Malawi Aid Suspension May Curb Economic Growth, Deter Investment

The suspension of U.S. and U.K. aid to Malawi, which depends on donors to fund as much as 40 percent of its budget, is likely to deter investment and undermine a five-year economic boom in the southern African nation.

The U.S. yesterday put a $350.7 million grant on hold after security forces killed 18 people protesting about fuel shortages and rising food costs on July 20. The U.K., the biggest donor, has also cut funding and announced it is reviewing relations with Malawi after President Bingu wa Mutharika deported its envoy for criticizing him in a leaked diplomatic cable.