U.N. Says as Much as 25 Percent of Burma Cyclone Aid Lost Due to Government's Exchange System

07/25/2008 --

As much as 25 percent of cyclone relief aid in Burma (also known as Myanmar) is being lost because of the military government's foreign exchange system, a United Nations official said Friday.

Dan Baker, the U.N. humanitarian coordinator for Burma, said he is concerned that the losses could upset donors who have already shown a reluctance to fund the relief effort following the May 2-3 cyclone that killed 84,537 people, according to the government.

"This is a big issue. This is a big concern," Baker said. "The donors aren't going to give us money if they know they will (lose) a percentage of that. This is not an issue we can let go by."

Burma requires that foreign aid money be converted first into Foreign Exchange Certificates at a set price and then into the country's national currency, the kyat. The certificates have been worth as much as 25 percent less than the market value of an equivalent number of dollars.

On Friday, a certificate costing $1 was worth 900 kyat while $1 on the open market fetched 1,175 kyat.

The certificates were introduced by the military junta in 1993 to counter a thriving black market and take advantage of a rise in tourism dollars coming into the country. But the black market has remained popular for most citizens because the official exchange rate remains artificially low at about 6 kyat to the dollar.

Baker said the U.N. has taken up the issue with Burma authorities and has argued for the elimination of the certificates.

The push to abandon the certificates comes as the U.N. is pressing nations to donate another $290 million for the Burma relief effort.

The U.N. has raised about $191 million so far following an initial appeal for $201 million in aid. On top of the $10 million shortfall, it says it needs $280 million in additional money for the work of 13 U.N. agencies and 23 non-governmental organizations.

The money is intended to help the 2.4 million survivors who the U.N. says have been seriously affected by the cyclone. More than 100 projects are planned to deliver food, shelter, clean drinking water, sanitation, education and other needs.