FIFTH COMMITTEE APPROVES FUNDS FOR MINURSO, UNOMIL UNTIL JUNE 1997
Press Release
GA/AB/3092
FIFTH COMMITTEE APPROVES FUNDS FOR MINURSO, UNOMIL UNTIL JUNE 1997
19961011 In Debate on Scale of Assessments, United Nations Asked to Reduce 'Heavy Dependence' on Major ContributorThe General Assembly would appropriate some $46 million gross for the United Nations Mission for the Referendum in Western Sahara (MINURSO) and the United Nations Observer Mission in Liberia (UNOMIL) for the period 1 July 1996 to 30 June 1997, if it adopts two of the three peace-keeping draft texts approved this morning by the Fifth Committee (Administrative and Budgetary), at a meeting that also discussed the scale of assessments.
The third text approved would have the Assembly determine what to do with an unencumbered balance of some $2 million gross ($1.7 million net) for the period 16 May 1995 to 12 January 1996 in the account of the United Nations Observer Mission in Georgia (UNOMIG). The Assembly would apply that balance to the future apportionments of the Member States that paid up their dues and use it to reduce the arrears of those that had.
Subject to the Security Council's extension of the MINURSO and UNOMIL mandates beyond 30 November, the draft texts on those Missions would, among other things, have the Assembly:
-- Appropriate and apportion some $13.3 million gross ($12.6 million net) for MINURSO for 1 July to 30 November and $18.6 million gross ($17.6 million net) for 1 December 1996 to 30 June 1997; and
-- Appropriate a rounded $14 million gross ($13.2 million net), or about $1.2 million gross ($1.1 million net) monthly, for UNOMIL for the period 1 July 1996 to 30 June 1997. About $8.2 million gross ($7.7 million net) for 1 December 1996 to 30 June 1997 would be apportioned at about $1.2 million gross ($1.1 million net) monthly, if the Mission is extended; the other $5.8 million gross ($5.5 million net), for 1 July to 30 November 1996, could be appropriated after the Assembly reviews the Mission's performance report for the period 1 July 1995 to 30 June 1996.
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Even though he had joined consensus on the texts, Germany's representative expressed reservations regarding the fact that the sums allocated for the peace-keeping missions would not be fully covered by the contributions of Member States as one of them had announced that it would cut its assessments to peace-keeping budgets to a level it deemed convenient.
Following the action on the financing of those missions, the Committee continued its general debate on the scale of assessments for apportioning the Organization's expenses among Member States.
Speaking on the scale, the representative of the United States asked the United Nations to reduce its present heavy dependence on his country by lowering of the regular budget's maximum assessment rate from 25 to 20 per cent. That had been done 11 times in the United Nations first 30 years, but not at all in the last 20, he added. The Fifth Committee must, therefore, instruct the Committee on Contributions to recommend a scale of assessments for the years 1998 to 2000 with the assumption of a 20 per cent ceiling rate.
The majority of today's speakers said that the rate should not be lowered further as it might shift costs to developing countries. They, however, proposed that the floor rate of 0.01 per cent be lowered to 0.001 per cent. Based on the current floor rate, the lowest any country was assessed for 1996 was $128,557 gross.
The ceiling rate has dropped over the years from 39.89 per cent in 1946 to the current 25 per cent. Based on that rate, the United States was assessed about $321.4 million gross for the United Nations 1996 regular budget expenses of about $1.3 billion.
Also speaking in this morning's debate, the representative of the Republic of Korea said that some delegations insisting on comprehensive scale reform, had unduly magnified the importance of fairness and equity. While the new scale methodology should ensure fairness and equity, it should give the same weight to the principle of stability. A long statistical base period would help ensure that, he added.
The representative of China said that both the suggestion to further reduce the regular budget ceiling rate and to set two different ceilings for permanent Security Council members should be rejected because they would shift the financial burdens of high-income countries to relatively low-income nations.
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The debt burden adjustment should be maintained as a factor in calculating assessment rates because debt remained of great concern to the Rio Group, the representative of Bolivia said on behalf of that Group. The debt burden adjustment must be maintained even if the gross national product (GNP) was used to calculate the scale of assessments, he added.
