law enforcement.