The Global Fund to Fight Aids, Tuberculosis and Malaria has introduced a stop-gap measure to keep essential services going, but has cut off a lifeline for civil organisations counting on new grants.
The stop-gap, called the transitional funding mechanism, will provide emergency funds to continue essential prevention, treatment and care services that are now financed by the body.
After meeting in Accra, Ghana, recently, the fund's board said it had a guaranteed $4-billion in its trustee account for existing grants and expected to issue more than $10-billion in new grants from funds donors pledged for existing programmes.
But a revised resource forecast presented to the board showed that huge budget challenges in some donor countries, intensified by low interest rates, significantly affected available resources to fund new grants.
The fund hoped to have nearly $12-billion available, but fell short by $2-billion, said board chairman Simon Bland. This forced the board to cancel the 11th round of its funding for programmes aimed at treating the three diseases.
"Because some traditional donors did not pledge, and because of the difficult economic outlook in virtually all donor regions, it is uncertain at this point whether all pledges will be turned into contributions on time," said Bland.
"Decreasing interest rates are resulting in diminishing investment income from our trustee account, which affects the return on all the money that is already paid in. Because of these uncertainties, it would be irresponsible to continue promising opportunities for additional funding when we are not sure we will have the money needed."
Civil society organisations are sorely disappointed, as they were counting on "round 11" grants to pay for their projects after missing out on round 10, which disbursed $1.73-billion to 64 countries for 79 disease proposals.
A panel of civil organisations, including Médecins Sans Frontières (MSF), Section27, Treatment Action Campaign and Malawi Network of People Living with HIV/Aids (MANET+), told this week of the possible potential consequences of the cancellation of round 11.
Malawi relies almost entirely on external funding for its HIV programmes as its government contributes only 1% of funds needed. Its round 10 proposal was rejected as the Global Fund regarded it as too ambitious.
"As a country we were very much looking forward to round 11," said Safari Mbewe, spokesman for MANET+.
The future of about 300000 Malawians with the condition is uncertain now.
Swaziland has enough anti-retroviral drug stocks to last until next April, after receiving emergency funding from the US President's Emergency Plan for Aids Relief.
"We don't know what will happen after that," said Aymeric Péguillan, head of the MSF mission in Swaziland.
The country was banking on round 11 to continue and scale up its HIV/Aids programmes, but immediate funding shortages are expected for the 2012/14 period.
On Thursday, MSF president Unni Karunakara summed up the feelings of those affected. "There's a huge sense of shock and dismay within MSF that the Global Fund, which has delivered such a massive leap forward in HIV, malaria and TB treatment worldwide through the projects it funds, should be hit right now by a funding crash that puts so many people's lives at risk," said Karunakara.
"MSF works in many of the countries affected, and we can see how fragile the hard-won gains are."