The Global Fund had said the Reserve Bank "confiscated" the aid money in 2007, and warned on Thursday it would not give hundreds of millions of dollars of proposed new aid grants to Zimbabwe until all the money was returned.
The Global Fund, launched by the G8 in 2002, has already given grants worth up to $88 million to the southern African nation, which has the fourth-highest rate of HIV prevalence in the world, according to 2007 data.
"The Global Fund greatly appreciates this development which will accelerate the life-saving activities of the malaria, TB and HIV programmes supported by the Global Fund in Zimbabwe," said the fund’s executive director, Michel Kazatchkine, on a visit to India. The Global Fund rerouted most of its money out of Zimbabwe as the country went into economic meltdown.
It bought relief materials from outside and then shipped them in but kept more than $12 million to spend locally, of which $7.3 million had not been returned until Thursday, Kazatchkine said.
The Global Fund said it had kept the $12 million in three commercial banks, but was then told to transfer the money to the Reserve Bank, from where it became "impossible" to make withdrawals.
The Global Fund had been worried about exchange rate risks in a country where inflation is officially put at 231 million percent, but the Reserve Bank said on Thursday the fund would be allowed to distribute its aid money in U.S. dollars.
Local media had reported that the aid money was handed out by the Reserve Bank to buy tractors and expensive televisions but Kazatchkine said the Global Fund has "no evidence of fraud". The Reserve Bank of Zimbabwe also denies the charge.
The Global Fund says it has prevented 2.5 million people dying from HIV/AIDS, TB and malaria worldwide.
It is set to grant up to $3 billion dollars in new funding by Saturday after a meeting in India.