The Dutch government has suspended nearly $150m in aid to Kenya because of concerns over corruption.
Dutch Development Co-operation Minister Agnes van Ardenne said her government wanted to see “more tangible results in the fight against corruption in Kenya”.
Kenyan officials said the move was based on a misconception.
The IMF and the World Bank have recently said they were withholding millions of dollars in aid to Kenya because of concerns over corruption.
Analysts said the decision by the Dutch government is a further blow to President Mwai Kibaki, who had appealed for funds for millions of people in need of food aid.
The Dutch government said it wanted to see more action before it re-started its 118m euros ($148m) aid programme to Kenya.
“The reason is that the Kenyan government has not produced enough proof of success in its fight against corruption,” Ms van Ardenne said in a statement.
“The Dutch government is also concerned to see more tangible results,” the minister added.
The suspended aid was aimed at supporting educational and environmental programmes.
President Kibaki was elected in 2002 on a pledge to tackle corruption which plagued previous administrations.
But Kenya has recently been rocked by a major corruption scandal—the so-called Anglo Leasing scam.
Two senior ministers implicated in the alleged $200m embezzlement scheme have resigned. They say they are innocent.
Kenyan officials said they were disappointed by the Dutch move, arguing that the government was doing a lot to tackle corruption.
They also pledged to reduce the country’s dependency on foreign aid.
“Dependency has over the years led to the mentality that we can only develop if funded by outsiders,” Kenyan government spokesman Alfred Mutua said.
“The government believes that true development can only be achieved when one is self-dependent and.. works with friends,” the spokesman added.