The Pentagon will not pay Pakistan $300 million in military reimbursements after US secretary of defence Ash Carter decided not to tell Congress that Pakistan was taking adequate action against the Haqqani network, a US official said.
Relations between the two countries have been frayed over the past decade, with US officials frustrated by what they term Islamabad's unwillingness to act against Islamist groups such as the Afghan Taliban and the Haqqani network.
"The funds could not be released to the government of Pakistan at this time because the secretary has not yet certified that Pakistan has taken sufficient action against the Haqqani network," Pentagon spokesman Adam Stump said on Wednesday.
The $300 million comes under the Coalition Support Fund (CSF), a US defence department programme to reimburse allies that have incurred costs in supporting counter-terrorism and counter-insurgency operations. Pakistan is the largest recipient.
"This decision does not reduce the significance of the sacrifices that the Pakistani military has undertaken over the last two years," Stump said.
According to Pentagon data, about $14 billion has already been paid to Pakistan under the CSF since 2002.
The decision by the Pentagon is a sign that while it sees some progress by Pakistan in its military operations in North Waziristan, much work remains.
Pakistan rejects harboring militants but says there are limits to how much it can do as it is already fighting multiple Islamist groups and is wary of a "blowback" in the form of more militant attacks on its soil.
"Pakistan does not draw any distinction between any terrorists and we have taken up the fight against terrorism and the terrorist elements within Pakistan," foreign office spokesman Nafees Zakaria told reporters in Islamabad on Thursday.
"These reimbursements enable the United States to support Pakistan's ongoing counterterrorism efforts in a manner that serves shared interests of both the countries."
Relations between the United States and Pakistan were tested in May by a US drone strike that killed Afghan Taliban chief Mullah Akhtar Mansour on Pakistani soil.
There has been growing resistance in the US Congress to sending money to Pakistan. Many lawmakers have expressed concern about its nuclear program, commitment to fighting terrorist organisations and cooperation in the Afghanistan peace process.
In March, Republican senator Bob Corker said he would use his power as the chairman of the Senate Foreign Relations Committee to bar any US funding for Islamabad's purchase of $700 million of Lockheed Martin Corp F-16 fighter jets.