The International Monetary Fund and donor countries suspended more than $75 million in aid in 2002 due to concerns over corruption and overspending during the rule of former president Bakili Muluzi.
Mutharika, who took over from Muluzi a year ago, has made Malawi’s economic revival his main priority, hoping to lift the country’s 11 million people from poverty and win back donor confidence.
“The aid resumption is a result of government’s commitment to reduce expenditure and its strong anti-corruption drive,” said a statement from the Swedish government issued in the capital Lilongwe.
“Sweden is now releasing its budget support to Malawi due to the fact that Malawi has made a considerable progress on macro-economic stabilisation and maintaining control of public expenditure,” it added.
Malawi’s parliament is due to adopt a new budget in June.
Some 60 percent of Malawians live on less than a dollar a day in the former British colony which is grappling with the AIDS pandemic affecting about 14 percent of adults in Malawi, or 770,000 people.
A five-member IMF team held talks in Malawi in February to review the government’s progress in cleaning up its affairs and possibly unlock financial aid.