Statements were also made by the representatives of Samoa, Cuba, Indonesia, Kenya, Colombia, India, Philippines, Algeria, Thailand, Venezuela, Iran and the Russian Federation.
The Committee is scheduled to meet again at 10 a.m., on Tuesday, 15 October, to continue debating the scale of assessments. It will also begin discussing the implementation of the $154 million budget cuts mandated by the Assembly, the pattern of conferences and human resources management.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) met this morning to consider three draft texts on the financing of the United Nations Observer Mission in Georgia (UNOMIG), the United Nations Mission for the Referendum in Western Sahara (MINURSO) and the United Nations Observer Mission in Liberia (UNOMIL).
The Committee was also scheduled to continue debating the scale of assessments for apportioning the Organization's expenses among Member States. On the scale, it had before it a report of the Committee on Contributions, which was set up to advise the General Assembly on the apportionment of United Nations expenses, the dues of new Members, appeals by Members for a change in their assessments and on the application of Article 19 of the United Nations Charter in cases of arrears in paying assessments. (For background on the scale, see Press Release GA/AB/3089 of 7 October.)
Financing of Peace-keeping Operations
The draft resolution on MINURSO (document A/C.5/51/L.4) would have the Assembly appropriate an already authorized and assessed sum of some $28 million gross ($25.5 million net) for the period 1 February to 30 June.
The Assembly would also appropriate some $13.3 million gross ($12.6 million net) for the Mission for 1 July to 30 November. The sums would include $526,835 for the support account for peace-keeping operations and take into account $7.8 million gross ($6.9 million net) that had already been authorized and assessed for 1 July to 30 September, as well as some $2.6 million gross ($2.5 million net) previously authorized for 1 to 30 October.
The Assembly would apportion among Member States an additional $5.5 million gross ($5.7 million net) for the period 1 July to 30 November, taking into account the $7.8 million gross ($6.9 million net) previously apportioned. It would then appropriate some $18.6 million gross ($17.6 million net) for 1 December 1996 to 30 June 1997 and assess it at no more than $2.7 million gross ($2.5 million net) monthly, should the Security Council extend MINURSO's mandate beyond 30 November.
A draft decision submitted by the Committee Chairman on UNOMIG (document A/C.5/51/L.2) would have the Assembly decide that, for Member States that have fulfilled their financial obligations to the Mission, their respective share in an unencumbered balance of $1.9 million gross ($1.7 million net) for the period from 16 May 1995 to 12 January 1996 shall be set off against their future apportionment. For Member States that have not fulfilled their financial obligations to the Mission, the Assembly would decide that their share of the unencumbered balance shall be set off against their outstanding obligations.
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A draft resolution on UNOMIL (document A/C.5/51/L.3) would have the Assembly appropriate $14 million gross ($13.2 million net) for the Mission for the 12-month period from 1 July 1996 to 30 June 1997, equivalent to a monthly rate of $1.2 million gross ($1.1 million net). The amount to be apportioned includes $791,800 for the support account for peace-keeping operations.
The Assembly would also apportion among Member States $8.2 million gross ($7.7 million net) for the period 1 December 1996 to 30 June 1997, at the monthly rate of $1.2 million gross ($1.1 million net). The decisions would be subject to the extension of UNOMIL's mandate by the Council beyond 30 November.
By other terms of the text, the Assembly would also decide that the apportionment of $5.8 million gross ($5.5 million net), for the period from 1 July to 30 November 1996, would be made at a later time following the review of the Mission's performance report for the period from 1 July 1995 to 30 June 1996. Member States would be urged to make every possible effort to ensure payment of their assessed contributions to the Observer Mission in full and on time. They would also be invited to make voluntary contributions to the Mission in cash and in the form of services and supplies acceptable to the Secretary-General.
Action on Financing of Peace-keeping Missions
MARTA PENA (Mexico), who had conducted the informal consultations on the issue, introduced and reviewed the draft resolution on the funding of MINURSO. She called for its adoption without a vote.
