Britain freezes Malawi aid, chides Mutharika

Thu May 19, 2011 4:14pm GMT

Last month, the United States approved a $350 million grant for Malawi's dilapidated electricity network that had been delayed because of concerns about a law preventing gay marriages and another that lets the government ban newspapers.

The DfID statement also said International Development Secretary Andrew Mitchell had written to Mutharika to express his concerns about corruption and government accountability.

Landlocked Malawi has enjoyed an economic boom in the last five years with the economy expanding at an average of seven percent a year and inflation falling to single digits.

However, a donor squeeze and question marks over the future of tobacco exports, which account for 70 percent of foreign exchange earnings, could hit growth and put the currency, the kwacha MWK=, under pressure. (Reporting by Mabvuto Banda, Editing by Ed Cropley/Maria Golovnina)

Powered by Reuters AlertNet. AlertNet provides news, images and insight from the world's disasters and conflicts and is brought to you by Reuters Foundation.