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The US has suspended a $350m (£213m) aid package to Malawi after the security forces were accused of killing anti-government protesters last week.
A US government agency, the Millennium Challenge Corporation (MCC), said the money was to have been spent on developing Malawi's power sector.
But it had suspended the aid because it was "deeply upset" by the deaths of 19 people during the demonstrations.
The nationwide protests were against the rising cost of living in Malawi.
President Bingu wa Mutharika accused the protesters of committing treason and deployed the army and riot police in three cities - the capital, Lilongwe, the biggest city, Blantyre, and Mzuzu in the north.
Malawi faces acute shortages of electricity, fuel and foreign currency.An estimated 75% of its population live on less than $1 a day.
Malawians remain frustrated by a lack of foreign exchange and fuel despite stellar growth statistics. "The protests this week gave them a lesson," said William Sanudi, a 37-year-old curio-seller in the capital, Lilongwe. "17 August - people are waiting for that day. They will go back on the streets and things will get worse."
Mutharika has presided over six years of high, aid-funded growth, but the sheen has come off this year as he has become embroiled in a diplomatic row with the UK, Malawi's biggest donor, over a leaked embassy cable that referred to him as "autocratic and intolerant of criticism".
The cable led to the expulsion of the UK ambassador and Malawi's representative in London was sent home. Aid worth $550 million (£335m) in the next four years was suspended. The freeze has left a hole in the budget of a country dependent on handouts for 40 per cent of its revenues, and intensified a foreign currency shortage that threatens the kwacha, which is pegged at 150 to the dollar.
BBC
Continue reading the main story[h=2]Related Stories[/h]
The US has suspended a $350m (£213m) aid package to Malawi after the security forces were accused of killing anti-government protesters last week.
A US government agency, the Millennium Challenge Corporation (MCC), said the money was to have been spent on developing Malawi's power sector.
But it had suspended the aid because it was "deeply upset" by the deaths of 19 people during the demonstrations.
The nationwide protests were against the rising cost of living in Malawi.
President Bingu wa Mutharika accused the protesters of committing treason and deployed the army and riot police in three cities - the capital, Lilongwe, the biggest city, Blantyre, and Mzuzu in the north.
Malawi faces acute shortages of electricity, fuel and foreign currency.An estimated 75% of its population live on less than $1 a day.
Malawians remain frustrated by a lack of foreign exchange and fuel despite stellar growth statistics. "The protests this week gave them a lesson," said William Sanudi, a 37-year-old curio-seller in the capital, Lilongwe. "17 August - people are waiting for that day. They will go back on the streets and things will get worse."
Mutharika has presided over six years of high, aid-funded growth, but the sheen has come off this year as he has become embroiled in a diplomatic row with the UK, Malawi's biggest donor, over a leaked embassy cable that referred to him as "autocratic and intolerant of criticism".
The cable led to the expulsion of the UK ambassador and Malawi's representative in London was sent home. Aid worth $550 million (£335m) in the next four years was suspended. The freeze has left a hole in the budget of a country dependent on handouts for 40 per cent of its revenues, and intensified a foreign currency shortage that threatens the kwacha, which is pegged at 150 to the dollar.
BBC