"It's a positive outlook where we did not have a positive outlook before," the Fund's General Manager Gabriel Jaramillo told Reuters.

The money includes funds from new donors, from traditional donors who are advancing their payments or increasing contributions and from some donors, such as China, that have offered to support projects in their own country to free up cash for more pressing needs elsewhere, Jaramillo said.

"It's the traditional donors that have made the difference. It is about recuperating trust and them being confident that they can satisfy their taxpayers that we are taking care with their money in these difficult times as well as we can."

Last November a lack of donor funds prompted the Global Fund to scrap new grants until 2014, triggering a crisis for agencies working to tackle AIDS around the world.

Donor governments were strapped for cash after the financial crisis, but some also balked at reports that funds were being misused in four countries that received grants from the Global Fund and temporarily suspended their contributions.

Jaramillo took over earlier this year and has shaken up the 10-year-old organization to focus more on managing the grants that the Fund makes with donor money, with 75 percent of jobs now in grant management or strategic investment roles.

He will make his first report to the Global Fund's board on Thursday, explaining his reforms and the reasons for them.

By December 2011, the Fund had approved funding of $22.6 billion for more than 1,000 programs in 150 countries, providing AIDS treatment for 3.3 million people, anti-tuberculosis treatment for 8.6 million people and 230 million insecticide-treated nets for the prevention of malaria.

Jaramillo's reforms will prioritize 20 "high impact" countries that account for 70 percent of the global burden of the three diseases and receive 70 percent of the Fund's grants.

"We have reorganized tactically and strategically to try to meet the Millennium Development Goals in health," Jaramillo said. "This is a jump start for the final lap of the race."

The Millennium Development Goals are eight targets that the international community agreed in 2000 and pledged to meet by 2015. One goal is to halt the spread of AIDS, malaria and other major diseases by that date.

Michel Sidibe, the head of UNAIDS, the joint U.N. program to tackle AIDS, said the announcement of an additional $1.6 billion "ushers in a new era for the Global Fund".

The first $616 million of the new money will be put to work as soon as the grant requests have been reviewed by the Fund's Technical Review Panel and approved by the board.

The Fund said it would consult countries and its partners on how to use the remaining $1 billion most effectively.

(Reporting by Tom Miles; Editing by Michael Roddy)

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