The Committee approved the draft text without a vote.
Speaking after action, KLAUS STEIN (Germany) said that, on all three peace-keeping missions, his delegation had joined the consensus on the texts with reservations. The issue that concerned his delegation was the fact that the sums allocated for the peace-keeping budgets would not be fully covered by the contributions of Member States since one of them had announced that it would cut its assessments to peace-keeping budgets to a level it deemed convenient. That unilateral action would further contribute to the United Nations already difficult cash position, and in the long run jeopardize the implementation of all peace-keeping missions. The commitment authority granted the Secretary-General for every mission's budget would have to be adjusted to the predictable income level. While supporting the peace-keeping missions in question, Germany would neither stand for the non-payment of dues by other Member States nor accept a change in its effective share in the current scale of assessments.
MOVSES ABELIAN (Armenia), who had conducted the informal consultations on the draft on the financing of UNOMIG, introduced the text and asked for its adoption without a vote.
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The Committee approved the draft decision without a vote.
NGONI FRANCIS SENGWE (Zimbabwe), the Committee Chairman, introduced the draft text on UNOMIL, which was also approved without a vote.
Statements on Financing of Peace-keeping Missions
HISHAM ELZIMAITY (Egypt) wondered whether he could ask about the reimbursement of countries that had contributed troops and equipment to the United Nations Operation in Somalia (UNOSOM II). He said that some countries had stopped paying their dues to that mission and the Secretariat was now not able to reimburse troop-contributing States. Those States were concerned that the largest contributor to the Organization had not contributed a single dollar to the mission. That development created a burden for the developing countries that had contributed troops to the mission.
The representative asked for the number of claims submitted by States for taking part in the Somalia operation and how much they cost. The Secretariat should submit proposals on how it would reimburse the expenses of the troop-contributing States. He was aware of the scale of financial crisis of the United Nations but could not ignore the fact that the passage of time would not solve the crisis, which was largely political. Egypt had been one of the States that had opposed the move to stop the Secretariat from borrowing from the peace-keeping budgets to finance its regular budget operations. The Secretariat should clarify how it intended to reimburse the troop-contributing States. He expressed hope for an answer in October.
VIJAY GOKHALE (India) associated himself with the statement by the Egyptian representative over the delays in reimbursement. India had contributed a brigade to the operation and was owed over $50 million in reimbursements. The Secretariat should tell the Committee what steps it would take to ensure that Member States would pay their dues to the operation.
ZULKIFLI ADNAN (Malaysia) said his country had contributed one battalion to the mission in Somalia and was owed some $15 million by the Secretariat in the form of reimbursements.
SYED RAFIQUL ALOM (Bangladesh) associated himself with the statements of Egypt, Malaysia and India. The troop-contributing States should be reimbursed without further delay since the Somalia operation had been closed.
LEON HOSANG, Director of the Peace-keeping Financing Division of the Department of Administration and Management, said he had noted the questions raised by the delegations on the lack of reimbursement for the amounts owed for UNOSOM. He would provide detailed answers later this month.
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Statements on Scale of Assessments
[Note: The current scale methodology tries to approximate Member States' capacity to pay by using about six criteria such as national income data for a base period; debt relief which reduces annual national income of eligible, highly indebted countries; low per capita income allowance that further reduces national income already adjusted for debt; the floor (0.01 per cent) and ceiling rates (25 per cent); and the scheme of limits, which avoids excessive changes in countries' rates between successive scales.]
EDGAR CAMACHO-OMISTE (Bolivia), speaking on behalf of the Rio Group (Argentina, Brazil, Chile, Colombia, Costa Rica representing Central American countries, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela) said that the issue of reform of the scale of assessments should be dealt with separately from the Organization's current financial situation.
He reaffirmed the continued validity of the principle of capacity to pay and the criterion of equitable distribution in determining the scale methodology. The use of the primary indicators of the gross domestic product (GDP) and gross national product (GNP) should not be the only indicators for calculating the scale. The debt burden adjustment was still valid. It did not introduce a distortion to the scale. Debt remained of great concern to the Rio Group. Even if the GNP was used to calculate the scale of assessments, the debt burden adjustment must also be maintained. Extreme variation in assessment must be avoided.
