* Ruling party says donors funding opposition
* Netherlands denies allegations
* Tension rising ahead of 2011 presidential vote
LUSAKA, May 5 (Reuters) - Zambia's ruling party has accused the
Netherlands of financing the main opposition party, a charge that
threatens to raise tensions with donors who froze funding for
AIDS and other health programmes last year amid concerns about
Katele Kalumba, national secretary of the ruling MMD party, said
the Netherlands Institute for Multiparty Democracy (NIMD) was
bankrolling the Patriotic Front (PF), whose leader, Michael Sata,
poses a major threat to President Rupiah Banda in an election due
"There is information that they have special funding dedicated to
the agenda of our colleagues, the PF," Kalumba told Reuters.
The Dutch embassy in Lusaka denied the accusations, saying the
NIMD funded all parties in parliament through the Zambia Centre
for Interparty Dialogue (ZCID).
"The NIMD does not favour any party over the other and works with
all parties in Zambia on an equal basis through the platform of
the ZCID," embassy spokesman Joost van Ettro said.
Sata, a gruff populist with strong support among the jobless
youth and the poor, narrowly lost the 2008 presidential election
to Banda and has since forged an alliance with the United Party
for National Development (UPND), the third group in parliament.
In a by-election last week, the MMD lost one of two seats up for
grabs to the alliance. [ID:nLDE64003P]
Since mid-2009, the alliance has won three seats in by-elections
after the deaths of legislators in MMD strongholds.
Last year, the Netherlands and Sweden froze $33 million in aid
for Zambia's fight against HIV/AIDS and other health programmes
after it emerged senior officials had stolen $5 million.
[ID:nLS72258] (Reporting by Chris Mfula; Editing by Giles Elgood)