CURRENT SCALE OF ASSESSMENTS DISTORT REAL CAPACITY TO PAY OF 22 STATES, FIFTH COMMITTEE TOLD
Press Release
GA/AB/3024
CURRENT SCALE OF ASSESSMENTS DISTORT REAL CAPACITY TO PAY OF 22 STATES, FIFTH COMMITTEE TOLD
19951019 The current scale of assessments had distorted the real capacity to pay of 22 Members States and other States of the former Soviet Union and should be revised to reflect that capacity and give long-term fiscal soundness to the United Nations, the Fifth Committee (Administrative and Budgetary) was told this morning as it continued discussing that scale. Today's meeting also discussed the pattern of conferences.Making that point, Kazakstan said the scale should be made more transparent and reflective of reality by basing it on a three-year statistical base period. The scheme of limits, which distorted the scale, should be eliminated.
[The statistical base period is the particular time in the past used as a yardstick in measuring economic data such as a country's income. It is 7.5 years in the current scale. The scheme of limits prevents excessive changes in a Member State's assessments.]
Bulgaria added that the scales should be updated yearly; gross national product (GNP) and market exchange rates should be used to measure incomes. Also, problems that inflated the incomes of the former centrally planned economies should be addressed before developing the next scale.
The method of granting low per capita income adjustment should be maintained, China's representative said. Debt relief should continue to be given to heavily indebted countries and caution exercised in lowering or eliminating the floor rate. Once set, a three- or six-year base period should be kept relatively stable.
Elements such as dependence on single or a few commodities, loss of income due to deteriorating terms of trade and limits on the acquisition of foreign exchange, should be considered in deciding what nations should pay to the United Nations, Cuba said. Balance-of-payment problems and developing countries' overall situation were other important factors.
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The representatives of Indonesia, Kyrgyzstan, Latvia and Belarus also spoke on the scale of assessments.
On the pattern of conferences, the Russian Federation stressed that use of conference resources should be rationalized in a non-discriminatory manner that would not prejudice the principle of sovereign equality of the Organization's languages. The quality of interpretation and translation must not be compromised. The Bahamas said the Organization should ensure that regional groups were provided with interpretation services to speed up their work.
The Committee will meet again at 10 a.m. tomorrow, 20 October, to conclude its general debate on the proposed $2.69 billion United Nations budget for 1996 and 1997, programme planning, scale of assessments and the pattern of conferences.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) met this morning to continue discussing pattern of conferences and the scale of assessments for dividing United Nations costs.
On pattern of conferences, the Committee is considering recommendations on matters relating to the calendar of conferences, control of documentation, and a review of conference services in the 1996-1997 budget, scheduled special conferences for 1996 and the provision of written records to the Assembly's subsidiary organs.
Regarding the scale of assessments, the Committee is discussing how to implement the principle of the capacity to pay as the fundamental criterion for determining the scale.
(For background on scale of assessments and pattern of conferences, see Press Release GA/AB/3019 of 10 October.)
Statements on Pattern of Conferences
SHARON BRENNEN-HAYLOCK (Bahamas) said she shared the concern of the Committee on Conferences regarding the large number of bodies whose utilization factor of conference services was below the 80 per cent benchmark figure. Welcoming the decisions by a number of subsidiary bodies to replace verbatim records with summary records and to use unedited transcripts, she said other organs should consider moving in a similar direction if that would not affect their effectiveness.
Delegations and Secretariat members should be more vigilant regarding the waste of documents, she said. Welcoming the increased use of technological advances, she referred to the effective use of remote translation services at the recent Fourth World Conference on Women. Regional groups were the first to suffer when there was a shortage in interpretation services. The Organization should ensure that those groups were provided with such services to speed up their work. While there was need for efficient use of resources, proposals which were arbitrary, ill-defined and not in the best interest of the goals and objectives of the Organization could not be supported.
EVGUENI N. DEINEKO (Russian Federation) said he supported the work of the Committee on Conferences and attached great importance to the rational utilization of conference resources. Ensuring rational use of those resources was a complex task which required the efforts of both the Secretariat and Member States. Strategies should be developed with their cooperation.
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He said he had certain doubts about the approach used by the Committee on Conferences to evaluate conference services utilization. Although statistical data played an important role, a bias towards statistical work alone was not acceptable. The possibilities for a more rational utilization of resources were not unlimited. Member States should demonstrate reasonable restraint in exercising their right to hold meetings and to acquire and use relevant documentation.
