The world's largest backer of the fight against AIDS, tuberculosis and malaria said on Wednesday it was cutting new grants for countries battling the diseases and bringing in a new manager to ensure better administration.
The move by the Global Fund to Fight AIDS, TB and Malaria takes management responsibility away from Michel Kazatchkine, currently executive director, and means the fund will make no new grants or funding until 2014.
Until then, any low and middle-income countries who have Global Fund grants that expire can apply for emergency maintenance funding to tide them over, a spokesman said.
Substantial budget challenges in some donor countries, compounded by low interest rates, have significantly affected the resources available for new grant funding, the Global Fund said in a statement after its board met in Accra, Ghana.
As a result, the Global Fund will only be able to finance essential services for on-going programmes that come to their conclusion before 2014.
The public-private Global Fund, based in Geneva, accounts for around a quarter of international financing to fight HIV and AIDS, as well as the majority of funds to fight TB and malaria. Founded in 2002, it raises money from donors every three years.
To date, it has committed $22.4 billion in 150 countries to support large-scale prevention, treatment and care programmes against the three diseases. But in recent years it has struggled to persuade international donors to pledge enough money for its work, and has faced accusations of lax regulation of money.
The Fund commissioned a review of its procedures in March after reporting grave misuse of funds in four recipient nations, a move that prompted some donors such as Germany and Sweden to freeze their donations.
Among other recommendations, the review committee said the Global Fund should adopt a risk management approach to financing programme which would take proper account of which countries could be most trusted with its money.
In Wednesday's statement, the Fund said a new general manager would now be appointed to work alongside the executive director and help take the organisation through its transformation phase over the next twelve months.
A spokesman said a decision on this post would be taken fairly quickly and the person appointed would be a tried and tested manager with a background in this sort of work.
It's an all-absorbing job, and frankly for the executive director to do this alongside his other roles would be very challenging, spokesman Andrew Hurst told Reuters.
At its last fund-raising conference in 2010, the Global Fund failed to secure the $13 billion minimum it said it needed to sustain the global fight against the three killer diseases.
The $11.5 billion in pledges it did win was also way below the $20 billion it had asked for to be able to scale up its efforts in the hardest-hit countries.
The international medical charity Medecins Sans Frontieres said it was concerned about the Global Fund's unprecedented decision to cut new grants, especially at a time when latest data on HIV and AIDS are suggesting that getting AIDS drugs to more people earlier could turn the epidemic around.
There's a shocking incongruence between both the new HIV science and political promises on one hand, and the funding reality that is now hitting the ground on the other, said MSF's Tido von Schoen-Angerer. Donors are really pulling the rug out from under people living with HIV/AIDS at precisely the time when we need to move full steam ahead.
In its latest report on Monday, the director of the United Nations AIDS programme said the past 12 months had been a game-changing year in the fight against the pandemic and voiced optimism that life-saving AIDS treatment is starting to bring down the rate of new infections.