Despite Better Management Tools to Avert Liquidity Crisis, Lagging Regular Budget Collection Rates Require Careful Monitoring, Controller Tells Fifth Committee

Seventy-seventh Session,

30th Meeting (AM)

GA/AB/4419

4 May 2023

While the Secretariat has effectively used improved management tools to avert a liquidity crisis and avoid spending restrictions this year, a senior United Nations financial official warned delegates in the Fifth Committee (Administrative and Budgetary) today that the lagging monthly collection rates for the Organization’s 2023 regular budget require careful monitoring.

As he laid out the Organization’s four main financial indicators — the amounts of assessed contributions, unpaid assessed contributions, available cash and outstanding payment to Member States — during the Secretariat’s semi-annual presentation, Chandramouli Ramanathan, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, said monthly regular budget collections continue to fluctuate significantly each year, making it more difficult to implement the budget efficiently or effectively.

He said the large inflows of payments by Member States in April and November 2021, along with controlled spending, meant the Organization’s regular budget ended 2021 with a cash surplus of $307 million. The cash position at the end of 2022 improved slightly, relative to 2021. “However, even though we started 2023 with a regular budget cash surplus, we are currently not in a better financial position as collections for 2023 so far are lagging behind our projections,” he said.

Referring to the Secretariat’s improved management tools, he said Member States in June 2022 agreed to a $100 million increase in the Working Capital Fund, using a part of the surplus returnable in 2023. The General Assembly also approved the use of the surplus cash in closed Tribunals for regular budget liquidity, while approving the return of the surplus cash in closed peacekeeping missions. “These measures will allow us to focus on programme delivery instead of liquidity management and we believe that spending restrictions will not be needed during 2023 and most probably 2024 also,” he said.

Turning to peacekeeping operations, he said the total amount outstanding for those missions at the end of April 2023 was $2.8 billion, compared to $2.1 billion at the end of both June 2022 and June 2021. Assessments for the current peacekeeping fiscal year were issued at a level of $6.3 billion, compared to $6.2 billion for the previous fiscal year. Collections for the current fiscal year, up to April, totalled only $5.6 billion, resulting in an increase of outstanding assessments.

Mr. Ramanathan then introduced the Secretary-General’s reports on the budget performance from 1 July 2021 to 30 June 2022 and the proposed budgets for the upcoming 1 July 2023 to 30 June 2024 period for both the United Nations Logistics Base at Brindisi, Italy, and the Regional Service Centre in Entebbe, Uganda. Abdallah Bachar Bong, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its corresponding reports.

The representative of Cuba, speaking on behalf of the “Group of 77” developing countries and China, said the Group believes detailed justifications for resources for the Logistics Base at Brindisi should be provided, in view of the reductions recommended by the Advisory Committee. He also emphasized the need for the Base to continue to align its operations with the 2030 Agenda for Sustainable Development and the Sustainable Development Goals. Turning to the Regional Service Centre in Entebbe, he said the Group acknowledges the Centre’s crucial work in supporting more than 77 per cent of the United Nations field operations globally and serving over 16,408 personnel. As the Centre’s workload, complexity and volume of transactions have greatly increased, it must have adequate financial and human resources to fulfil its mandate.

The representative of Uganda, aligning himself with the Group of 77 and China, echoed this view and said the Centre must be provided with the adequate resources commensurate with its increased workload and responsibility. On the Centre’s national staff, he urged the Secretary-General to issue continuing contracts to staff who meet the eligibility criteria in line with Assembly resolution 72/286.

Mr. Ramanathan also introduced the Secretary-General’s reports on the 2021/22 budget performance and the proposed 2023/24 budget for the United Nations Support Office in Somalia (UNSOS). Mr. Bachar Bong, ACABQ Chair, introducing its related report.

The Fifth Committee will reconvene at 3 p.m. on Tuesday, 9 May, to discuss the financing of three peacekeeping missions: United Nations Interim Security Force for Abyei (UNISFA), United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) and United Nations Mission in South Sudan (UNMISS).

Improving Financial Situation of United Nations

CHANDRAMOULI RAMANATHAN, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, briefing on the current financial situation, said the Secretary-General works actively with Member States on the Organization’s liquidity situation. Turning first to the regular budget, he said monthly regular budget collections continue to fluctuate significantly each year, making it more difficult to implement the budget efficiently or effectively. The large collections towards the last quarter necessitate careful liquidity management to ensure that operations are not disrupted during the year. “A healthy cash balance at the start of the year is therefore very important for effective programme delivery,” he added.

