Ahmed, 31, a former refugee who became an Australian citizen last month, replaces Xavier Doherty, who played in the ICC Champions Trophy in England last June.
Chief selector John Inverarity said Ahmed has an opportunity to be the squad's lead spin bowler.
"Fawad has been a consistent wicket-taker on the Australia A tour of Zimbabwe and South Africa," Inverarity said.
"He is a very good and mature leg-spin bowler and the selection panel is keen to see how he fares in international competition."
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Smith replaces Mitchell Marsh.
"Steve is a talented young stroke-maker who is steadily gaining confidence and has been impressive at times during the Ashes series and Australia A tour that preceded it," said Inverarity.
"Mitchell is still only 21 years of age and is a player who remains of high interest.