OSLO, Oct 11 (Reuters) - Norway has suspended budget aid to Malawi, one of the poorest nations in Africa, because of alleged corruption and embezzlement, the foreign ministry said on Friday.
"There are clear signs that substantial funds have been embezzled from the Malawian Ministry of Finance," Norway said in a statement.
"We have a policy of zero-tolerance for corruption, and cannot disburse any more budget support to the Malawian authorities until this matter has been fully resolved," development Heikki Eidsvoll Holmaas said.
So far this year Norway provided 250 million crowns ($41.4 million) worth of aid to Malawi, a fifth of which was in the form of budget support.
Norway is one of the world's biggest foreign donors and expects to donate $5 billion this year to dozens of developing nations.
Earlier this month it decided to reduce its aid to Afghanistan, signalling to Kabul that it has not done enough to combat corruption and violence against women.
($1 = 6.0448 Norwegian krones) (Reporting by Balazs Koranyi; editing by Ron Askew)