Yangon - The United Nations Thursday acknowledged that over the past three months some 1.56 million dollars in aid for the victims of Cyclone Nargis has been lost to Myanmar's odd foreign exchange regulations.

"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 dollars," said Daniel Baker, UN Humanitarian Coordinator in Myanmar.

"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," said Baker, in the latest UN update on relief efforts for Cyclone Nargis.

UN Under Secretary-General for Humanitarian Affairs John Holmes had raised concerns about the loss during his first visit to the country last month.

Under Myanmar's foreign exchange controls, all foreign agencies must convert their dollars in to Foreign Exchange Certificates (FECs) at government banks before making local purchases.

A sharp devaluation of the FECs against the dollar between May to July meant the UN and various non-governmental organizations providing relief to victims of Cyclone Nargis, were losing up to 20 to 25 per cent on the FEC exchange rate.

Myanmar's military government has apparently refused to drop its foreign exchange requirements, which have been in place for decades, but recommended that UN agencies and NGOs make direct dollar transfers when making purchases in the country, as a means of skirting the FEC use.

The FEC system was put in place to assure that official transactions put dollars in the state banking system and got them out of the ubiquitous black market. 

Attracting international aid for the relief effort for Cyclone Nargis, which smashed into central Myanmar on May 2-3 leaving about 140,000 people dead or missing, has already been complicated by the government's initial reluctance to allow supplies in to the hard-hit Irrawaddy delta and its refusal to grant visas to foreign aid workers.

The refusal to lift its foreign exchange requirements of monetary aid was deemed another barrier to donations for the Cyclone Nargis effort.

The UN had made flash appeals for approximately 500 million dollars in emergency aid for the cyclone's victims. Myanmar, a pariah among Western democracies for its abysmal human rights record and refusal to free thousands of political prisoners including opposition leader Aung San Suu Kyi, has been placed under economic sanctions by the US and European Union.

The country has been cut off from aid from multilateral lenders such as the World Bank and Asian Developemnt Bank and from bilateral aid from most western countries since 1988, when the army cracked down on a pro-democracy movement, killing an estimated 3,000 people. (dpa)