OUTLINE FOR 1998-1999 BUDGET DISCUSSED BY FIFTH COMMITTEE

Press Release
GA/AB/3128*

OUTLINE FOR 1998-1999 BUDGET DISCUSSED BY FIFTH COMMITTEE

The Secretary-General should restore the $205 million he would cut from the proposed 1998-1999 United Nations budget since he had not explained how he would make further efficiency savings in the Organization, the Fifth Committee (Administrative and Budgetary) was told this evening as it began discussing the outline of next biennium's expenditures and the first performance report on the 1996-1997 budget.

Making that proposal on behalf of the "Group of 77" developing countries and China, Costa Rica's representative said that the Group was not convinced that the outline's $2.43 billion level would be sufficient for fully implementing all mandates.

Also, the level of the contingency fund for 1998 and 1999, she said, should remain at 0.75 per cent of the budget and not lower to the 0.25 level proposed in the outline.

The representative emphasized the issue of vacancy rates in relation to both the budget outline and the performance report. She stressed that involuntary separations should not be used to save funds, that the redeployment exercise should not lead to the involuntary separations, that the Secretary-General should not exceed the 6.4 per cent vacancy rate, which should not become a precedent for future budgets. The rates must not be used to pay for unfunded mandates, she stressed.

The representative of the United States stressed that the projected spending for 1998 and 1999 should not exceed the 1996-1997 budget's total of $2.6 billion. Additional expenses should be met by efficiency savings, budget cuts or savings from the elimination of marginal or obsolete programmes. To that end, his Government supported the adoption of a "sunset policy" which would end programmes of unproven value after a specified period of time.

__________ * The first page of Press Release GA/AB/3122 of 4 December should have been designated 36th Meeting.

Also making statements on the proposed budget outline for 1998 and 1999 were the representatives of Saudi Arabia, Cuba and the Russian Federation.

Introducing the budget outline, United Nations Controller Yukio Takasu said it had been issued to ensure greater involvement of Member States in the budgetary process to facilitate a consensus agreement on the budget. It provided the basis for political negotiations among States who could then guide the Secretariat's preparation of the budget on the basis of the outline.

Presenting the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), its Chairman, Conrad M.S. Mselle, said that some of the projections in the budget outline seemed arbitrary because they lacked adequate justification. "The budget outline was not meant to be a vehicle for change in existing policy", he said.

The Secretary-General's first performance report was also introduced by Mr. Takasu and the related report of the ACABQ was presented by Mr. Mselle.

The Committee is scheduled to meet again at 10 a.m. tomorrow, Friday, 13 December, to continue discussing the first performance report and the proposed budget outline.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this evening to begin debating the first performance report on the 1996-1997 budget and the outline of the proposed 1998-1999 budget.

First Performance Report on 1996-1997 Budget

The first performance report on the 1996-1997 budget (document A/C.5/51/38) proposes that the approved appropriations of $2.608 billion be reduced by $5.6 million to $2.603 billion. However, the report does not take into account total anticipated revised estimates and financial implications of about $21.5 million emanating from resolutions of legislative bodies.

The Secretary-General says that the main aim of the first performance report, submitted in the first year of a biennium, is to identify the adjustments that would be necessary to take account of variations in inflation and foreign exchange rates and other factors that were assumed in calculating the initial appropriations of the budget. The level of resources is adjusted to ensure that appropriations are neither overstated nor insufficient for budgeted items.

For 1996-1997, the Secretary-General states, the first performance report also considers, but does not change, his proposals to achieve the $154.1 million savings mandated by the General Assembly. The assumptions in

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those proposals remain valid, with no significant developments necessitating revisions to the amounts contained in the savings proposals. While the average vacancy rate for the biennium can only be determined at the end of 1997, the Secretary-General states, the level of vacancies achieved so far is not expected to yield savings that are significantly different from what was envisaged.

According to the report, the appreciable strengthening of the United States dollar against the Swiss franc, the Austrian schilling and other currencies in 1996 enabled the Secretariat to save some $60.1 million from the expenditures of the approved budget. For example, favourable exchange rates in relation to the duty station in Geneva yielded savings of $40.5 million. Those savings were then used to absorb such costs as those of the additional mandates that were approved by the Assembly after the adoption of the 1996-1997 budget and of the net sum of $12.3 million needed to pay for the salary increases recommended by the International Civil Service Commission (ICSC).

