REDUCTION IN MINIMUM ASSESSMENT ON MEMBER STATES FOR UN BUDGET PROPOSED IN FIFTH COMMITTEE DEBATE

7 October 1996

Press Release
GA/AB/3089

REDUCTION IN MINIMUM ASSESSMENT ON MEMBER STATES FOR UN BUDGET PROPOSED IN FIFTH COMMITTEE DEBATE

19961007 Costa Rica Says 'Floor Rate' Departs from Principle of Capacity to Pay; Committee Also Takes up Financing for Missions in Liberia, Western Sahara

The fifty-first session of the General Assembly should lower the floor rate of the scale used to assess Member States for their share of the expenses of the United Nations, the Fifth Committee (Administrative and Budgetary) was told this afternoon, as it began its substantive work for this session with a debate on the scale of assessments.

The proposal was made by the representative of Costa Rica, also speaking for the "Group of 77" developing countries and China, who said that the current floor rate -- which is the minimum amount a State is expected to pay, now calculated at 0.01 per cent of the regular budget -- had led to a serious departure from the principle of capacity to pay. For many small and developing States, the amount calculated by the floor rate exceeded by a substantial sum the amount they would pay if it had been calculated on the basis of capacity to pay. He also recommended that the ceiling rate of 25 per cent -- the maximum any State is assessed -- should not be lowered any further.

Expressing support for a substantial reduction or the elimination of the floor rate was the representative of Ireland, also speaking for the European Union and other States, who called for reforms to the scales methodology in order to close the gap between a State's assessment and its true capacity to pay. As a starting point, gross national product (GNP), converted to United States dollars at market rates, should be used to measure relative wealth. A three-year statistical base period and an annual calculation of the scale should also be used to ensure that the scale reflected an up to date measure of relative wealth.

The scale used to finance peace-keeping missions should be overhauled, the representative of Australia said, who was also speaking on behalf of Canada and New Zealand. The practice of voluntary swaps by Member States from higher- or lower-paying groups of countries created for peace-keeping assessments would continue unless a comprehensive review was undertaken. A

Fifth Committee - 1a - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

substantial surcharge should continue to be levied on all permanent Security Council members, without predetermined floor or ceiling rates in the peace- keeping scale.

The representative of the Ukraine said the effects of the scheme of limits -- a mechanism that curbs changes in assessment rates from one period to another -- should be eliminated in 1998, because it was one of the major causes of the disparity between a Member State's assessment and its real capacity to pay.

The representative of Malaysia said that the current scale reflected the principle of the capacity to pay and it was hard to understand why it should be fundamentally changed, as proposed by some delegations. Since it was not in the Organization's best interest to rely on one Member for one quarter of its regular budget, the issue of the ceiling rate should be discussed further by the Fifth Committee.

The representatives of Latvia, Mexico, Marshall Islands, Ecuador, Bangladesh, Viet Nam and Norway also spoke.

The debate on the scale of assessments began after the Chairman of the Committee on Contributions, David Etuket (Uganda), introduced his committee's recommendations on the subject.

Earlier in the afternoon, the Committee took up the financing of the United Nations Observer Mission in Liberia (UNOMIL) and the United Nations Mission for the Referendum in Western Sahara (MINURSO), with delegates from Morocco and Algeria speaking on the latter.

The Secretary-General's reports on both missions were introduced by the United Nations Controller, Yukio Takasu. Those of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) were presented by its Chairman, C.S.M. Mselle.

The Committee is scheduled to meet again at 10 a.m. tomorrow, 8 October, to continue discussing the scale of assessments and to take up the financing of the United Nations Observer Mission in Georgia (UNOMIG), the United Nations Mission in Haiti (UNMIH) and the United Nations Support Mission in Haiti (UNSMIH).

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to begin its general debate on the scale of assessments for apportioning the Organization expenses among Member States. On that issue, it would have before it a report of the Committee on Contributions. The Committee was also expected to begin considering reports on the financing of the United Nations Mission for the Referendum in Western Sahara (MINURSO) and the United Nations Observer Mission in Liberia (UNOMIL).