Steps to rationalize resource use should be non-discriminatory and should be implemented without prejudice to the principle of sovereign equality of the Organization's languages, he said. It was therefore necessary to search for ways of more efficient disbursement of funds for translation. It was important not to compromise the quality of interpretation and translation. That was not a technical issue but, possibly to a greater extent, a political one. Therefore it should not be resolved on the basis of pure commercialization. He expressed support for a draft resolution on multilingualism which was before the Assembly. The issue was of great political significance; the multilinguistic nature of the Organization promoted better understanding among Member States. That contributed to the Organization's enhanced efficiency.
Statements on Scale of Assessments
JU KUILIN (China) said the fact that the General Assembly had adopted the current scale of assessments by consensus showed that it reflected the capacity to pay of Member States, even though there were factors that tended to distort that capacity and the demands of some States had not been met. That principle should continue as the fundamental criterion for assessing Member States and any method that departed from that would be unacceptable.
No method would accurately reflect that capacity due to the limitations of the methods themselves and the existence of different statistical concepts across the world, he said. The Committee on Contributions should continue to study the various methods on the basis of technical feasibility and the availability of reliable data in order to seek accurate measurements of the capacity to pay. Currently it was appropriate to use national income or the gross national product (GNP), which reflected national income. China opposed the abolition of the low per capita income adjustment but, at the same time, it did not support a limitless expansion of the margin of allowance. The existing method of adjustment should be kept because its components had met the demands of low per capita countries.
Regarding purchasing power parity, he said the concept was still in its incipient stage and posed theoretical and practical problems which should be further examined. Most developing countries did not have such data either. Its adoption would pose difficulties. Appropriate debt relief should continue to be given to heavily indebted countries and the Committee on Contributions
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should continue searching for a more reasonable method of debt relief. Because of the floor rate, assessments of some smaller developing countries were beyond their capacity to pay; that situation should be remedied quickly. Caution should be exercised to ensure that the lowering or elimination of the floor rate would not increase the burden of other developing countries in general, particularly those that were paying the floor rate. A base period of three to six years must be kept relatively constant and stable, once established.
PRAYONO ATIYANTO (Indonesia) said the capacity to pay should remain the fundamental criterion for assessments. National income was sounder than many other measures for determining the scale, and its fluctuations were accurately reflected in the scale. Market exchange rates should be used for conversion as they were based on reality, represented the best means of reflecting universality and would allow comparisons of national incomes. Purchasing power parity should not be used to calculate assessments as it was available for a few countries only.
He said special attention should be paid to countries which, despite adverse external financial situations, had continued to meet their debt obligations in time. The low per capita income formula was also very important. Along with the debt adjustment approach, it should be applied for calculating the scale of assessments and for providing progressive relief to developing countries. He opposed the so-called "clean slate" approach as it did not properly reflect the underlying principle of capacity to pay.
ANA SILVIA RODRIGUEZ (Cuba) said that once a scale of assessments had been determined it should not be changed often. The capacity to pay should remain the fundamental criterion for assessments. The Committee on Contributions should present proposals for inclusion of other elements that had been considered in other forums. Those included dependence on a single or a few commodities, loss of income due to deterioration of the terms of trade, limitations on the acquisition of foreign exchange and the existence of serious balance-of-payment problems and negative resources. The overall situation of developing countries should be considered as affected their capacity to pay. It was unfortunate that the largest contributor had decided to withhold its contributions even though it had benefitted from the existence of a ceiling rate of assessments.
She said the special scale for peace-keeping operations should continue to be governed by relevant General Assembly resolutions. However, it was time to institutionalize those assessments rates. The current financial problems of the United Nations could have been avoided if all Member States paid their dues on time and without conditions.
ASKAR AITMATOV (Kyrgyz Republic), welcoming the work of the Committee on Contributions, said improving the scale of assessments was a major way of
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finding realistic solutions. Many Member States had to pay excessively high assessments. The Committee's latest report showed that the assessment rates of countries of the former Soviet Union, including his, would be approximately three times lower if their assessments were not subject to the application of the scheme of limits.
Capacity to pay should be the basic principle for calculating assessments, he continued. His Government was committed to its obligation to pay assessments based on the fundamental principle of the Charter. Recently, it had paid $600,000 of its arrears to the United Nations regular budget. However, due to reasons beyond its control, his country's capacity to pay was very limited. It was possible that by 1 January 1996, his country's arrears would equal or exceed the amount specified in Article 19 of the Charter and would face the loss of its voting rights. Other countries of the former Soviet Union faced the same problem.
It was important for the Committee to understand the factors which were affecting the economies of the former Soviet Union, he continued. Reviewing the problems faced by those countries, he said data from the World Bank and the International Monetary Fund (IMF) revealed the negative impacts on his country of the transition to a market economy. Those included high debt burden, a disruption of trade, a decline in gross domestic product, distortion of trade links, high unemployment, a decline in industrial and agricultural production as well as adverse social circumstances. Other data showed that his country was one of the poorest that had emerged from the former Soviet Union.
