The U.S. Agency for International Development (USAID) is pulling aid from El Salvador's national police and a public information institute and will instead redirect the funding to civil society groups, the agency's head said in a statement Friday.
The statement cited concerns over votes earlier this month by legislative allies of President Nayib Bukele to oust the attorney general and top judges.
USAID Administrator Samantha Power expressed "deep concerns" with the dismissals as well as "larger concerns about transparency and accountability" in the Central American country.
The earmarked funds will now go to "promoting transparency, combating corruption and monitoring human rights" in concert with local civil society groups, the statement said, without specifying the amount of money in question.
In an apparent response to Power, Bukele heaped scorn on the civil society groups that were poised to benefit from the shift in U.S. funding in a post on Twitter minutes after the announcement.
"It's good they receive foreign financing, because they will not receive a cent from the Salvadoran people," Bukele wrote.
USAID, the international development arm of the U.S. government, provides funding to a wide variety of programs in mostly poor countries across the globe.
"Respect for an independent judiciary, a commitment to the separation of powers and a strong civil society are essential components of any democracy," it said in its statement.
It is the latest salvo in an intensifying spat between the two countries. On Tuesday, the U.S. government released a list of allegedly corrupt Central American politicians, including a couple with close ties to Bukele. That prompted the Salvadoran leader to praise China, in an apparent swipe at Washington.
Bukele, 39, who is popular at home, has argued that the high-profile dismissals were justified and legal.
Bukele's party accused the five ousted judges of impeding the government's health strategy amid the COVID-19 pandemic, and the attorney general of lacking independence.
The abrupt votes to remove them were criticized as a dangerous power grab by the tiny opposition to Bukele in El Salvador, as well as the U.S. government and international rights groups like Amnesty International.
Bukele's critics also accuse him of misusing the national police and the public information institute for political ends.
El Salvador, which has an economy closely tied to the United States by trade and a large migrant population, is negotiating a more than $1 billion loan from the International Monetary Fund (IMF), where Washington wields significant influence.
The IMF earlier this week cited progress in the ongoing talks.