Weakening aid dollar squeezes Myanmar relief funds

By Tim Large

LONDON (Reuters) - Visa restrictions aren't the only hurdles facing aid groups scrambling to provide relief after Myanmar's cyclone -- they're also up against plain economics.

A weak greenback and soaring fuel and food prices mean a fistful of aid dollars today packs less punch than it would have in past disasters.

"The real concern right now is just getting things in," Monte Achenbach, vice president of international programs at the American Refugee Committee, said on Monday.

"But the higher cost of doing business, so to speak, has got to reduce the amount of funding that will eventually get to beneficiaries. It means more money will need to be generated."

The United Nations last week appealed to world governments for $187 million to help 1.5 million survivors of Cyclone Nargis, which killed tens of thousands of people as it tore across the Irrawaddy Delta.

That money, along with millions raised by nongovernmental aid groups, will have to work harder than ever to buy food and fuel for transport in Southeast Asia's deadliest emergency since the 2004 tsunami.

How much harder?

Today the dollar is about 12.5 percent weaker than it was at the time of the tsunami, as measured against a basket of major world currencies. It is down almost 16 percent against the Thai baht.

Global crude oil prices have surged more than five-fold since 2002 and are up nearly 25 percent since the start of 2008. That makes it more expensive to deliver aid by ship, plane and truck.

Meanwhile, global prices of staple foods have risen more than 40 percent in the past year, causing shortages, hoarding and riots in some poor countries.

FUEL COSTS

The United Nations' World Food Program (WFP) said last month the price it had to pay for a tonne of rice had jumped to $780 a tonne from $460 in February.

Aid experts say that triple-whammy spells a decline in the value of the aid dollar that could prove deadly in Myanmar.

"What is clear is that this operation is going to be hugely costly because air transport and air drops... are going to be colossally expensive," said Brendan Gormley, head of British charity umbrella group the Disasters Emergency Committee.

"So we are desperate that donors understand both the scale of the tragedy and the potential costs and do what they can to help us meet that."