ANDREA WILLIAMS-STEWART (Samoa) stressed that the scale of assessments was an issue of great importance to many small States like Samoa. Regarding the floor rate, she fully supported the Committee on Contributions' recommendation that all Member States whose share of adjusted national income was less than the current floor rate should be assessed at their actual share of adjusted income. The current floor rate was a major impediment to many small developing countries which were being assessed at levels far beyond their capacity to pay.
Samoa therefore reiterated its firm view that the floor rate should be appropriately reduced, she said. The strong degree of consensus on the issue deserved vital attention. Abolishing or reducing the floor rate would only enhance the principle of universal membership in the United Nations. Such a decision would enable a number of small independent countries to join the Organization that were largely prevented from doing so because of the cost. The decision would also assist many countries that were in arrears due to economic factors beyond their control and which would fall under Article 19 of the United Nations Charter.
The ceiling should be maintained at its current level, she continued. The United Nations should take action now on the financial crisis by proposing a comprehensive package of reform measures. It would be timely to commence
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those reforms on an issue on which there was near unanimity such as the reduction of the floor rate.
ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said the issue of the reform of the scale methodology had become controversial. It was regrettable that the Committee on Contributions had offered only a few scant recommendations. The Committee was the technical organ appointed to advise on those matters. It was, therefore, of great concern to see the attempts being made to take the issue of the scale methodology to other negotiating forums. Such action questioned the Committee's usefulness.
The Committee on Contributions must consider the issue of scale methodology on its merits until the Fifth Committee gave instructions to prepare the scale for the period 1998-2000, she said. The Committee on Contributions should convene a special session on the matter and submit its conclusions to the Fifth Committee. Among those conclusions should be a decision on a specific base period reflecting the principle of capacity to pay; the gradual elimination of the scheme of limits (the mechanism to control the rate by which a Member State's dues could vary between two successive scales); an analysis of the impact of economic measures on the capacity to pay; and how the scale methodology could take account of the relevant Assembly resolution on the matter adopted during the fiftieth session.
Any change in the scale's methodology should be introduced gradually, she continued. The lack of consensus on the principle of capacity to pay meant that a number of measures, such as low per capita income adjustment and the debt burden adjustment, were not taken into account when considering the economic problems of developing countries. Those elements must continue to be an integral part of future scale methodologies. However, even those elements were insufficient since they did not take account of the large number of factors that adversely affect developing countries' capacity to pay. For example, the existence of a ceiling rate meant that many developing countries had to shoulder an additional burden.
In that connection, the major contributor should negotiate in good faith and should not impose conditions on the Assembly, she continued. Cuba could not support any proposal which transferred the obligations of developed countries to developing countries. The floor rate should be decreased to 0.001 per cent. Its reduction would respond to the demands of the least developed countries over the years. A shorter base period would better reflect any country's real capacity to pay.
ISSLAMET POERNOMO (Indonesia) associated his delegation with the statement that had been made on the scale of assessments by Costa Rica on behalf of the "Group of 77" developing countries and China when the Committee met on Wednesday, 9 October. Since the current methodology for calculating the scale was based on States' capacity to pay, it should continue to be used to determine such future scales as those for the years 1998 to 2000. National
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income seemed to be the fairest guide for measuring Member States capacity to pay. However, it could be adjusted for factors identified by the General Assembly. The use of GNP as a first approximation of capacity to pay should be supplemented by other economic and social adjustments to ensure that fairness and equity were recognized in the scales of many developing countries.
The representative said that, if the current base period of 7 to 8 years was to be cut, it should be carried out gradually to avoid excessive fluctuations in the next scale. As for debt-burden adjustments, he said that the factor should continue to be included as a vital element in the scale methodology. It was indispensable for many developing nations, such as Indonesia, and the least developed countries. The debt data in the World Bank's publication World Debt Tables could be used to measure debt-adjusted income for future assessments. Market exchange rates were the most appropriate and practical means of converting national current data, in comparison with purchasing power parity.
