For 64 years, USAID has played a role in Indonesia. According to its official website, the agency was established by President John F. Kennedy in 1961 as a central aid body responsible for managing donor funds to other countries, particularly those related to social and economic development. CNN reports that USAID today allocates hundreds of billions of dollars annually, with its highest expenditure recorded in 2023, when $72bn was directed to Ukraine.

As a recipient country, Indonesia has also received annual funding from USAID. According to data compiled by Good Stats and reported by Magdalene, in 2024, USAID provided $153.5mn in aid to Indonesia, an increase from the $151.6mn allocated in 2023.

Information from ForeignAssistance.gov, as reported by Tempo, indicates that USAID’s funding in Indonesia is typically divided between operational costs and aid distribution. Operational costs include the Foreign National Employees Separation Liability Fund, which is allocated for USAID employees in Indonesia who are not US citizens.

USAID provides various types of aid to Indonesia, including economic support funds, development assistance, and international disaster relief. Between 2006 and 2011, USAID also channelled tens of millions of dollars towards post-tsunami reconstruction and recovery through the Tsunami Recovery and Reconstruction Fund.

However, earlier this year, Elon Musk, head of the Department of Government Efficiency (DOGE), announced that Donald Trump had approved the cessation of USAID operations, Tempo reported. According to an official statement on usaid.gov, all USAID employees worldwide started being furloughed on February 7 2025, except those working in essential sectors. Additionally, US employees working abroad were required to return to the United States within 30 days of that date.

The decision has raised concerns about several key programmes funded by USAID, particularly in the sectors of healthcare, access to clean water and sanitation, disaster response, and governance. 

As reported by Jakarta Globe, USAID programmes in Indonesia that are at risk of being halted include:

Healthcare programmes

One of USAID’s flagship health initiatives in Indonesia is the USAID BEBAS TB programme, launched in July 2023 with a five-year budget of $70mn. The programme aims to enhance the detection, diagnosis, treatment, and prevention of tuberculosis (TB) to help Indonesia achieve its target of TB elimination by 2030. The programme focuses on four provinces with high TB prevalence: North Sumatra, West Java, Central Java, and East Java. If funding ceases, technical assistance and treatment for those in need could be disrupted.

USAID also plays a crucial role in Indonesia’s HIV/AIDS response. Through contributions to the Global Fund under the US President’s Emergency Plan for AIDS Relief (PEPFAR), USAID has helped provide treatment for millions of HIV patients in Indonesia.

Clean water and sanitation projects

To improve access to safe drinking water and sanitation services in Indonesia, USAID launched the Global Water Strategy Indonesia High Priority Country Plan in July 2023. Through this initiative, USAID committed over $50mn to ensure more than 1mn Indonesians gain access to clean water and climate-resilient sanitation services by 2027. The agency also aimed to drive $300mn in investment in the sector and strengthen 100 water and sanitation institutions.

The decision to halt funding could also impact the USAID Indonesia Urban Water, Sanitation, and Hygiene Market (IUWASH Pasar) programme, a five-year initiative with a $10mn budget aimed at expanding access to clean water and sanitation for low-income communities. This programme is linked to IUWASH Tangguh, which has a budget of $44mn and is designed to benefit 1.5mn Indonesians.

Governance and transparency initiatives

To enhance governance and transparency in Indonesia, USAID launched the Effective, Efficient, and Strong Governance (ERAT) programme in March 2022. The five-year initiative, with a budget of $38.5mn, seeks to improve public service quality, transparency, and anti-corruption efforts at the local government level. It also focuses on strengthening democracy, accountability, and human rights protection in Indonesia.

However, with funding being cut, the continuation of these governance reforms is now in question. Experts warn that without stable financial support, Indonesia’s progress in tackling corruption and improving public sector accountability could face significant setbacks.

Post-disaster recovery and reconstruction efforts

USAID has been a key partner in post-disaster recovery efforts in Indonesia since the 2004 Indian Ocean tsunami. Between 2006 and 2011, the agency allocated millions of dollars through the Tsunami Recovery and Reconstruction Fund, benefiting over 580,000 people in Aceh. This support included rebuilding the 146-kilometre Banda Aceh-Calang road, revitalising the Gayo coffee industry, and strengthening disaster mitigation strategies.

The current uncertainty surrounding USAID funding raises concerns about Indonesia’s ability to respond swiftly and effectively to future natural disasters. USAID has historically provided rapid and large-scale humanitarian assistance in times of crisis.

USAID freezes recruitment amid budget cuts

USAID Indonesia has cancelled several job openings due to budget constraints, as announced in an Instagram post on January 24, 2025. Affected positions include Infectious Disease Advisor, Project Management Specialist – Tuberculosis, and Project Management Specialist – Urban Resilience Lead. USAID Indonesia stated that these positions might be reopened in the future, giving applicants a chance to reapply if new opportunities arise.

On March 10 2025, US Secretary of State Marco Rubio announced that over 80% of USAID-sponsored programmes would be discontinued, as reported by AP. “Following a six-week review, the Trump administration has officially cancelled 83% of USAID programmes,” Rubio wrote in a post on the social platform X. He stated that 5,200 contracts had consumed tens of billions of dollars in ways that did not serve, and in some cases harmed, key US national interests.

USAID’s funding cuts come at a time when the Indonesian government has recently announced budget reductions in critical sectors including Water Resources Directorate General, Highways Directorate General, Human Settlements Directorate General, Strategic Infrastructure Directorate General, and Ministry of Health. 

This has understandably raised concerns about the government's ability to prioritise and sustain public welfare initiatives without becoming overly dependent on foreign aid.