New Zealand's High Commissioner in Papua new Guinea, Nils Holm, says New Zealand's donor agency was left with no option but to suspend 25 agricultural scholarships for PNG women.
NZAID has announced the scholarships had been suspended at the Timber and Forestry Training College because the college has not met reporting requirements or acquitted previous funding.
Mr Holm says New Zealand places great emphasis on the need to fully account for an monitor the expenditure of all taxpayer money spent on overseas development.
"And we've just found that we're now in a position where if we don't have complete confidence in the way in which this organisation is using New Zealand taxpayer funds, we've really got no alternative, unfortunately, but to pull the pin."
Nils Holm says the decision only affects the 25 recipients at the college and other institutions appear on target to meet the full quota of 230 scholarships this year.