PHILIP R.O. OWADE (Kenya) said that the Assembly had recognized the importance of the adjustment of national income by additional factors, which did not represent distortions but were designed to achieve greater balance and fairness. They must include GNP, exchange rates, the debt adjustment and relief to low per capita income countries. [Note: Debt relief reduces the national income of eligible countries with high levels of external debt.] Debt burden was a major obstacle to developing countries and must be taken into account.
Turning to the issue of the base period, he said that the current one of 7.5 years had worked well and should not be altered radically. But, maybe, a slightly shorter period of 6.5 years would be a good compromise. The ceiling rate should not be lowered further. [Note: Currently at 25 per cent, it was about 40 per cent in 1946.] The current floor rate of 0.01 per cent should be reviewed, with due consideration given to the plight of the developing and least developed countries.
AURELIO IRRAGORI (Colombia) said that norms that would enable the Organization to get the funds it needed should be promulgated, with the necessary political will. The refusal of one of the major countries to pay its dues and to attach conditions for its payments was cause for concern. The current scale of assessments required adjustments to correct some specific situations that required changes. He wondered whether the scale should be changed completely or simply adjusted. Some delegations had called for changes in both the regular budget scale and that from the peace-keeping operations. Colombia was ready to work on that on the basis of some conditions. First, there should be a change in the system of governing the United Nations. When the weight of all States was equal, with no country having the ability to veto decisions, Colombia would be ready to support a complete change in the scale.
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The representative said the principle of capacity to pay was a fundamental criterion for determining Member States dues to the United Nations. The work of the Committee should proceed to ensure that the smallest countries were not asked to pay what was far above their means. Currently, what was included in the GNP was the payment of interest on the debts of Member States and not the principal. The external debt of developing countries had grown by 37 per cent in the last five years and that should be considered. About $224 billion had been paid last year by the developing countries, with $101 billion as interest payments alone and the rest as capital. Many developing countries had been labelled severely indebted. He asked whether the Committee could adopt a scale of assessments that only partially considered the plight of those countries. The ceiling rate should remain. But if it was to be lowered, Colombia would join in the consensus as long as the points to be distributed would not affect developing countries.
WANG XUEXIAN (China) said that the principle of capacity to pay should be maintained, as any deviation would be unfair and unacceptable to the majority of Member States. The current criteria for setting the scale, particularly the low per capita income allowance, should be preserved. [Note: The low per capita income allowance formula reduces the national income already adjusted for debt relief.] Isolated deviations from the principle of capacity to pay in the current scale should be addressed on a case-by-case basis to bring them more into line with that capacity. At the same time, efforts should be made to prevent the shifting of financial burdens onto the developing countries. However, one major contributor, in disregard of its Charter obligations, had piled arrears time and again, landing the Organization in serious financial crisis. That was entirely unjustifiable.
The representative said that base period should not only reflect changes in economic development, but also contribute to the stability of the scale of assessments. A fixed period, whatever its length, would have the same impact on all countries. China preferred a six-year base period, and it should not be changed at will once it was fixed, so as to ensure the scale's stability. Market exchange rates would provide fair and accurate conversions of income data. Purchasing power parity remained a subject for research by experts in the academic world and it tended to overestimate devel oping countries' incomes. Therefore, it was immature and could not reflect a country's actual economic level.
The debt-burden adjustment, he said, was necessary in determining countries' capacity to pay and should continue to be considered as a factor in setting the scale. Low per capita income adjustment was the best expression of the principle of capacity to pay as it took into account both a country's aggregate national strength and its per capita income, which reflected the capacity to pay. That allowance should continue to be used and fixed for a long time to avoid any more influence from artificial and political factors. China welcomed the proposal to lower the floor rate from 0.01 per cent to 0.001 per cent. Both the suggestion to further reduce the ceiling rate and to
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set two different ceilings for permanent Security Council members were in essence aimed at shifting the financial burdens of high-income countries to relatively low-income nations. They must be rejected.
