Earlier this week, executive director of the Fund Michel Kazatchkine warned that no future grants from the aid agency would be awarded until the remaining US$7.3 million had been transferred to commercial banks by the due date.
This did not happen, despite assurances from the Reserve Bank of Zimbabwe (RBZ). "The Reserve Bank has failed to meet the deadline and they have asked to be given a little while longer. This doesn't reflect very well on Zimbabwe," said Jon Liden, the Global Fund's spokesman.
The aid agency has five ongoing grants in Zimbabwe worth US$88 million, and disbursed just over US$39 million between 2004 and 2007, helping to enrol 13,000 people in AIDS treatment programmes and supply 330,000 insecticide-treated bed nets to combat malaria.
Some of the money was held by the RBZ, but was distributed "erratically and only partially", which had affected the implementation of programmes, the Fund said.
Although there was no evidence of fraud, the Global Fund will not be disbursing any more funds to Zimbabwe until it can "come with some guarantees that can make us comfortable that this will not happen again", Liden told IRIN/PlusNews.
"Given the complexities of the hyperinflationary environment and the lack of confidence in the Central Bank, we could look at having as little cash in the country as possible, with implementers accessing the funds without going through the banking system."
The failure to meet the deadline came a day before the Global Fund's board of directors are to meet in New Delhi, India, to decide on whether to approve funding applications from Zimbabwe and other countries.
Zimbabwe's application for about US$300 million for HIV/AIDS, US$58 million for its TB programme, and US$80 million to revive the ailing health sector was found to be "technically sound", and was widely expected to be approved by the board.
Health Minister Dr David Parirenyatwa, who also heads the body responsible for drawing up funding proposals, expressed concern over the effects of a possible grant refusal on the country's AIDS efforts.
"We are eagerly waiting for the funds because our people are really in need of it. We hope the disputed US$7 million will not affect our pending grant proposal, and we are working hard to ensure that money goes back to its intended beneficiaries," he told IRIN/PlusNews.
"We strongly recommend that the Global Fund looks at other means to disburse this money, [and are] recommending that any future grants come straight to programme implementers instead of through RBZ, so that we minimise the interferences," he said. "We hope the Global Fund will consider this proposal and not deny the people of Zimbabwe money."
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