(CNN) -- Bolivian President Evo Morales said he is expelling the U.S. Agency for International Development from his country for allegedly meddling and conspiring against the government.
"USAID is out; I ask the foreign minister to immediately communicate with the U.S. Embassy," Morales said in a speech Wednesday, according to the state-run ABI news agency.
According to USAID's Bolivia website, the agency has operated there since 1964. It says it carries out health, sustainable development and environmental programs in the country. The agency says its 2011 budget for Bolivia was $26.7 million.
The State Department called the decision regrettable and said the ones who will be hurt by the expulsion will be ordinary Bolivians.
"We deny the baseless allegations made by the Bolivian government," State Department spokesman Patrick Ventrell said of the accusations that the agency meddled in Bolivian affairs.
After Morales' announcement Wednesday, Bolivia's foreign minister called the U.S. Embassy in La Paz to inform officials of the decision and said USAID would be given a "reasonable" amount of time to end operations, which employ nine Americans and 37 Bolivians, Ventrell said.
Bolivia and the United States have had diminished relations since September 2008, when each country expelled the other's ambassador. Morales, a strong proponent of the cultivation of coca plants -- the source of cocaine -- expelled the U.S. Drug Enforcement Administration a month later. He also delivered a strong verbal criticism of the U.S. government at the United Nations General Assembly that year.
The order to expel USAID appeared to be off-the-cuff, but it's not the first time it's been suggested.
In 2011, an influential Bolivian official accused the agency of "destabilizing" the government and called for its ouster.
"The expulsion of USAID should be ... an act of sovereignty," Juan Ramon Quintana, director of a Bolivian government development agency and a former top presidential aide, said at the time.
The move is also in protest of a comment made by U.S. Secretary of State John Kerry at a hearing in Washington last month, Morales said.
In response to a question about Latin America, Kerry told lawmakers that "the Western Hemisphere is our backyard. It's critical to us."
To many in the United States, the reference to "backyard" would mean that the Western Hemisphere is a neighbor. But Morales took offense, apparently interpreting the phrase as derogatory toward Latin America's place in relation to the United States.
A history of U.S. policy toward Latin America that asserted American dominance over the region made Kerry's phrase stinging to some. The phrase "America's backyard" harkens back to the Monroe Doctrine, which considered Latin America under the influence of the United States.
"We may be a small country, but we deserve respect," said Morales, stating his offense to being called the "back patio" of the United States.
Ventrell said Kerry did not intend to offend anyone with his remarks.
"It's about us being neighbors," he said.
CNN's Catherine E. Shoichet and Jill Dougherty contributed to this report.