SAVITRI KUNADI, Joint Secretary, Ministry of External Affairs of India, said her delegation objected to the European Union's proposal on how the issue of assessment methodology should be dealt with. The objection was premised on the belief that the financial crisis was based on non-payment of assessed contributions, reflecting lack of political will by some Member States. "It is not the result of any inherent defect in the scale of assessments, a revision of which should be discussed on the basis of merit." The concept of the principle of capacity to pay lacked precision. Statistics about a country's national income did not by itself represent an accurate portrayal of its capacity to pay; neither was devising statistical formulas.
India looked forward to a consensus on shifting from the GDP to the GNP as the basis for calculating each country's share of the Organization's costs, she said. There should be a compromise on the issue of a shorter base period. For many developing countries, the debt burden adjustment continued to remain a valid factor in the scale methodology. However, the possibility of revising the mode of calculating the relief should be explored, provided the validity of relief to developing countries was not questioned.
The low per capita income relief should be maintained, she continued. It was a moderating element in the existing formula. The current floor rate payable by many small countries, and which strained their capacity to pay, should be alleviated. Any consensus solution to change the ceiling rate should ensure that any concomitant burden was not shifted to developing countries. Early consensus should be reached on the final phasing out of the scheme of limits. The scale should be reflected in three decimal places to make it more precise.
JOSE FERNANDEZ (Philippines) said apportioning the Organization's expenses had never been, and perhaps would never be, arrived at to the complete satisfaction of 185 Member States, given their varying levels of economic development. Nevertheless, it was the Organization's duty to try to develop a formula which could be accepted as fair and effective and which would be a powerful incentive for Member States to honour their contributory obligations.
Referring to the discussions in the Committee on Contributions, he said the base period should be long enough to provide stability and predictability to the scale. Its length should be considered in conjunction with the decision to completely phase out the scheme of limits in the next scale. The debt burden adjustment should be maintained to provide relief to developing countries with low per capita incomes. The floor rate should be reduced. The lowering of the ceiling rate should be made in order to reduce the shares of
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expenses of countries in the international financial institutions, including the World Bank and the regional banks such as the Asian Development Bank.
DJAMEL MOKTEFI (Algeria) said a new scale methodology would ensure a fair apportionment of the Organization's costs. The new scale came at a time of a worsening in macroeconomic circumstances which was reflected in a broadening of the gap between developed and developing countries. The Committee on Contributions' research on the scale methodology over the years had not achieved the results hoped for. It was of concern that its latest report did not make precise and unanimous recommendations.
The criteria for the new scale should be based on national income and realistic exchange rates, he said. A higher ratio should be given to the debt burden adjustment. The ceiling and the floor rates needed to be adjusted as well. The current statistical base period of 7.5 years undermined the methodology and led to erroneous assessments. Therefore, a shorter base period of three years would be a more realistic assessment of Member States' capacity to pay.
His country's contribution had increased over the last few years in an illogical manner which did not reflect the economic problems it was experiencing, he said. Export earnings had plummeted, the country's terms of trade had deteriorated and a high percentage of its income went to debt servicing. The increases in Algeria's assessment, therefore, reflected the shortcomings of the current system. He looked forward to contributing to the development of a clear precise methodology for calculating the scale of assessments based on objective and equitable criteria.
THAKUR PHANIT (Thailand) said that the current scale was the product of negotiations based on consensus. Therefore, it was difficult for Thailand to justify any future scales based on elements that merely sought to simplify the scale of assessments. It could not accept the "clean slate approach", and efforts to improve the scale should be gradual, not drastic. The national per capita income and external debt should continue to be used, as they remained valid criteria for determining the scale. A longer base period would reduce the volatility of the scales and help Member States which faced fluctuations in their economies. Such a base period would accurately reflect a State's capacity to pay. Thailand could consider a six-year base period.
