International funding cuts threaten to deepen an HIV crisis in Myanmar, where tens of thousands of people are denied lifesaving treatment, an aid agency said Wednesday.

Medecins Sans Frontieres (Doctors Without Borders) said only a third of the 120,000 people in need of antiretroviral drugs in Myanmar were receiving the therapy, with up to 20,000 people dying each year due to a lack of treatment.

MSF Myanmar head Peter Paul de Groote said there was already an "unacceptable" gap in treatment and warned the situation would worsen without further funding.

"In Myanmar, we have a situation where there is willingness and the capacity to scale up, so if more money would flow into the country we think, combined with better access, we could close that gap," he told reporters in Bangkok.

The Paris-based aid agency said the cancellation of an entire round of support by the Global Fund to Fight AIDS, Tuberculosis and Malaria has left it with limited funds to treat a further 40,000 people.

The Global Fund, which receives donations from governments and the private sector, is a major financier of programmes to treat its three target illnesses worldwide.

"It is an unacceptable situation. You have to tell someone: 'You are not sick enough, so please come back later, maybe then you'll be sick enough and we can give you the treatment'," said de Groote.

Myanmar's former junta prioritised military spending, leaving healthcare in tatters.

While a new quasi-civilian regime which took power last year is likely to boost funding, MSF said it would be years before the health system is fully functioning.

Recent political reforms have sparked hopes of an increase in aid to the country -- the least developed in the region and one of the lowest recipients of development aid in the world.

MSF urged the international community to make tackling HIV and tuberculosis (TB) a top donor priority for the nation, which would need to spend around $560 per HIV patient every year on treatment.

TB is the most common cause of death for HIV patients in the world.

The MSF Lives in the Balance report said Myanmar has a high prevalence of multidrug-resistant tuberculosis (MDR-TB), which is more difficult and expensive to treat.

Of an estimated 9,300 people newly infected with this disease each year, only around 300 have been receiving treatment.

"Without increased availability of treatment, HIV and TB will continue to spread unchecked in many areas. The time to treat is now," said MSF Doctor Khin Nyein Chan.