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Government cuts currency red tape for donors

A young boy at a displaced persons camp (3 Mile camp) outside Labutta in southern Myanmar. Nearly 140,000 people were lost or left missing when Cyclone Nargis slammed into the country in May 2008.

The UN is calling on donors to give more generously to an international appeal for victims of Cyclone Nargis, and a senior official says donors are now getting a fair exchange rate.

On 10 July, the UN re-launched a flash appeal on behalf of 13 UN organisations and 23 NGOs for emergency relief and early recovery efforts through to April 2009 for a total of US$481 million, up from a previous appeal of $201 million. But so far that remains just 41 percent funded. Donor reluctance was blamed by humanitarian officials in part on transaction fees and poor exchange rates for incoming hard currency.

"Now is the time for donors to step up to the plate," Daniel Baker, the UN Humanitarian Coordinator to Myanmar, told IRIN on 3 September in Yangon, the former Burmese capital, reassuring donors that earlier problems over foreign exchange rate differentials had been resolved.

"This issue has been taken fully on board by the government. Donors should feel confident that they are getting the best value for their money.

"The loss in value due to foreign exchange for the Cyclone Nargis international humanitarian aid during the last three months has been about $1.56 million," Baker had said on 13 August, in a joint statement by the UN, Myanmar's government and the Association of Southeast Asian Nations (ASEAN).

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"We are not getting the full value of dollars donated for emergency relief, and donors are extremely worried and keen to see that this issue is resolved," he said at the time. The issue was first raised at the end of July by the UN Under-Secretary-General for Humanitarian Affairs, John Holmes, and stems from Myanmar's restrictions on the use and exchange of foreign currency.

When the UN brings dollars into the country, it received so-called Foreign Exchange Certificates (FEC), which can be used to buy local currency. The FECs can be converted into the kyat, but they were being changed at a rate of about 900 kyats to one, or 20 percent less than the current exchange rate of close to 1,200 kyats for one dollar.

"That rate can be either higher or lower than the current market rate," Baker clarified.

To address this, the government has agreed to allow foreign donors to pay local vendors directly and in dollars, rather than through FECs, an option that had also carried a 10 percent government transaction fee.

The government has since agreed to waive this fee for all international humanitarian agencies providing cyclone assistance, including the UN, bilateral and international NGOs.

The Minister for National Planning and Economic Development U Soe Tha said such issues could always be brought to the government's attention.

"Effective assistance to the Nargis-affected population is our common goal and we certainly have the intention to continue addressing any issues as they arise," he said.

According to the Post-Nargis Joint Assessment (PONJA) report in July, about $1 billion would be needed over three years to help affected communities and households meet food, livelihoods, housing, education, and other needs. The report, compiled by the UN, the Myanmar government and ASEAN is based on detailed surveys of more than 390 affected villages in June.


This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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