U.S. Emergency Economic Assistance to Pakistan
April - June 2008
A History of Emergency Economic Assistance to Pakistan
Pakistan remains an important ally in the Global War on Terror. From 2002 to 2007, the U.S. Government's Emergency Economic Assistance (EEA) Agreements provided balance of payments, budget, and policy reform support to the Government of Pakistan (GoP) during a time of economic hardship and political strain associated with Pakistan's participation in the Global War on Terror.
In 2008, the Emergency Economic Assistance will be put into USAID-managed development programs that directly improve the health, education and economic opportunities of Pakistanis.
EEA 2002-2007
In 2002, President Bush met with President Musharraf and pledged that the U.S. Government (USG) would provide Pakistan with $1 billion in Economic Support Funds (ESF) EEA over the three-year, fiscal year (FY) 2002 - FY 2004 period. To complement this pledge, the USG opened its USAID Mission in Pakistan with a program that addresses some of the most pressing needs of Pakistan's people: education, health, economic growth, and democracy and good governance. In 2004, the United States pledged to provide another $1 billion in EEA at $200 million per year during the five-year period (FY 2005 - FY 2009). The EEA agreements were integral and complementary to parts of USAID's bilateral program. USAID transferred $200 million in ESF funds to the GoP each year in FY 2005, FY 2006 and FY 2007. The funds provided vital budgetary support for the GoP's health, education, clean drinking water and earthquake reconstruction initiatives.
The EEA agreements provided U.S. dollars that enabled the GoP to meet critical foreign exchange needs. The 'Shared Objectives' portions of the agreements promoted macro-economic stability and second-generation structural reforms consistent with USAID's development objectives in Pakistan and Pakistan's Poverty Reduction Strategy Plan. Specific targets were set for these policy reform measures.
The local currency (rupee) generations from the EEA grant agreements were also programmed carefully to enable the government to allocate real increases in public sector spending on education, health, clean water and earthquake reconstruction initiatives. Through the GoP's Ministry of Finance and the Auditor General of Pakistan, the USAID Mission in Pakistan monitors these funds at the national budget level to assure that the USG contributions are used in accordance with the agreements.
In FY 2007, the GoP allocated: $20.9 million of EEA into its budget for clean drinking water projects; $64.4 million of EEA into its health budget; $64.7 million of the EEA into its education budget; and $50 million into its earthquake reconstruction budget.
U.S. Non-Project Assistance for Pakistan
| Fiscal Year |
ESF Level ($ million) |
Objective of Emergency Economic Assistance |
| 2002 |
$600 million |
Balance of payments and direct budget support grant |
| 2003 |
$188 million |
Debt relief |
| 2004 |
$200 million |
Debt relief |
| 2205 |
$200 million |
Direct budget support grant to help Pakistan meet macroeconomic stability objectives and increase spending on human capital and private sector development objectives |
| 2006 |
$200 million |
Direct budget support grant to help Pakistan meet macroeconomic stability objectives and increase spending on human capital specifically in education, health, and clean drinking water sectors |
| 2007 |
$200 million |
Direct budget support grant to help Pakistan meet macroeconomic stability objectives and increase spending on human capital specifically in education, health, clean drinking water, and earthquake reconstruction |
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