"Recognizing steps Egypt has taken over the last year in response to specific US concerns... the administration has decided to allow Egypt to use the remaining $195 million," the official said, without describing those steps.
The funds for Egypt, a key US ally, were withheld last year after the passage of a law that severely restricted the work of non-governmental organizations (NGOs).
"There remain areas of concern, and we will continue to make clear the need for progress in addressing them, including... addressing our concerns about the NGO law," the State Department official said.
"We will continue to look for and encourage opportunities to improve and bolster cooperation," the official said.
The United States "remains committed to strengthening our strategic relationship with Egypt," the official added.
Since 2013, international human rights groups have criticized President Abdel Fattah al-Sisi's government for cracking down on secular and left-wing activists, as well as Islamists close to the banned Muslim Brotherhood.
Human Rights Watch said last year that the NGO law would lead to "unprecedented levels of repression and ... criminalize the work of many NGOs."
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