It's embeded into the wall. My idea is to remove it and line up the interior walls with cement.
You should know what is causing the wetness before doing anything else.
maybe is humidity from neighbour´s house
Have you tried a dehumidifier yet?
I remember when I lived in the UK we had a similar issue. They could not find a water leak the damp was caused by condensation. We were given a sealed from the hardware store that we had to paint on 2 coats. This sealed the wall and we were able to paint it again. We found out it was damp when trying to hang wallpaper. It kept falling down.