The new mandates give rise to additional requirements of about $25.3 million in relation to Haiti, Guatemala, El Salvador and Rwanda, according to the report. The costs include almost $19 million for the United Nations Human Rights Verification Mission in Guatemala (MINUGUA); some $5 million for the International Civilian Mission to Haiti (MICIVIH); $886,000 for the United Nations Office of Verification (ONUV) in El Salvador; and $498,500 for the Commission of Inquiry (Rwanda). If the related staff assessment costs of some $2.5 million and the $3.1 million meant for the meetings of the United Nations Framework Convention on Climate Change are added to those estimates, the total additional requirements would be about $30.9 million, which could be met from current appropriations.

Apart from the costs of the new mandates, the Secretary-General says that revised estimates and statements of financial implications totalling some $4.5 million have so far been submitted. They relate to the revised estimates emanating from the decisions of the Economic and Social Council ($1.1 million), to the International Seabed Authority's budget ($2.8 million), and to the budgetary implications relating to the situation in Central America ($391,900) and action to combat illicit drug use and production ($290,500). He anticipates the submission of more resolutions which would require a further $17 million.

As the budget is adjusted from $2.608 billion to $2.603 billion, sections that would have upward revisions in their estimates, according to the report, include those on: peace-keeping and special missions (from $94.5 million to $121.4 million); Economic and Social Commission for Asia and the Pacific (ESCAP) (from $63.4 million to some $68 million); and Africa's critical economic situation and development (from $4.3 million to $4.4 million).

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Sections that would have lower estimates include: Administration and management (from $934.7 million to $921.1 million); United Nations Conference on Trade and Development (UNCTAD) (from $116.4 million to $111.3 million); Economic Commission for Latin America and the Caribbean (ECLAC) (from $84.5 million to $83.1 million); and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) (from $21.3 million to $17.6 million).

In its related report on the budget's performance (document A/51/7/Add.6), the ACABQ says that the Secretary-General's document had not specifically addressed the Assembly's request that he should propose how to absorb the cost of MICIVIH, MINUGUA, ONUV and the Commission of Inquiry (Rwanda). The Secretary-General's representatives had clarified that the mandates' $30.9 million costs would be met from the $60 million savings that had resulted from favourable exchange rates and not from the savings expected from the increase in the Organization's vacancy rates. Since the $30.9 million was only for 1996, the extension of those mandates would create the need to consider their funding in the context of how to find an additional $17 million for new mandates, as mentioned in the performance report.

The ACABQ says that, in contending that there is no need to revise the Secretary-General's proposals to achieve the mandated savings of $154.1 million from the budget, the performance report had failed to address some specific issues. It is silent on the question of the composition of vacancies and how they have been achieved; the extent of intergovernmental review; the questions of additional mandates and of deferred or postponed programmes. Therefore, the ACABQ states that the revised appropriations proposed should be adopted only after those issues have been addressed by the Secretary-General and considered by the Assembly.

Outline of Proposed 1998-1999 Budget

A report of the Secretary-General (document A/51/289) contains the outline of the proposed 1998-1999 budget. Such outlines are submitted in the off-budget years -- the second year of the biennium. The preliminary estimate of resources for the 1998-1999 biennium at 1996-1997 prices is $2.4 billion and represents a reduction of $178.9 million or 6.9 per cent compared with the initial appropriations for the current biennium (1996-1997). It is anticipated that when those estimates are adjusted for inflation and other factors at 1998-1999 rates, the outline will be around $2.6 billion.

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Proposed 1998-1999 Expenditures by Budget Part

I. Overall policy-making, direction and coordination $ 37.3 million

II. Political affairs $224.9 million

III. International justice and law $ 47.9 million

IV. International cooperation for development $281.3 million

V. Regional cooperation for development $347.4 million

VI. Human rights and humanitarian affairs $137.3 million

VII. Public information $126.2 million

VIII. Common support services $816.9 million

IX. Special expenses $ 57.3 million

X. Office of internal oversight services $ 15.4 million

XI. Capital expenditures $ 40.9 million

XII. Staff assessment $296.6 million

XIII. International Seabed Authority $ 0.0

Total $2,429.4 million

The resource change between the 1996-1997 appropriation and that proposed for 1998-1999 is as follows: for Overall policy-making, direction and coordination, a decrease of $1.7 million (4.3 per cent); for Political affairs, an increase of $61.8 million (37.9 per cent); for International justice and law, a decrease of $3.2 million (6.2 per cent); for International cooperation for development, a decrease of $19.2 million (6.4 per cent); and for regional cooperation for development, a decrease of $10 million (2.8 per cent). In addition, the 1998-1999 budget outline shows a decrease of $7.8 million (5.4 per cent) for Human rights and humanitarian affairs; a decrease of $6.5 million (4.9 per cent) for Public information; a decrease of $111.8 million (12 per cent) for Common support services; a decrease of $10.9 million (16 per cent) for Special expenses; an increase of $0.3 million (2.2 per cent) for the Office of Internal Oversight Services; a decrease of $10 million (19.6 per cent) for Capital expenditures; and a decrease of

