Burma aid pocketed by regime, claim exiles
Saturday, 2 August 2008
Harvey Morris at the United Nations
International aid money sent to Burma's cyclone victims is being lost as a result of the junta's foreign exchange regulations, according to United Nations officials.
John Holmes, the UN's humanitarian affairs chief, has described the loss as "a serious problem" that he had raised with Burmese leaders during a visit in the third week of last month. They had promised to address the issue.
The UN's first acknowledgement of the gravity of the problem followed claims by Burmese political exiles that the regime was using exchange controls to pocket a proportion of donor funds destined for the more than 2.0m survivors of cyclone Nargis that killed 140,000 in May. While UN officials could put no figure on the losses, the exiles claimed they might amount to 20 per cent of the tens of millions of dollars so far spent.
The losses stem from Burma's requirement that foreign exchange brought into the country must be changed into government-issued Foreign Exchange Certificates (FECs). The FECs are, officially, at parity with the dollar but, in practice, they trade in the local market at a discount when converted into Burmese kyat to buy local goods and services.
"FECs trade currently at about 80 cents for every $1.0 they supposedly represent," said Sean Turnell, an Australian economist who monitors the Burmese economy from Sydney's Macquarie University.
"This means that for every $1.0 supplied by the international agencies, 20 per cent is automatically unavailable for redemption into goods and services. Shorn of technicalities, a cut of 20 per cent to the regime is built in."
Mr Turnell said it was difficult to quantify the actual losses as much of the aid to Burma was supplied in kind rather than in cash. Claims of an overall loss of 20 per cent were probably overstated, he said.
A spokeswoman for Mr Holmes office said the "vast majority" of aid to Burma was purchased outside the country and not subject to the exchange control anomaly. Any losses would principally be related to salaries and expenses of local aid personnel.
Mr Holmes last month more than doubled the target of an international disaster appeal for Burma to $482m (
International aid money sent to Burma's cyclone victims is being lost as a result of the junta's foreign exchange regulations, according to United Nations officials.
John Holmes, the UN's humanitarian affairs chief, has described the loss as "a serious problem" that he had raised with Burmese leaders during a visit in the third week of last month. They had promised to address the issue.
The UN's first acknowledgement of the gravity of the problem followed claims by Burmese political exiles that the regime was using exchange controls to pocket a proportion of donor funds destined for the more than 2.0m survivors of cyclone Nargis that killed 140,000 in May. While UN officials could put no figure on the losses, the exiles claimed they might amount to 20 per cent of the tens of millions of dollars so far spent.
The losses stem from Burma's requirement that foreign exchange brought into the country must be changed into government-issued Foreign Exchange Certificates (FECs). The FECs are, officially, at parity with the dollar but, in practice, they trade in the local market at a discount when converted into Burmese kyat to buy local goods and services.
"FECs trade currently at about 80 cents for every $1.0 they supposedly represent," said Sean Turnell, an Australian economist who monitors the Burmese economy from Sydney's Macquarie University.
"This means that for every $1.0 supplied by the international agencies, 20 per cent is automatically unavailable for redemption into goods and services. Shorn of technicalities, a cut of 20 per cent to the regime is built in."
Mr Turnell said it was difficult to quantify the actual losses as much of the aid to Burma was supplied in kind rather than in cash. Claims of an overall loss of 20 per cent were probably overstated, he said.
A spokeswoman for Mr Holmes office said the "vast majority" of aid to Burma was purchased outside the country and not subject to the exchange control anomaly. Any losses would principally be related to salaries and expenses of local aid personnel.
Mr Holmes last month more than doubled the target of an international disaster appeal for Burma to $482m (