Scale of Assessments

In the report of its annual session (document A/50/11/Add.2), held from 10 to 28 June, the Committee on Contributions makes two recommendations pursuant to General Assembly resolutions 50/207 B, regarding exemptions under Article 19 of the United Nations Charter, and 50/471, concerning the phasing out by 50 per cent of the effects of the scheme of limits. (Article 19 states that a Member State shall have no vote in the Assembly if the amount of its arrears to the United Nations equals or exceeds two years of its dues. The scheme of limits is a mechanism used to limit fluctuations in a Member State's rate of assessment.)

The Committee on Contributions, which advises the Assembly on matters related to assessment, including appeals for changes and the application of Article 19 in cases of arrears, recommends to the Assembly that Comoros be permitted to vote through the Assembly's fifty-first session and that this waiver be subject to review before any further extension. The Committee agreed that Comoros faced circumstances beyond its control, related to the invasion of that country in 1995, which contributed to its failure to pay the amount necessary to avoid the application of Article 19.

Regarding the scheme of limits, the Committee found no basis to conclude that Turkey's assessment rate should be adjusted during the period 1995-1997. Turkey did not meet one of three criteria -- that the Member State was benefiting from the scheme of limits for the period 1992-1994.

According to the report, in considering the method of determining assessments, the Committee discussed issues such as the principle of capacity to pay, conversion rates, debt-burden adjustment, and floor and ceiling rates. Regarding the floor rate, the Committee had recommended that, in future scales, all Member States whose share of adjusted national income was less than the current floor of 0.01 per cent should be assessed at their actual share of adjusted income, subject to the minimum assessment rate of 0.001 per cent.

Fifth Committee - 4 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

Financing of MINURSO

In a report on the financing of MINURSO (document A/50/655/Add.2), the Secretary-General asks the General Assembly to appropriate $18.6 million gross ($17.6 million net) for the period 1 December 1996 to 30 June 1997, including $737,565 for the support account for peace-keeping. It should be assessed at the rate of $2.7 million gross ($2.5 million net) monthly, subject to the extension of MINURSO's mandate by the Security Council beyond 30 November.

He requests it to appropriate approximately $28 million gross ($25.5 million net) for 1 February to 30 June, and $13.3 million gross ($12.6 million net) for 1 July to 30 November inclusive of the amount of $7.8 million gross ($6.8 million net) already authorized and assessed. He asks it to assess an additional $5.5 million gross ($5.7 million net) for 1 July to 30 November.

According to the report, the revised cost of maintaining MINURSO from 1 July 1996 to 30 June 1997 is estimated at $31.9 million gross ($30.1 million net). It provides for a 230-person military component and a nine-member civilian police, supported by an administration of 167 (102 international and 65 local) staff. It takes into account the phased repatriation of military observers until 31 October 1996. Due to the reduction of military personnel and the suspension of identification activities, 243 of the Mission's 410 authorized posts will be blocked until its activities are resumed.

As of 21 June, a total of $231.3 million had been assessed from the Mission's inception in 1991 to 31 May 1996, with some $187.7 million received.

In its report on MINURSO (document A/51/440), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) concurs with the Secretary- General requests for appropriation and assessment.

Financing of UNOMIL

The Secretary-General's report on the financing of UNOMIL (document A/50/650/Add.4) contains the Mission's revised budget for the period from 1 July 1996 to 30 June 1997. The Assembly is asked to appropriate $14.5 million gross ($13.6 million net) which is equivalent to a monthly rate of $1.2 million gross ($1.1 million net) for the period from 1 July 1996 to 30 June 1997.

The amount to be appropriated is the revised cost of the Mission's maintenance for the 12-month period, the report states. It represents a 47 per cent reduction in the previous estimate of $27.6 million gross ($25.9 million net). The downward revision of resource requirements is due to the proposed reduced staffing level of 124 military and civilian personnel and the non-implementation of the disarmament and demobilization programmes. A non- recurrent cost of $1 million relates to the replacement of equipment lost or

Fifth Committee - 5 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

stolen during the outbreak of fighting in Monrovia in April and helicopter services for the movement of personnel and logistics resupply during the month of July 1996.

