New Delhi — The United Nations' Humanitarian Chief John Holmes on Monday admitted that about US $ 10 million of the funds provided by donors to help Burmese cyclone victims could have been lost due to the distorted money exchange mechanism followed by the military regime.
Holmes, who returned from last week's visit to Burma's cyclone hit zones, called the loss of up to 25 per cent of the funds that were provided to help cyclone survivors, a 'significant problem'.
Holmes said, "This clearly is a significant problem in terms of the loss that is made on the exchange of the dollar."
He added that UN agencies, as well as other aid groups, had been affected by fluctuating exchange rates for foreign exchange certificates which the Burmese Government issues to foreign organizations buying goods and services in the country.
In Burma , foreign aid groups, including UN agencies that are directly transferring money, have to go through the government-owned Myanmar Foreign Trade Bank, which takes in the hard currency, the dollar and remits it in the junta-created Foreign Exchange Certificates (FEC), as equivalent to the value of the dollar.
But in the market, while the value of the dollar is 1180 Burmese Kyat, the FEC is valued at 880 Kyat.
Frank Smithuis, spokesperson of the French Medical team the Medicines Sans Frontiers (MSF) said losing on the exchange rate is discouraging for donors as the money they have intended to use to help does not reach the victims.
"Exchange rates are very important, and if you loss on the exchange rate then it will not be very encouraging for donors," said Smithuis.
While expressing fears that the loss on exchange rate can discourage donors, Smithuis, however, said the impact on the MSF is minimal as their aid for cyclone victims are brought in kind and most of their international staff are paid outside the country, where there is no exchange rate involved.
But he said, "It is a negative thing for donors to lose money on the exchange rate and it could have a negative affect on them."
Zach Abraham, spokesperson of the International Federation of Red Cross in Geneva said, the loss on the exchange rate mainly affects the UN and its agencies, it is 'a big concern.'
But Abraham said the IFRC suffers minimal impact on the exchange rate loss, as most of the support that they provide to cyclone victims are purchased outside the Burma and shipped in.
John Holmes's acknowledgement and announcement of the figures of the money loss in the exchange rate comes days after Mizzima's source in Rangoon, who is close to the military establishment, had said that the Burmese junta is lining its pockets with aid money.
Holmes, however, said he has raised the issue with the Burmese government and expects to find a solution to the problem.
"We hope that they will work with us to try to find a practical solution, which is what they said they would do, and we are pressing them very hard to do that," Holmes said referring to the Burmese military government.
A Rangoon based editor of a Weekly Magazine said, the solution to the problem on the exchange rate could have been easily solved if the government had recognized the value of FEC and allowed its usage for trading including export and import trade.
"Actually the solution is simple - the government just needs to recognize the FEC utility to be the same as USD. FEC is not of much use in Myanmar [ Burma ] as the government deliberately limits the utility," the editor, who declined to be named for fear of reprisal, told Mizzima.
He added that if the government allows the use of FEC for foreign trade including import and exports, the value of FEC would jump.
Despite the loss of aid money due to the exchange rate, Holmes said the UN will continue helping cyclone victims in Burma 's Irrawaddy and Rangoon divisions, which were the hardest hit by the cyclone.
While the relief efforts so far are making progress, Holmes admitted that more has to be done to reach all the affected people with what they need and to sustain the aid for a longer period.
"It's clear that there's absolutely no room for complacency in this – there's still a lot to do to make the relief operation a lasting success – to reach everybody with all that they need for a sustained period," Holmes said.