Regarding the scheme of limits, he said that it should be phased out gradually in order to avoid causing excessive hikes in the dues of the countries affected by the scheme. [Note: The scheme of limits avoids excessive variations of individual assessment rates between successive scales.] In the process, the impact on developing countries benefiting from the scheme's application should be limited to 15 per cent of the total effect of the phase-out. The floor rate could be lowered but not abolished and the current ceiling should be retained.
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HERBERT D. GELBERT (United States) said that, for many delegations, the problem of the financial crisis was a simple one. "If only members with debts, particularly major contributors -- particularly, the major contributor -- would pay what they owe, without delay, without asking for any changes, the financial problem would go away. Things could go back to the way they were", he cited them as saying. However, such views were not realistic. Part of the problem had been the growth of programmes, commissions, committees and other activities over 50 years without due attention to the overlapping and outdated nature of some of them. Actions by the United Nations leadership -- in managing the 1996-1997 budget and carrying out the Efficiency Board's recommendations -- had begun to address those concerns. The result was a sounder financial foundation than what existed two years ago. Such work must continue in order to generate confidence in the United Nations efficiency.
The representative said that Member States should pay what they owed, something to which his Government was committed. It had contributed, in the United States' fiscal 1995, $1.8 billion to the United Nations agencies and programmes, more than any other Member State. In fiscal 1996, which ended on 30 September, the total exceeded $1.6 billion. Its contributions to the regular budget and peace-keeping alone in the 1996 fiscal year totalled $670 million. Since the United States Congress had approved a budget for fiscal 1997, the United States would be able to make significant payments much earlier than in the 1996 fiscal year.
Those payments, he went on, would not change the fact that the United Nations membership must address the United States' unique role in the Organization's cost-sharing. As had been announced in March at the Assembly's high-level working group on the financial situation of the Organization, the United States was proposing a lowering of the regular budget ceiling rate from 25 to 20 per cent. That had been done 11 times in the United Nations first 30 years, but not at all in the last 20. With the changes in the global economic balance, it was time to adjust the financial demands the current scale placed on the United States and for other nations to pay greater shares of the costs.
He said that setting the ceiling rate, which should be discussed by the Assembly and not the Committee on Contributions, would require a political decision reflecting a careful balancing of political and economic interests. The main interest that should be considered was how to re-establish a productive financial relationship between the United Nations and its contributors. "One key factor in this is to reduce the United Nations present heavy dependence on the United States. With 185 Members, all of whom have a major stake in it, the Organization should expect a wider sharing of responsibility." The Fifth Committee resolution that would emerge from the discussion on the scale must include instructions to the Committee on Contributions that it should make its recommendations on a scale for the years 1998 to 2000 with the assumption of a 20 per cent ceiling rate.
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He stressed that other changes in the scale methodology were necessary. For instance, he supported the changes proposed by the European Union, as modified by the views of the United States on the ceiling.
HAHM MYUNG CHUL (Republic of Korea) said he shared the views of the majority of Member States that the United Nations fiscal disorder was due to the failure by some States to pay their dues. Even the formulation of a perfect methodology might not resolve the United Nations financial problems. The scale should ensure fairness and equity and create a methodology that would withstand the test of time. The scheme of limits and longer base periods had been devised to ensure the stability of the methodology over time. The principle of stability should carry the same weight as those of fairness and equity in the process of devising a new methodology. The Committee on Contributions had spelled out the need for stability in the creation of a new scale methodology.
The representative said that some delegations, insisting on a comprehensive scale reform, had unduly magnified the importance of fairness and equity. Since the scale of assessments issue was very sensitive, it must be approached prudently and gradually. He agreed with the position of the Group of 77 as presented by Costa Rica.
Turning to the remaining 50 per cent phase-out of the scheme of limits, he said that a gradual approach would be rational and effective in terms of stability. It would also minimize potentially extreme changes in some countries' assessments. Fairness and equity could best be assured by phasing out the scheme by the year 2000. As a result of the phase-out, however, Member States that were experiencing rapid economic growth would sustain a disproportionate share of assessments. How then could stability be ensured for those countries? he asked. He proposed a longer base period as a possible answer to his question. If long periods were shortened and combined with a phase-out of the scheme of limits in the year 2000, the financial burden of certain States would be doubled. That would contradict the principle of stability.