According to the report, resources of $101.5 million gross have been made available for the Mission's operation from its inception on 22 September 1993 to 31 March 1996. Of that amount, credits returned to Member States amounted to $20.6 million gross. The estimated expenditures amount to $81 million gross. As at 15 August 1996, a total of $79.1 million had been assessed on Member States for the period 22 September 1993 to 31 March 1996. Contributions received for that period amounted to $68.2 million resulting in a shortfall of $10.8 million. The outstanding assessment has been reduced by an amount of $163,022 pursuant to Assembly resolution 50/83 of December 1995.

In its report on UNOMIL (document A/51/423), the ACABQ recommends that the Assembly appropriate the reduced amount of $14 million gross ($13.2 million net) for the 12-month period from 1 July 1996 to 30 June 1997, which represents a decrease of $496,800 gross ($444,000 net) in the amount proposed by the Secretary-General. The reduction is due to adjustments to the deployment schedule for military and civilian personnel. As at 18 September, only 78 of the 124 military and civilian personnel were on board. The ACABQ's recommendation is subject to the extension of UNOMIL's mandate by the Security Council and the decision to be made regarding a revised concept of operations in line with the new programme of implementation of the Abuja Agreement. (The Abuja Agreement, which was signed by heads of State and government of the Economic Community of West African States (ECOWAS) on 17 August 1996, provides for a new programme of implementation for, among other things, the disarmament, demobilization and repatriation process to take place between 22 November 1996 and 31 January 1997, culminating on elections on 30 May 1997 and the new Government being sworn in on 15 June 1997.)

The ACABQ also recommends the appropriation of $12.2 million gross ($11.8 million net) which is already assessed, the report states. It notes that the Secretary-General will submit revised cost estimates to the Assembly to include resource requirements for the overall disarmament and demobilization programme, humanitarian assistance and electoral component of UNOMIL.

The ACABQ notes that an amount of $807,800 for claims and adjustment is included in UNOMIL's revised budget. That amount covers the costs of claims from all categories of mission staff arising from the outbreak of fighting in Monrovia and throughout Liberia, during which UNOMIL personnel suffered losses of their personal effects during evacuation procedures. The Advisory Committee was informed that, as at 20 September 1996, 161 claims had been received by UNOMIL for losses suffered by military and civilian personnel. The claims are yet to be reviewed and finalized by the local claims review board.

Fifth Committee - 6 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

Financing of MINURSO and UNOMIL

YUKIO TAKASU, United Nations Controller, introduced the Secretary- General's reports on the financing of the two missions.

C.S.M. MSELLE, Chairman of the ACABQ, introduced his Committee's reports on the missions.

ABDESALAM MEDINA (Morocco), referring to the Secretary-General's report on MINURSO's financing, said that last May when the matter was being discussed by the Fifth Committee, he had requested a correction of what had been stated as the cause of the deadlock between the two parties on the verification process in Western Sahara. Those concerns had not been taken into consideration in the present report.

DJAMEL MOKTEFI (Algeria), also referring to MINURSO, said he saw no reason to open such a debate, especially since the matter would be dealt with by the Fourth Committee. The question of Western Sahara was a decolonization issue that had reached a political impasse. It should be dealt with by the United Nations. The Fifth Committee should confine itself solely to the financial aspects of MINURSO.

Statements on Scale of Assessments

DAVID ETUKET (Uganda), Chairman of the Committee on Contributions, introduced and reviewed his Committee's report. The Committee had agreed that market exchange rates should be used for the purposes of the scale of assessments, except where it caused excessive fluctuations in the income of Member States. It also had agreed that the debt-burden adjustment should be based on actual principal repayments, rather than on a proportion of debt stocks, as in the current scale of assessments. It had recommended that, in future, all States whose share of adjusted national incomes were less than the current floor of 0.01 per cent should be assessed at their actual share of adjusted income, subject to a minimum rate of 0.001 per cent. Consistent in its recommendation that the minimum rate should be 0.001 per cent in future, the Committee had recommended expressing the scale to three decimal places.

Regarding Comoros, he said that the Committee agreed that, as a result of the extraordinary circumstances related to the invasion of the country in 1995, its failure to pay the amount necessary to avoid the application of Article 19 of the Charter was due to conditions beyond its control. Comoros should, therefore, be permitted to vote through the fifty-first session and, the waiver should be subject to review before any further extension.

