The European Commission said on Monday it was suspending all budgetary support payments to Honduras after the failure of efforts to resolve a crisis following a military overthrow of President Manuel Zelaya, Reuters reported.
"I very much regret that it has not been possible to this date to arrive at a mutually agreeable solution to the Honduran crisis," EU External Relations Commissioner Benita Ferrero-Waldner said in a statement.
"In view of the circumstances, I have taken the difficult decision to suspend all budgetary support payments," she said.
An EU spokeswoman said the European Commission had earmarked 65.5 million euros ($92.73 million) for budgetary support payments for the 2007-2010 period.
Honduras' political foes are on a collision course after talks mediated by Costa Rican President Oscar Arias collapsed on Sunday and deposed President Manuel Zelaya vowed to return home despite warnings from a defiant de facto government installed after the June 28 military coup.
The interim government has threatened to arrest Zelaya if he returns and crack down on any protesters who stir up trouble.
The EU has backed efforts by the Organization of American States for a peaceful solution aimed at restoring constitutional order by reinstating Zelaya.