First-quarter collections were 43 per cent in 2021, dropped to 42 per cent in the first quarter of 2022 and remained at 42 per cent for the first quarter of this year, he said. By the end of the second quarter, collections were 80 per cent in 2021 and 58 per cent in 2022. Collections in the third quarter are usually the weakest, he explained. In the last quarter of 2022, collections totalled $896 million, compared to $903 million during the same period in 2021. Yet, in 2022, more money was collected in December than November, an unwelcome reversal from the pattern of collections in 2021, where larger collections were received in November than December.

For most of 2022, cumulative monthly collections trailed estimated collections and caught up only at the end of the year. “Fortunately, a healthy cash balance at the beginning of the year obviated any need for spending restrictions despite the lag in collections during the year,” he said. Again in 2023, at the end of April, collections have fallen short of estimates by $370 million.

As shown in Chart 2, the progressively more stringent cash conservation measures made in 2020 and early 2021 effectively reduced the risk of a disruption in operations, or of exhausting all liquidity reserves. These measures meant the regular budget cash deficit occurred later each year and reduced the size of the deficit since 2019. During 2018, borrowing from the Working Capital Fund occurred as early as May. In subsequent years, the Organization has managed to postpone such borrowing: until July in 2019, September in 2020 and November in 2021. In recent years, the deepest deficits have been $488 million in October 2018, $520 million in November 2019 and $334 million in December 2020. In 2021 and 2022, the full amount of the Fund was borrowed towards the end of the year, but it was not necessary to use either the Special Account or the cash available in closed peacekeeping operations, he said.

As seen in Chart 2, liquidity management has been effective and management tools have been improved to deal with liquidity crises in the future. In June 2022, during the second resumed session, Member States agreed to a $100 million increase in the Working Capital Fund, using a part of the surplus returnable in 2023. The General Assembly also approved the use of the surplus cash in closed Tribunals for regular budget liquidity, while approving the return of the surplus cash in closed peacekeeping missions. “These measures will allow us to focus on programme delivery instead of liquidity management and we believe that spending restrictions will not be needed during 2023 and most probably 2024 also,” he said.

Chart 3 shows the cash resources available at 31 December 2021 and 31 December 2022, and at 30 April 2022 and 30 April 2023. Due to large inflows in April and November 2021 and controlled spending, the Organization’s regular budget ended 2021 with a regular budget cash surplus of $307 million. The cash position at the end of 2022 improved slightly, relative to 2021. “However, even though we started 2023 with a regular budget cash surplus, we are currently not in a better financial position as collections for 2023 so far are lagging behind our projections,” he said.

Chart 4 summarizes the status of regular budget assessments at the end of December in 2021 and 2022, and at the end of April in 2022 and 2023. Chart 5 shows 146 Member States had paid their regular budget assessments in full by the end of 2022, 7 fewer than at the end of 2021. By the end of April 2023, 97 Member States had paid in full, 1 more than the same time last year.

Turning to peacekeeping operations, he said the total amount outstanding at the end of April 2023 was $2.8 billion, compared to $2.1 billion at the end of both June 2022 and the year before. Assessments for the current peacekeeping fiscal year were issued at a level of $6.3 billion, compared to $6.2 billion for the previous fiscal year. Collections for the current fiscal year, up to April, totaled only $5.6 billion, resulting in an increase of outstanding assessments.

Chart 11 provides an overview of unpaid assessments by peacekeeping operation. The $2.8 billion outstanding as of 30 April comprises $2.3 billion owed for active missions and $516 million for closed missions. For active missions, out of the $2.3 billion, $1.8 billion relates to the current fiscal year, while $531 million relates to assessments in prior fiscal periods. By 31 December 2022, 51 Member States had paid all peacekeeping assessments that were due and payable, 5 fewer than 31 December 2021.

He said Chart 16 laid out the assessed contributions for each of the past nine financial periods and the level of unpaid assessments as of 30 June. The trend shows that unpaid assessments, as a percentage of the assessments, have been increasing in each of the last four financial periods. “Without the prompt and decisive action of Member States to address the historical unpredictability and delays in the receipt of assessed contributions, peacekeeping missions will be unable to effectively implement their mandates,” he said.