NAZARETH INCERA (Costa Rica), also speaking for the "Group of 77" developing countries and China, endorsed the recommendation of the Committee on Contributions on the application of Article 19. The current scale was not

Fifth Committee - 7 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

the cause of the financial crisis of the Organization. Rather, it was due to the non-payment of dues already approved by consensus. The principle of capacity to pay should remain the fundamental principle in sharing United Nations expenses.

The General Assembly, she continued, had rejected the "clean slate approach" by repeatedly reaffirming that the methodology for determining contributions was a complex process containing several elements. While simplicity and transparency were useful and relevant, they could not be substitutes for making fundamental alterations in the various elements that comprised such a methodology. The starting point for determining capacity to pay was the national income as a proportion of the world's total income. But national income should not be used as the sole criterion for determining the capacity to pay. The role of additional factors should not be minimized. The factors did not represent distortions, but sought to balance the use of national income indicators in the exercise of determining assessments. Extreme variations in Member States assessments should be avoided.

He said that the use of the market exchange rate was the most viable and accurate mode of converting currencies in order to compare national incomes. Debt-burden adjustment relief, as related to Member States international debt, should remain an indispensable component of the method used to determine the scale of assessments. Similarly, low per capita income relief should also remain part of the methodology.

Any future change in the scale should not increase burdens beyond the means of the developing countries, she said. Since the ceiling rate -- the maximum any country was assessed -- was already a departure from the implementation of the principle of capacity to pay, it should not be lowered any further. The use of the current floor assessment rate had led to a serious departure from the principle of capacity to pay for many small and developing States. Therefore, the current session of the Assembly should lower the floor rate in consideration of the difficulties of the least developed and developing countries.

PATRICK KELLEY (Ireland), also speaking for the European Union, as well as Bulgaria, Czech Republic, Estonia, Hungary, Romania, Slovak Republic and Iceland, said that there were fundamental problems with the current method of determining the scale of assessments. It did not reflect capacity to pay because it did not reflect true economic reality. Reform of the scale of assessments should be accompanied by steps taken by those in arrears to pay their dues. There should be incentives and disincentives to ensure that the crisis of non-payment of dues did not recur.

Reforms of the methodology should try to close the gap between Member States' contributions and their actual capacity to pay, he said. At the same time, the needs of countries with low per capita incomes must also be

Fifth Committee - 8 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

considered. The starting point should be the use of the gross national product (GNP), converted to United States dollars at market rates, as the most objective measure of the relative wealth of Member States. The European Union supported a three-year statistical base period and an annual calculation of the scale of assessments, in order to eliminate excessive fluctuations and ensure that the scale reflected an up-to-date measure of relative wealth.

The Union, he said, supported the continued use of the "per capita income" as a basic criterion for determining relief to developing countries. Only those Member States whose per capita incomes were below the world average should be eligible for such relief, and it should be provided at 75 per cent of the proportion by which a State's per capita income fell below the world average per capita income. The relief should be applied to a State's share of total membership GNP. The Union supported a substantial reduction or elimination of the floor rate. The ceiling rate should be kept at 25 per cent, as it was appropriate to maintain the principle that the United Nations should not excessively rely on a single Member. It was no longer necessary to have a provision for debt relief, since the actual cost of debt servicing would already be reflected in GNP data.

There were no grounds for the Assembly to postpone taking decisive action to fundamentally reform the scale methodology, he continued. Political will was needed to tackle the problems of the current method. He expressed disappointment that the Committee on Contributions could not agree on far- reaching recommendations on how to reform the scale methodology. A new scale would have to be adopted next year. By providing the right set of instructions to the Committee on Contributions on how to prepare the new scale, the Assembly could ensure that one of the items on the agenda of the high-level working group of the General Assembly on the financial situation was dealt with. That would enable the working group to concentrate on packages to resolve the financial crisis, when it resumed next January.

ULDIS BLUKIS (Latvia) said successful completion of reform of the scale of assessments should be guided by considerations such as: the full implementation of the capacity to pay; a scale methodology that did not confer privileges on, nor discriminate against, small groups of Member States; and implementation of the reform at a prudent and deliberate speed. The problems of reliability and comparability of data and the methodology for calculating assessment rates should be solved. The Committee on Contributions should be requested to study the feasibility of the systematic gathering of information and related statistical studies to verify the extent of reliability and comparability of the data used to determine assessment rates.

