Dec. 18 (Bloomberg) -- The Dutch government will cut anti- poverty funding for Nicaragua because of concerns that President Daniel Ortega manipulated municipal elections last month to favor his Sandinista party.

“I find it irresponsible to give direct aid to the Sandinista government which has sabotaged the free and fair elections in all possible ways,” Minister of Development Aid Bert Koenders said in a statement today on the ministry’s Web site.

The Dutch government had planned to disburse 12 million euros ($17.2 million) in aid over the next two years. The U.S. government-backed charity Millennium Challenge Corp., citing similar concerns about the elections, said on Dec. 11 that it would suspend assistance for new projects. The Washington-based group said it may reinstate a five-year $175 million grant if Nicaragua takes steps to ensure the election irregularities are cleared up.

Donations from foreign governments and international agencies rose 25 percent to $430 million last year, according to Nicaragua’s central bank. Ortega said in a speech earlier this month that Venezuelan President Hugo Chavez has offered to replace any financial aid cuts stemming from the disputed results, in which Sandinista mayors won 105 of 146 cities in elections held Nov. 9.

To contact the reporter on this story: Eric Sabo in Managua, Nicaragua at esabo1@bloomberg.net.

Last Updated: December 18, 2008 11:42 EST