Britain suspends Malawi budget aid over human rights

Reuters, Thursday 14 Jul 2011

UK suddenly shelved its aid package to Malawi over what is calls 'autocratic and intolerant of criticism' regime

Britain said on Thursday it had suspended aid to Malawi indefinitely and accused the southern African nation's government of mishandling the economy and trampling over human rights.

The move by Malawi's biggest donor and former colonial ruler is likely to exacerbate a funding crisis for a government that has traditionally relied on foreign aid for more than a third of its revenue.

It will also intensify a dollar shortage that is straining the kwacha's peg of 150 to the dollar and causing acute fuel shortages in the landlocked nation of 13 million.

London first mentioned an aid freeze in April after a diplomatic spat in which Malawi kicked out the British ambassador because of a leaked diplomatic cable that called President Bingu wa Mutharika "autocratic and intolerant of criticism".

The latest comments from the Department for International Development do not suggest a imminent patch-up with Mutharika, a former World bank economist first elected in 2004.

"Demonstrations have been suppressed, civil society organisations intimidated, and an Injunctions Bill passed that would make it easier for the Government to place restrictions on opponents without legal challenge," it said in a statement.

Aid from other donors has also stalled because of Malawi's failure to complete a review of its economic performance by the International Monetary Fund.

Even though it is one of the world's poorest countries, Malawi has been among its fastest growing economies in the last five years, due in large part to a donor-funded fertiliser subsidy programme for farmers.

However, the IMF has said government growth forecasts of 6.9 percent this year and 6.6 percent in 2012 are unrealistic given the sharp drop in aid.

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