The GNP should replace national income as the best first approximation of capacity to pay, he continued. He supported the European Union's position on the methodology for calculating assessment rates. Expressing support for the proposal to lower the scale's floor rate to 0.001 per cent, he said its

Fifth Committee - 9 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

adoption would mean that 20 to 30 countries would be paying the new floor rate, compared to nearly half of the Member States that pay the current floor rate, and none of those countries would pay more than a few thousand dollars above their presently calculated capacity to pay.

Expressing support for a three-year base period, he said a stable base period should be negotiated that would protect Latvia and other countries during times when economies were doing poorly in relation to the world average. The results of the reforms he had outlined would result in fewer States that would lose the right to vote, fewer requests to waive the application of Article 19 of the Charter, a less expensive United Nations and a scale methodology that enjoyed the general confidence and respect of Member States.

MILES ARMITAGE (Australia), speaking also on behalf of Canada and New Zealand, said the scale should remain based on the principle of capacity to pay. The current scale contained too many departures from that basic principle. The present method of calculating the scale could not pass the test of being simple enough to be understood by parliamentarians in Member States. It failed the basic test of simplicity and transparency. Those anomalies should be addressed urgently, because they placed a disproportionate burden on many Member States, particularly the smallest and the poorest.

Even the anomaly of per capita income assessments was the result of the cumulative effect of all elements of the methodology, he continued. The scale's revision should, therefore, be comprehensive, not piecemeal. The only transparent and equitable element of the scale was national income. He supported the Committee on Contribution's recommendations to base future scales on estimates of the GNP, if it became part of the comprehensive changes to the scale methodology. The scale should have a three-year base period. The debt burden adjustment, however, did not provide the relief intended for debtor countries and should be eliminated from the methodology altogether. If it were retained, it should be based on actual repayments of the principal on the debts.

He called on the Committee on Contributions to study a proposal, put forward by Canada, to recommend a simpler formula for low per capita income adjustment and one that more closely reflected the principle of capacity to pay. Welcoming the reduction in the floor rate to 0.001, he said "we see no reason for any 'floor' at all". It was a political element and should not be included in the methodology. The ceiling rate bore no relation to the principle of capacity to pay. He did not agree that the ceiling should be lowered from its present level of 25 per cent. "Fairness, equity and the principle of capacity to pay would all be better served if there were no ceiling", he said.

Fifth Committee - 10 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

The peace-keeping scale of assessment required an overhaul, he said. Its revision was overdue. The practice of voluntary swaps by Member States from higher or lower paying groups would continue unless a comprehensive review was undertaken. A substantial surcharge should continue to be levied on all permanent members of the Security Council. However, there should be no predetermined floor or ceiling in the peace-keeping scale. It was important that all Member States continue to meet their legally binding financial obligations under the Charter, while negotiation continued to improve the scale.

MARTA PEÑA (Mexico) said that the tendency of failing to reach agreements in the Committee on Contributions due to political differences over technical matters was not helpful. The Assembly should instruct the Committee on Contributions to prepare a proposed scale for the year 1998-2000 for its consideration. The current methodology was the result of lengthy consultations. It was not necessary to overhaul the scale in order to prompt compliance by Member States with their financial obligations to the United Nations.

She said she supported the use of the gross domestic product (GDP) in calculating the scale, but had doubts about the use of the GNP. Also, it was difficult to understand the Committee's recommendation for a lowering of the floor rate of the scale of assessments from the current 0.01 per cent to 0.001 per cent. The current floor rate charged Member States less than $110,000. The percentages of the scale could be rounded to three decimal points, as proposed by the Committee on Contributions. She did not object to that Committee's recommendation that Comoros be allowed to vote in the Assembly. However, the repeated exemptions granted to countries could nullify a disincentive measure that was meant to prompt Member States to pay their dues.