Turning to the status of peacekeeping cash over the last three years, he said that, as of 30 April 2023, the cash balance consisted of approximately $1.5 billion in the accounts of active missions, closed missions and the Peacekeeping Reserve Fund. He said the Secretary-General is committed to meeting its obligations to Member States that provide troops and equipment as expeditiously as possible, as the cash situation permits.

Moving on to the international tribunals, he said the total contribution outstanding as of 30 April 2023 was $93 million and 84 Member States had paid their assessed contributions in full for all Tribunals, compared to 73 Member States on 30 April 2022.

United Nations Logistics Base in Brindisi/Regional Service Centre in Entebbe

Mr. RAMANATHAN, Controller, Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, introduced the Secretary-General’s reports on the budget performance for the period 1 July 2021 to 30 June 2022 and the proposed budget for the period 1 July 2023 to 30 June 2024 for the United Nations Logistics Base at Brindisi, Italy (documents A/77/613 and A/77/741). The proposed budget of $66.3 million for its maintenance represents an increase of 0.5 per cent — $0.3 million — compared to the approved resources of $66 million for the 2022/23 period, he noted. This amount reflects an increase in operation costs ($2 million) primarily due to additional requirements for facilities and infrastructure ($1.2 million) to purchase and install photovoltaic panels, repair and waterproof existing facilities and cater to increased contract prices for electricity supply.

The overall increased requirements are offset in part by reduced requirements for civilian personnel ($1.6 million) due to the appreciation of the United States dollar against the euro — thereby impacting national salary staff rates and international staff post adjustments — and due to an increase of the vacancy rate for national and international staff. He also pointed out that annex III to the budget report for the 2023/24 period includes an assessment of the services offered by the Standing Police Capacity and the Justice and Corrections Standing Capacity.

He then introduced the Secretary-General’s reports on the budget performance for the period 1 July 2021 to 30 June 2022 and the proposed budget for the period 1 July 2023 to 30 June 2024 for the Regional Service Centre in Entebbe, Uganda (document A/77/612 and A/77/732). The proposed budget of $43.8 million for its maintenance represents an increase of 1.5 per cent ‏— $0.6 million — compared to the 2022/23 approved budget. This amount reflects an increase in operational requirements ($0.7 million) mainly for communications and information technology (ICT) due to the re-establishment of dedicated Internet connectivity services which were discontinued during the COVID-19 pandemic, as well as an increase in civilian personnel requirements for national General Service staff ($0.5 million) and National Professional Officers ($0.4 million) due to higher salary rates. The overall increased requirements are offset in part by reduced requirements for international staff ($0.9 million) due to the reduction in common staff costs and the application of a higher vacancy rate, he said.

ABDALLAH BACHAR BONG, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its related report on the United Nations Logistics Base at Brindisi, Italy (document A/77/767/Add.6) which recommended a reduction of $307,100 from the proposed resources for 2023/24. In noting that the Standing Police Capacity and Justice and Corrections Standing Capacity have evolved over time to become United Nations systemwide providers, he said the Advisory Committee trusts that these Capacities will continue to prioritize the assistance provided to peacekeeping operations and that detailed information on field deployment rates, workload indicators and the cost recovery model will be included in the next budget report. He then stressed that the Committee reiterated its view that the General Assembly should be provided with comprehensive and more transparent information including on the resources required to provide services, on the different financing and cost-recovery arrangements and on the recording of related income and expenditures. Moreover, information on cost avoidance, reduced costs and greater efficiencies should be included in the next report. On the scalability model, the Advisory Committee recalled its recommendation which was endorsed by the Assembly in resolution 75/295 on the further refinement of the scalability formula. Updated information in that regard should be included in the next report.

He next introduced the Advisory Committee’s eponymous report on the Regional Service Centre in Entebbe, Uganda (document A/77/767/Add.5) and said it recommended a reduction of $106,800 from the proposed resources for 2023/24. Comprehensive information on the numbers and frequency of staff movements should be provided in future performance reports if the proposed consolidation of service lines in respective transactional Sections is approved, he stressed. The Advisory Committee also trusts that an assessment of the current organizational structure’s potential impact on managerial and oversight efficiency and accountability will be provided in the next budget submission, he added. Furthermore, the respective roles and complementarities of the Forward Support and Deployment Hub and the Global Procurement Support Section in the regional and global supply chain should be more clearly defined within the context of the proposal for an improved service delivery concept and the deployment of the Secretariat’s global operational support architecture.

