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July 29, 2008

UN: $10m in Myanmar aid lost due rate distortions

The UN aid operation in cyclone-hit Myanmar has lost around $10 million due to distortions in the country's official exchange rate, AFP quoted the world body's humanitarian chief as saying Monday.

John Holmes, the UN under-secretary general for humanitarian affairs, called the losses "a significant problem," and said about 15 per cent of the aid delivered to Myanmar in the past three months had been lost.

The UN has spent some $200 million on aid to Myanmar since Cyclone Nargis struck in May, leaving an estimated 140,000 people dead or missing.

On July 10, it launched a new appeal for $482 million to assist victims of the cyclone. Holmes said $200 million had been received so far and that he was confident that there would be a good response to the appeal.

He said conditions were improving on the ground and that "every part of the affected areas" had been visited.

"We can say that we have reached virtually everyone with something, with some kind of aid," Holmes said. "It might be food, it might be non-food items such as shelter, tarpaulins or kitchen equipment."

He added, however, that the UN needed to ensure "a more systematic provision of aid" over the next six to nine months, especially in more remote areas.

"What we've not done yet is reach everybody with what they need and that's the main challenge for the next few months," he said.

He said the losses on aid expenditure were caused by the devaluation of foreign exchange certificates (FECs) in Myanmar. The UN uses FECs, which are normally worth $1, and converts them to the local currency, the kyat.

But Holmes said the UN now gets 20 percent less in terms of local currency when it uses FECs to change money with currency traders in Myanmar.

Holmes said the exchange rate varies from day to day.

"The gap between them used to be very small before May this year," he said. "Now it is significantly larger. It can go up to 25 per cent. I think it's currently more than 20 percent. This clearly is a significant problem in terms of the loss that is made on the exchange of the dollars."

Calling the losses "unacceptable," Holmes said he had raised the issue with the government of Myanmar.

"We hope that they will work with us to try to find a practical solution," he said. "We're pressing them very hard to do that."

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