ANATOLI M. ZLENKO (Ukraine) said that the assessment on many countries, including his own, far exceeded their capacity to pay, leading to their chronic indebtedness to the United Nations. At the same time, some of the leading industrialized nations had paid dues that were below the level of their economic performance. The methodology used to calculate the scale for the period 1998-2000 should be improved to make it genuinely reflect capacity to pay.

He said that, for the next scale, "a clean slate approach" -- based on a country's share of world output -- would fully reflect the capacity of countries to pay. He also supported the recommendation of the Committee on Contributions that the GNP be used in determining the scale of assessments and that recommendation should be implemented as quickly as possible. A three- year statistical base period should be used, as a short period would provide a realistic approximation of Member States' current capacity to pay. It would also coincide with the fact that the scales of assessments were usually set for three-year periods, for instance from 1995 to 1997.

Fifth Committee - 11 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

He agreed with the view of the Committee on Contributions that market exchange rates should be used for the purposes of the scale, except where they caused excessive fluctuations or distortions in the income of some Member States. If GNP was used to evaluate national income, additional debt-burden adjustments should be excluded from the scale methodology. Nevertheless, he was ready to support the proposals that, should the Assembly retain the adjustment, debt information from the World Bank should be used to calculate debt-adjusted income. In that event, the adjustment should be based on data on actual principal repayments, rather than on a proportion of debt stocks.

States whose share of adjusted income was less than the current 0.01 per cent should be assessed at their actual share of adjusted income, subject to a minimum rate of 0.001 per cent, he said. That recommendation should be carried out as soon as possible, along with other measures to prevent the next scale from fixing rates that were too high for any country. The effects of the scheme of limits -- [which helps avoid excessive fluctuations in Member States' assessment rates] -- should be eliminated while determining the next scale of assessments.

Countries like Ukraine, he said, had become one those affected by the unfair redistribution of the excessive assessment of the former Soviet Union to the United Nations regular budget. While his country had appealed twice to the Committee on Contributions to set Ukraine's dues on the basis of its capacity to pay, the scale for 1995-1997 still contained assessment rates that exceeded Ukraine's capacity to pay several times over. The Committee had been unable to recommend equitable apportionment, because it had used obsolete factors that had impeded implementation of the principle of capacity to pay. A major factor was the scheme of limits, and it should be phased out in the next scale in 1998.

HASMY BIN AGAM (Malaysia) said it was difficult to comprehend why the current scale needed to be fundamentally changed, as some delegations had proposed. Its weaknesses could be studied by the Committee on Contributions. Malaysia reaffirmed its support for the validity of the current scale, as it reflected the principle of the capacity to pay and the consensus agreed upon by all Member States. It was difficult to come up with a scale that would satisfy all 185 Member States. The recommended rates had taken into consideration the need to maintain a balance between all Member States. The criteria for determining Member States' capacity to pay should take account of various socio-economic factors that determined a Member State's well-being. Relying on only some basic indicators would not be reflective of the real situation.

With regard to a new scale for the year 1998-2000, he said a base period of five to six years was reasonable and would provide a basis for consensus. The floor rate should be lowered to 0.001 per cent. The issue of the ceiling rate would be further discussed by the Fifth Committee. It was not in the

Fifth Committee - 12 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

Organization's best interest to rely on one Member State for a quarter of its regular budget. The scheme of limits for the years 1998-2000 should be phased out by a gradual three-step approach, as a reasonable compromise to avoid excessive changes in Member States' assessment rates over the next three-year period.

The debt-burden adjustment should continue to be used in the scale's calculation, he continued. Since the economies of so many developing countries were badly affected by debt repayment, it continued to remain a valid factor. The use of the low per capita income adjustment should be continued as an important element in the scales methodology. The rounding of the scale to three decimal places would make it more precise and fair to those Member States with smaller assessment rates. He could not accept any unilateral decision to reduce peace-keeping assessments. The scale should reflect the special responsibilities of the Security Council's permanent members, the larger contributions expected from the economically more developed countries, and the limited capacity of some States to contribute to peace-keeping operations.

