Australia reallocates $5.1 billion aid to Pacific, Southeast Asia

Australia is reallocating a larger portion of its foreign aid budget to Pacific Island nations and Southeast Asia in response to cuts in U.S. aid, particularly from USAID. The 2025/26 Budget allocates nearly $5.1 billion for overseas development assistance, marking a slight increase from the previous year, but the overall budget remains constrained due to inflation and reduced allocations to multilateral programs. Foreign Minister Penny Wong emphasized the need to fill gaps left by U.S. aid cuts, directing funds towards health services, climate action, and humanitarian crises. Some critics argue that Australia must maintain its aid commitments to counter China's influence in the region and uphold its leadership role. As defense spending is also projected to increase significantly, concerns are rising about balancing military expenditures with foreign aid responsibilities. Experts advocate for a higher aid-to-GNI ratio, fearing that aid cuts could lead to increased unrest and conflict in the region.