MANAGUA -- The U.S. ambassador to Nicaragua gave the government of the Central American country 90 days to settle a dispute over last month's municipal elections or run the risk of losing millions of dollars in development funds.

Robert Callahan referred to the money Nicaragua gets from the Millennium Challenge Corp, a U.S. government development program that operates in poor countries. The MCC already moved to withhold $64 million pledged to Managua a part of a $175 million program.

"If the country cannot come to an agreement that is acceptable to all Nicaraguans, in which the whole country has faith, than I'm afraid that Nicaragua's account could be canceled," the envoy told a press conference at the U.S. Embassy here.

He added that a failure by the leftist Sandinista government to resolve the electoral quarrel could prompt Washington to review all of its aid for Nicaragua, the second-poorest country in the Western Hemisphere.

Callahan cited "profound doubts over the transparency of the count" in the Nov. 9 elections that saw President Daniel Ortega's Sandinistas take a majority of mayoralties, including Managua.

At the same time, the diplomat said that the United States is not imposing any solution and that the only request is that the democratic process be respected.

He noted that European aid donors are equally concerned about the disputed election.

Callahan said that the new U.S. administration, headed by Barack Obama, will maintain the same requirements regarding respect for the democratic system.

The ambassador noted that since 1990 the U.S. Agency for International Development has provided to Nicaragua $1.4 billion in aid for education, health care, infrastructure, strengthening democratic processes and environmental protection.

He added that during the same period Washington forgave $500 million in Nicaraguan debt and financed food programs for $175 million.

He also said that each year, Nicaraguans living in the United States send some $500 million in remittances to their family members still living in the Central American country.

The official election results released by the CSE electoral council gave the governing Sandinistas wins in 105 of the 146 municipalities in contention.

According to the data, the alliance headed by the main opposition Liberal Party won 37 mayoral races.

The Liberals completely reject the official results under the argument that there was "massive fraud" in the vote throughout the country and that irregularities, violations and anomalies occurred before, during and after the balloting.