The floor rate, he said, should be lowered to 0.001 per cent but the ceiling rate should be unchanged. Debt adjustment relief and low per capita income should remain in the scale methodology.
ROSSANNA FIGUERA (Venezuela) said she hoped that the Committee on Contributions' discussions on the scale would lead to the adoption of a new methodology. The entire process should be trustworthy and transparent and reflect Member States' capacity to pay. The methodology should be fine-tuned based on such recommendations as the use of the GNP, the lowering of the floor rate and a base period that closely reflected Member States' economic situations.
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The stability of the scale was subsidiary to its more realistic measurement, she said. A long base period and a rigid scheme of limits restricted the scale's ability to reflect the principle of capacity to pay. The scheme of limits should be completely eliminated in order to overcome distortions in the scale. Debt burden adjustments were of singular importance and should be retained. The debt problem deserved special efforts in international cooperation.
The capacity to pay should not be based on a limited number of factors, she continued. The mitigation factor -- another adjustment in the scale whereby the assessment of countries facing exceptional difficulties was further cut by the Committee on Contributions -- remained important and should be seriously considered in fine-tuning the scale methodology. The scale was not the basis of the financial crisis and it should not be looked at to provide solutions for that crisis.
SEYED MORTEZA MIRMOHAMMAD (Iran) said the principle of capacity to pay was the fundamental criterion for determining the scale of assessments. If the criteria for assessing the capacity to pay were determined only by national income and per capita income, it would not truly represent the real capacity to pay of Member States at different levels of development. Because of the great disparities between developed and developing countries, it would be unjustifiable to put them on an equal footing when determining their share of the Organization's expenses. The scale's improvement should imply stability and not rigidity so as to allow for future adjustments in the methodology.
He called for the earliest implementation of measures that would bring the scale more closely into the real capacity of Member States to pay their assessments. The "clean slate approach" -- assessment on Member States share of world output -- would not solve the scale's imperfections. Natural and man-made disasters, the adverse impact of refugees on host countries' national economy, the debt burden adjustments and low per capita income adjustments were important elements of the methodology to be considered. A shorter base period would better reflect the national capacity to pay. The ceiling rate adversely affected the developing countries. It should not be lowered any further.
EVGENY DEINEKO (Russian Federation) said the scale methodology had become a priority issue in the context of the Organization's serious financial difficulties. Countries whose assessment rates were too high account for a considerable amount of the arrears to the Organization. Therefore, a sound financial basis could not be secured without a just apportionment of its expenses. The stability of the scale should not imply rigidity. The principle of capacity to pay should remain fundamental to the scale's methodology. He therefore endorsed the recommendation that future scales should be based on estimates of the GNP rather than net national income.
Fifth Committee - 14 - Press Release GA/AB/3092 6th Meeting (AM) 11 October 1996
What Member States were paying today was the amount they were capable of paying seven or eight years ago, and not what they could afford to pay, he continued. There had been no agreement in the Committee on Contributions on a three-year base period or on gradual movement in that direction. The next scale should be based on a six-year base period. Market exchange rates were more objective for the purpose of the scale. The use of the GNP, if retained, should be based on actual repayment of the principal of debts rather than on the proportion of capital debt stocks. Per capita income should remain a decisive factor when a reduction was granted to developing countries. However, substantial distortion stemmed from the calculation of the adjustment under the current methodology. The issue should be kept under review. The Russian Federation supported the proposal to reduce the floor rate to 0.001 per cent. The scheme of limits should be phased out as soon as possible.
He noted that the recommendations of the Committee on Contributions were only adjustment measures, not comprehensive proposals for reforming the entire process of apportioning the Organization's expenses. It was time to adopt a procedure that would enjoy the confidence of all Member States, remove discrimination and ensure the stable financing of the United Nations at this time in its history. The proposals made by the European Union in the Assembly's high-level working group on the financial situation would serve as a good basis for a complete revision of the Organization's financing system. The Russian Federation fully supported them.
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