Robert Mugabe's government has effectively been placed on the Global Fund blacklist, after the state's central bank failed to account for more than US$7 million worth of Global Fund grant money.

Global Fund executive director Michel Kazatchkine announced on Monday that the donor group had ordered that funds under its administration in Zimbabwe be placed under the Additional Safeguards Policy (ASP), which aims to ensure that funding is used for its intended purpose and not to benefit the government.

The Global Fund took the drastic action after the Reserve Bank (RBZ) failed to release US$7.295 million of the US$12.3 million, which was lodged with the central bank. The money was part of a US$103 million grant from the Geneva based 'Global Fund to Fight Aids, Tuberculosis and Malaria.' Over US$28 million was destined for the Health Ministry, for the prevention and treatment of malaria.

The government requires that all foreign donations to non-governmental organisations in Zimbabwe be sent through the RBZ and civic groups have suggested that the funds were spent by the bank on drumming up political support for ZANU PF, particularly in the run-up to elections in March and June this year. The Reserve Bank handed out hundreds of imported cars, tractors, combine harvesters, plasma TVs and other goods, to win over voters and pay off Mugabe's cronies.

The government initially denied the money had gone missing, but has since admitted that it was no longer in the central bank. State media on Thursday quoted Health Minister David Parirenyatwa as saying that government would 'pay back' the missing millions within the next seven days.

CEO of Zimbabwe's National Association of NGOs (NANGO), Cephas Zinhumwe told Newsreel on Thursday that aid groups "feel cheated by the bank's decision to deliberately divert critically needed funds." Zinhumwe explained that NANGO and other groups are still trying to establish how the RBZ plans to deliver the funds.

"A lot of our people have been affected in serious ways by the bank," Zinhumwe explained. "We really hope they will quickly start putting back the money that belongs to aid groups."

Under the new measures, which come into immediate effect, the Global Fund will place special emphasis on the transparency and accountability of the flow of funds to its intended recipients. The blacklisting of Zimbabwe for failing to release the funds condemns the country to join other rogue states such as the Democratic People's Republic of Korea, Myanmar, Cuba and Sudan, all of whom have been blacklisted by the Global Fund.

The United States has since also pledged to not fund humanitarian agencies through the central bank, because of it's 'tendency' to divert funds for other purposes. US Ambassador to Zimbabwe, James McGhee, said this week that, for the time being, donor funding should be held out of Zimbabwe and that non-governmental organizations should be permitted to access it directly.

"We have submitted a letter asking the Reserve Bank to give all non-governmental organisations 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 in an interview with news agency Voice of America.