LILONGWE, Aug 14 (Reuters) Malawi's President Bingu wa Mutharika threatened today to close parliame

LILONGWE, Aug 14 (Reuters) Malawi's President Bingu wa Mutharika threatened today to close parliament if a budget crisis threatening to cut off services in the impoverished nation was not resolved within two days.

The 2007/2008 budget debate, which should have been concluded by June 30, was suspended last month because the opposition first wanted a dispute over the poaching of its members by the ruling party settled.

''I am giving them two days -- today and tomorrow -- and if today and tomorrow they do not start discussing seriously the budget, I am closing down the parliament,'' Wa Mutharika said in a speech monitored on state radio.

''Parliament, especially the opposition, has abrogated their responsibility and as such they have therefore become irrelevant for the development of this country,'' the president said in the eastern town of Balaka.

Leaders in parliament were meeting on Tuesday afternoon to discuss what to do. Finance Minister Goodall Gondwe said in an interview with Reuters that the southern African country risked losing donor budget aid if the stand-off continued.

''We are in a financial crisis and further delays to pass the budget will be catastrophic as donors will not be forthcoming to put financial support to the budget,'' Gondwe told Reuters on yesterday evening.

Yesterday, the government rejected a proposal by the opposition to adopt a temporary three-month budget that would allow for public spending while the political dispute over the opposition's members was being resolved.

The draft 2007/08 budget allocates more resources to poor rural areas, proposes salary increases for civil servants and allows higher spending on health care and food production.

Malawi relies heavily on donor support for its public spending. Gondwe said the country was expecting 500 million dollars of foreign aid for its $1.2 billion budget.

Frustrations have been growing in the southern African nation of 12 million people as the political standoff deepened, and thousands have taken part in demonstrations.

Reuters RSA DB2340