GEORGUI DIMOV (Bulgaria) said the current scale of assessments had overtaxed his country, and the method of calculating it should be stable and based on reliable, transparent and comparable data that reflected reality. A three-year statistical base period should be used to allow better relationship between the current capacity to pay and Member States' assessments. The scale should be updated yearly and the remaining 50 per cent of the scheme of limits phased out completely with the next scale. Gross national product (GNP) should be applied in measuring incomes. Problems that inflated the income of the former centrally planned economies should be addressed before developing the next scale.
He said that market exchange rates should be used to measure economies and debt burden adjustment should be applied to calculate the capacity to pay. All Member States should pay their United Nations bills without conditions to improve its finances, unless circumstances were beyond their control.
AIVARS BAUMANIS (Latvia) said reform in the scale methodology should have a sound technical basis. The existing basis should be strengthened and broadened; the report of the ad hoc working group on the implementation of the principle of the capacity to pay had identified additional elements that
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needed to be investigated. The principle of capacity to pay must be the basis of the scale methodology, but its use must be guided by additional principles. The principle of progressivity or vertical equity required that rich members pay a larger share of their income to the United Nations than the poor countries.
A financially sound United Nations was in the interest of all Member States, he said. Distortions in the scale of assessments should be removed. That would help increase the participation of Member States in the Assembly's work by shortening the list of countries which had lost their right to vote under Article 19 of the Charter. The participation of many countries, including Latvia, was being threatened. Many were near the top of the monthly lists of Member States with outstanding contributions.
In addition, the Organization would save money if a permanent methodology for determining the scale of assessments could be decided on, he said. By doing so, Member States would no longer have to pay for the inevitable inefficiencies of a financially strapped Organization nor would the conference services be consumed by interminable negotiations on the scale and on other issues relating to the chronic financial crisis.
Many Member States, including Latvia, would lose the right to vote beginning next year, he continued. Those States had been overassessed since 1992, with some adjustments in 1994. The overassessment was beyond his country's control. It had led to a build-up of arrears which would lead to the application of Article 19, in spite of his Government's best efforts under difficult financial conditions and in the face of many social, economic and humanitarian needs. As a result, Latvia would have to seek a decision by the Assembly that would allow it to discharge its financial obligation to the United Nations over an extended period.
YURI N. ORANGE (Belarus) said the unfairness of the current scale of assessments was a major cause of the United Nations current financial crisis. Another was the lack of efficiency in the Organization. Before programmes were approved, their costs should be considered. Many countries, like his, had been overtaxed by the scale. For instance, while Belarus owed some $61 million to the United Nations since the early 1990s, which had piled up for reasons beyond its control, only about $10 million should have been its dues if the calculation had been based on the capacity to pay. His country had been treated unjustly in calculating the scale and no measures had been taken to remedy the situation. Other countries in that situation did not trust the financing system of the United Nations for that reason. Measures should be taken to address the concerns of countries that had piled up debt to the Organization due to circumstances beyond their control.
He said the United Nations should try to solve the problem of individual States in the process of reforming the scale. There was no sign that that was
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currently the case. Instead, there was an emphasis on trying to punish those that had not paid their dues. Any radical approach towards punishment would only worsen the current financial crisis. The conditions of States that had been overassessed by the current system should be considered before any measures were introduced. The base period should be reduced to three years and the GDP and market exchange rates used to help determine the capacity to pay.
AKMARAL KH. ARYSTANBEKOVA (Kazakstan) said there should be constructive and positive reforms to ensure the United Nations a sound financial basis. Many of the delays in payments to the regular and peace-keeping budgets was a cause of concern. Her country's ability to pay its dues had been affected by its current economic situation. However, on the eve of the United Nations fiftieth anniversary, it had allocated $2.5 million to the Organization and would try to cover its debt.
She said the Committee on Contributions' report was heading in the right direction. Kazakstan also supported the work of the ad hoc working group on the implementation of the principle of capacity to pay. It agreed that the scale of assessments should be revised so that it would reflect more accurately the capacity to pay and provide long-term financial soundness for the Organization. The real capacity to pay of 22 Member States and other States of the former Soviet Union had been most distorted. There should be a transparent scale, with improvements in the method of billing Member States. The base period should be reduced to three years to reflect current realities. The effects of the scheme of limits, which distorted the scale, should be erased as early as possible and national economies measured in United States dollars. The high-level working group on the financial situation of the United Nations should make proposals based on the recommendations of the ad hoc working group on the capacity to pay and the Committee on Contributions.
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