LAURENCE N. EDWARDS (Marshall Islands), also speaking on behalf of the Forum Island Countries of the South Pacific -- the Federated States of Micronesia, Fiji, Papua New Guinea, Samoa, Solomon Islands and Vanuatu -- welcomed the statement made by Costa Rica on behalf of the Group of 77 and China. He strongly supported the recommendation of the Committee on Contributions that, in future assessment scales, a minimum assessment of 0.001 per cent should be applied. The recommendation was in line with statements made by the Pacific island delegations on several occasions. The reduction of the scale's floor rate was of vital importance to all developing countries with small economies, in particular a large number of small island developing States and least developed countries. Special consideration that was given to the larger economies was not given to them, because they were flatly assessed at the floor rate.

He called on the Fifth Committee to take action on the matter as quickly as possible -- during the current Assembly session. The adoption of the recommendation would benefit more than 60 countries. Further, it would encourage a number of countries from his region that were not members of the United Nations to make the commitment to become Members. Those independent countries were prevented from joining the Organization because of the cost. Although he had previously asked for the floor rate to be abolished altogether, he had been persuaded by the argument that there should be some minimum assessment for membership in the United Nations -- at least for the time being. In light of the unanimity on the issue, there should be a formal resolution. It would be a first important step in reforming the scale of assessments.

Fifth Committee - 13 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

FABIAN PALIZ (Ecuador) expressed support for the statement made by the representative of Costa Rica, on behalf of the Group of 77 and China. He added that the principle of the capacity to pay should remain the fundamental criterion for determining the scale of assessments for sharing United Nations expenses.

The stability of the scale methodology should be maintained and any adjustments should not adversely affect developing countries, he continued. Any adjustments considered should be gradual and the issue of debts should continue to be taken into account, in order to provide adjustments to the scale of assessments. Member States' contributions to the regular budget should be seen as investments and a political and legal commitment to the United Nations. The continuous deliberations being undertaken on the scale of assessments did not relieve Member States from paying their dues to an Organization that had started its second half century with serious liquidity problems.

SYED RAFIQUL ALOM (Bangladesh) said that the scale of assessments should be established on the basis of the principle of capacity to pay. While there was a need to improve the existing scale methodology, it should be recognized that the scale was a zero-sum game. The issue should, therefore, be addressed fairly, consistently and flexibly. The plight of 48 least developed countries was well understood, and they had been charged at the floor rate. While the overall economic performance of a few of them had improved recently, a decisive reversal of their socio-economic deterioration was not yet in sight. They still faced declining flows of development resources, crushing debt burdens, low levels of human development, environmental degradation and many other adverse conditions. The current "safety net" approach must be maintained in determining the scale of assessments, in order to continue helping those nations and other small Member States in vulnerable situations.

He said that national income, per capita income, external debt burden and the availability of foreign exchange were indispensable in ascertaining Member States' actual capacity to pay. The statistical base period should be 7.5 years, which would ensure stability and prevent fluctuations. Market exchange rates should be used to obtain accurate conversions for comparing national incomes. It was premature to use purchasing power parity, because it had data and methodological deficiencies and was still in its infancy. The debt-burden adjustment factor in the methodology should be strengthened in order to take into account the huge debts owed by many developing countries.

PHAM THI NGA (Viet Nam) said the most important principle of the scale of assessments must be capacity to pay. In determining the real capacity to pay, other criteria, such as external debt and per capita national income in proportion to the world's total income, should be taken into consideration. The base period should be at least six years and she endorsed the recommendation of the Committee on Contributions of a minimum assessment rate

Fifth Committee - 14 - Press Release GA/AB/3089 3rd Meeting (PM) 7 October 1996

of 0.001 per cent. She expressed strong support for the Group of 77 and China's position that any change in the new scale of assessments should not result in an increased burden on developing countries that was beyond their capacity to pay. The ceiling rate should remain at 25 per cent. Also, the Committee on Contributions should examine all aspects of the application of Article 19 and provide more flexibility before its application.

TRYGGVE GJESDAL (Norway) expressed support for the European Union's statement. He agreed with the need for fundamental reform of the scale's methodology. Although the review by the Committee on Contributions was helpful as a first step, the Fifth Committee should provide guidance on the reform, and the European Union's broad package constituted the best basis for the reform process. He looked forward to the discussion on the scale's comprehensive reform. The suggestion that the ceiling should be lowered raised a number of questions which should be dealt with in the broader context of the financing of the Organization.

* *** *