LONDON (Reuters) – Investors said the US decision to freeze and profit the basic relief agency that got rid of the countries that have obtained their funding and may make it difficult for emerging economies to attract private money, the investors said.
The USAID Agency (USAID) has not only described 44 billion dollars in the fiscal year 2023, but the establishment of private investment in everything from health care to small companies, and leads to increased merit in the largest emerging markets that borrow money on sovereign debt markets.
Its cancellation may undermine investment in secret countries Langka to South Africa and make it more expensive for them to borrow on international markets.
Investors say the funds from the agency enable startups in the poorest countries in the world to grow to the point that they can attract investors from the private sector.
Elsewhere, relatively small amounts of money help reduce the risks of other banks and lenders who are looking to invest in efforts to expand irrigation, or build hospitals, and benefit from money to millions of others. Its support can enhance governments’ ability to pay debts and enhance their economies.
“They have effects on medium and long -term credit merits for a country,” said Julia Pellegrini, chief wallet manager in the emerging market debts in “Allianz Global”, referring to the cuts.
The freezing of foreign aid financing in the United States near the United States has entered last month, and President Donald Trump said he wanted to finish the United States Agency for International Development.
For Simon Shawwal, CEO of OKO, which focuses on Africa – supported by Morgan Stanley and New Fond Capital, facilitates and facilitated crop insurance designs for farmers in Mali, Ivory Coast and Uganda – the effect was immediate.
He said that the company is at risk of closing without money from the American Agency for International Development, which would have been counted, directly and indirectly, 80 % of the cash flow of OKO this year.
“We cannot raise the investment we were planning,” he said without replacing the United States Agency for International Development. “We are at risk of having to close the work if we find no alternative partners.”
The alternatives are limited. The United States provided 42 % of all humanitarian aid followed by the United Nations in 2024, and other countries also sought to reduce spending on aid.
The quick full back can also knock on some troubled countries such as Ethiopia immediately and erosion of other economies.
“This may be a great setback for these border markets,” said Hemancho Bourwal, a Credit analyst on the emerging market in the field of Seapport Global.
Immediate and comprehensive
The emerging markets were ready to return the investor after years of punishing external flows due to the Covid-19 pandemic, high global interest rates and Russia’s invasion of Ukraine.
The restructuring of the debt in Ghana, Sri Lanka and Ukraine have strengthened hopes that special cash flows help meet the growth needs – and costly – for everything from climate change to infrastructure.
Expectations are now more blurry.
Florian Kemeric, an administrative partner with Impact Investment Coais, said that the speed and depth of discounts in the United States can reduce the number of investment projects.
He said, “You need capital that is not intended to win …
The United States Agency for International Development usually provides grant and technical support, but also enabled some mixed funding, and the $ 70 million investment fund with Norway aimed at stimulating hundreds of millions of dollars in investment for farmers and agricultural companies in Africa.
Rose credit effects
Bond investors said they are closely monitoring the cuts and effects of countries such as Ethiopia, the second largest recipient of the US Agency for International Development after Ukraine.
East Africa is in the midst of restructuring the only sovereign dollar bond and working to recover from the punished civil war.
“With regard to comprehensive financing needs, American aid is more important for the likes of Ethiopia,” said ABRDN EDWIN GUTERREREZ director, adding that “he does not have many funding sources available to it.”
Ethiopian officials did not immediately comment.
Ukraine, involved in three years of war with Russia, got more than $ 16 billion from the United States Agency for International Development last year – approximately 10 % of its gross domestic product.
Timothy Ash, the sovereign strategic expert at RBC Bluebay, indicated that former US President Joe Biden has been uploaded about $ 50 billion in Ukraine’s funding this year – and Europe also provided money.
“They have a war box of about $ 100 billion that must be isolated.” But “it’s definitely harmful.”
Other recipients, such as Nigeria or Kenya, can replace lost aid with borrowing. Kenya Finance Minister Reuters told the country that the country will need to re -customize spending if the freezing becomes permanent, while Nigeria increased its budget volume 2025 to 54.2 trillion ti ($ 36.4 billion) on Wednesday, from 49 trillion brightness.
South Africa, Trump’s goal of the Land confiscation law, gets 17 % of the financing of HIV/AIDS from the United States. Not replacing it with the dangers that cause economic traction if those who live in a productive manner with the disease are sick.
Pellegrini pointed out that borrowing – and building possible debt is expensive – comes at a cost.
She said: “This means, in turn, that they will go to the capital markets, they will export bonds, perhaps in the higher returns, which in turn again affect their budgets and what they can do with money.” “So it is a vicious cycle.”
(Additional reports and graphics by Mark Jones in London; additional reports by Denkan Meriri in Nairobi and Rodrigo Campus in New York; edited by Emilia Citol-Matis)
