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US: Zimbabwe Central Bank 'Diverts' Donor Funds

This week, the Global Fund to fight AIDS, Malaria and Tuberculosis reported it would no longer fund projects in Zimbabwe through the central bank after more than $7 million of its funds disappeared from the Reserve Bank of Zimbabwe. Peta Thornycroft reports for VOA that the United States says it too will no longer fund humanitarian agencies through Zimbabwe's central bank.

United States Ambassador to Zimbabwe James McGhee tells VOA the United States is pleased that the Global Fund has decided not to channel future funds through the Reserve Bank of Zimbabwe.

"We do not want to see the people of Zimbabwe, who need this money, disadvantaged. What we do want to see however, is a surefire system to safeguard the money that is coming into Zimbabwe. So the move that the Global Fund has made is an excellent move," he said.

Last month, the Global Fund technically approved $500 million for Zimbabwe for its operations to fight HIV/AIDS, malaria and tuberculosis. Final approval of this allocation is still pending.

As in many other countries, the government requires that all foreign donations to non-governmental organizations in Zimbabwe be sent through the central bank.

But Ambassador McGhee says that the Reserve Bank of Zimbabwe "diverted" Global Fund money to what he describes as other purposes. He says that, for the time being, donor funding should be held out of Zimbabwe and that non-governmental organizations be permitted to access it directly.

"Through the U.N. and we have submitted a letter asking the Reserve Bank to give all [non-governmental organizations] operating here in Zimbabwe the ability to access money from off shore accounts. We are still waiting for a response. We need to know that our people will have access to their funds when they need it so that they can go ahead and help the needy people here in Zimbabwe," he said.

The Global Fund said the Zimbabwe government has damaged its efforts to fight AIDS, TB and malaria by diverting money intended for that work. The Reserve Bank of Zimbabwe has failed to honor a commitment to repay the $7 million it diverted.

Several humanitarian organizations, and foreign currency earners in commerce, industry and agriculture told VOA that foreign currency held in their accounts was looted by the Reserve Bank of Zimbabwe ahead of elections held in March.

The Global Fund will decide Friday whether it will release the next $188 million to Zimbabwe. The Fund says the funding will be released only if it is held off-shore.

Leading non-governmental organizations also say they cannot do their jobs because the central bank restricts the amount they are able to withdraw from their bank accounts.

The central bank has also banned electronic transfer of money from non-governmental organizations to pay for goods and services needed to distribute emergency food to millions of hungry Zimbabweans. McGhee says this must change.

"The government of Zimbabwe has to do a better job. This is a brutal, repressive regime that has instilled fear into nearly everyone - [non-governmental organizations] included. These are brave people, they are doing God's work trying to help the people of Zimbabwe, and until the government takes these artificial restraints away from the system, it is going to be very difficult for [non-governmental organizations] to do what they are here in Zimbabwe to do," he said.

Central bank governor Gideon Gono is a strong supporter of President Robert Mugabe. He has said he prints money to keep the economy going. In July, the official inflation rate in Zimbabwe reached 231 million percent.

Ahead of elections in March, Gono handed out expensive farming equipment to ZANU-PF supporters and he has also given top civil servants generous gifts of imported goods.

In 2007, the United States provided $176 million worth of food through partner organizations and an additional $8 million for non-food humanitarian assistance. Much smaller amounts of program support costs are paid via accounts regulated by the Reserve Bank of Zimbabwe.