RICHARD TUR (Cuba), speaking on behalf of the “Group of 77” developing countries and China, said the Group believes detailed justifications for resources for the United Nations Logistics Base at Brindisi should be provided, in view of the reductions recommended by the Advisory Committee. He asked for more comprehensive and transparent information on the services provided for the Base to different entities, the resources required to provide those services and the different financing and cost-recovery arrangements, as well as the recording of related income and expenditures. The Group also would like additional information on the progress achieved in reinforcing the Office of Supply Chain Management’s role on inventory management. Further, it would like the Base’s assessment of the feasibility of establishing National Professional Officers posts at the Base to be included in the next budget report. He emphasized the need for the Base to continue to align its operations with the 2030 Agenda for Sustainable Development and the Sustainable Development Goals.

Turning to the Regional Service Centre in Entebbe, the Group acknowledges the Centre’s important work in providing services to 17 clients, including 7 peacekeeping missions and support offices and 9 special political missions, as well as other missions in the region. He noted the Centre provides support to more than 77 per cent of the United Nations field operations globally and serves over 16,408 personnel, including international and national staff, as well as uniformed personnel. As the Centre’s workload, complexity and volume of transactions have greatly increased, it is very important that it has adequate financial and human resources so the Centre can fulfil its mandate. The Group also believes it is necessary to assess how the current organizational structure might impact the managerial and oversight efficiency of the Centre, as well as accountability. Concerned that 49 posts were vacant as of 9 March, he reiterated that the Centre should be adequately staffed and provided with adequate resources. Vacant posts should be filled as expeditiously as possible, he stressed.

ADONIA AYEBARE (Uganda), aligning himself with the Group of 77 and China, pledged his Government’s unwavering support to the continued operations of the Organization’s activities at the Regional Service Centre in Entebbe and its peacekeeping operations in the region and beyond. In the current budget period, the Centre will support 17 client entities, including 7 peacekeeping missions, 9 special political missions and other missions in the region, by providing human resources, finance, ICT, transportation and movement control services on top of liquidation support to three clients. Against this backdrop, the Centre must be provided with the adequate resources commensurate with this increased workload and responsibility. On the Centre’s national staff, he urged the Secretary-General to issue continuing contracts to staff who meet the eligibility criteria in line with Assembly resolution 72/286.

United Nations Support Office in Somalia

He reported that the proposed budget amounts to $556.7 million — an increase of 6.7 per cent when compared with the approved resources for 2022/23. This amount notably reflects increased requirements for military and police personnel — $15 million — due to the deployment of additional contingent-owned equipment and the anticipated improvements in their deployment and serviceability. It also reflects increased requirements for operational costs — $23.5 million — attributable primarily to the proposed deployment of additional rotary-wing aircraft and higher fuel prices. These increased requirements, he noted, are partially offset by reduced requirements under civilian personnel — $3.4 million — owing to the application of lower common staff costs ratio for international staff and proposed higher vacancy rates in line with incumbency patterns.

Mr. BACHAR BONG, ACABQ Chair, introducing its related report (document A/77/767/Add.7), noted that the budget implementation rate for the 2021/22 period was 99.3 per cent, with unliquidated obligations amounting to $73.25 million at 30 June 2022, which is an increase of $3.66 million or 5.3 per cent when compared with the amount of $69.60 million at 30 June 2021. The proposed civilian staff changes include a net increase of 9 posts and positions, reflecting 13 establishments, 4 abolishments and 1 reassignment. Taking into account the role of the P-5 Senior Programme Management Officer in relation to the security transition from the African Union Transition Mission in Somalia (ATMIS) to Somali Security Forces, the Advisory Committee recommended that the proposed post be established as a general temporary assistance position. In also recommending reductions under official travel and ICT, the Advisory Committee further recommended that proposed resources for 2023/24 be reduced by $247,000 to $556.46 million.

He then said the Advisory Committee noted that the proposed resources include a total of 35 positions for mine action support services covering procurement, contract management, logistics and asset management, transport, human resources and administration, as well as ICT. Every effort should be made to ensure that demining activities are performed in the most efficient and effective ways possible, leveraging all existing capacities. In addition, the Advisory Committee recommended that the Assembly request the Security Council to provide — in the context of future budget submissions for all peacekeeping operations — explanations of variations in relation to mandate changes as part of the supplementary information and organizational charts with clearly indicated vacant posts and positions, as well as proposed changes. The Secretary-General should also provide — in the context of the peacekeeping budgets for 2024/25 — the outcome of the review of surpluses accumulated in the cost recovery fund.