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$58.7 million (16.5 per cent) for staff assessment. For the International Seabed Authority, there would be a 100 per cent decrease in the allocation since that entity would no longer be financed by the regular budget.

It is to be noted that the only areas of increased resources are Political affairs and the Office of Internal Oversight Services.

The budget outline lists a number of factors that have influenced the decrease in resources at 1996-1997 prices. New posts at the Professional and General Service levels that were partially funded in the current biennium would be fully funded in 1998-1999 and would require an additional $7 million. On the other hand, a provision of $8.0 million relating to one-time costs in 1996-1997 would not be required. In addition, increased productivity and streamlined structures and work processes would also lead to reductions in the next biennium. In the circumstances, a reduction of $204.7 million, including a reduction of some 1,000 posts, may be anticipated in comparison with the current staffing table of 10,021 approved for the 1996-1997 biennium. With the maintenance of a 6.4 per cent vacancy rate, as is budgeted for 1996-1997, the average number of posts occupied in 1998-1999 would be around 8,500.

In the light of decisions taken so far in 1996 by the Assembly on the extension of existing special missions and the establishment of new ones, a provision is included in the budget outline. A total of $85 million is allocated for such missions for 1998-1999. That amount reflects an additional $70 million above the current amount of $15 million for special missions for the current biennium. The change in estimated resources also reflects provisions on a net rather than gross basis, starting 1998-1999, for the ICSC and its secretariat, the Joint Inspection Unit (JIU) and its secretariat and the services provided by the United Nations at the Vienna International Centre. That proposed change in presentation would lead to a reduction of $43.2 million. Those expenditures are now presented in the programme budget on a gross basis under the relevant expenditure sections. That change will reflect more accurately the true level of expenditure under the regular budget applicable to the United Nations.

The Secretary-General is reasonably confident that the objectives of the programmes included in the proposed medium-term plan for the period 1998-2001 can be pursued in 1998-1999 within the overall level of resources included in the proposed outline. As was the case with the proposed programme budget for 1996-1997, the programme budget for 1998-1999 will be subjected to the most intense scrutiny within the Secretariat.

Based on experience with the level of expenditures from the contingency fund, it is recommended that the level be set at 0.25 per cent for the

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biennium 1998-1999, representing $6 million. The size of the contingency fund was set at 0.75 per cent of the overall level of resources for the first outline and for all subsequent ones. It has always proved to be adequate to accommodate additional expenditures derived from legislative mandates not provided for in the proposed programme budget as defined in Assembly resolutions 41/213 of 19 December 1986 and 42/211 of 21 December 1987, which govern the budgetary process. In the ACABQ's report on the proposed 1998-1999 programme budget outline (document A/51/720), the Advisory Committee points out that the Secretary- General's report attempts to change existing methodology and practice in a number of areas. That approach has not been fully explained, which has made it difficult for the Advisory Committee to arrive at definitive recommendations without further policy proposals from the Secretary-General and guidance from the Assembly. Moreover, some of the projections appear arbitrary since they lack adequate justification.

The Advisory Committee recommends that the Assembly take note of the proposed budget outline, the report states. It requests that "a more realistic projection of resources" should emerge during the consideration of the proposed programme budget for the biennium 1998-1999, taking into account the decisions that the Assembly will have reached by that time on the various issues concerning the 1996-1997 programme budget. According to the report, the more realistic projections have to take account of a number of issues raised by the ACABQ. They include the Advisory Committee's request for the Secretary-General to submit a policy paper showing the relationship between the new proposals and the existing procedures for examination by legislative bodies, with a view to making informed decisions. That suggestion referred to the inclusion of the amount of $85 million for special missions. A policy paper is also requested from the Secretary-General detailing the implications, if any, of the proposed change in the treatment of expenditures relating to jointly financed activities such as the ICSC and JIU.

In addition, the ACABQ requests that the Secretary-General address the following issues which were of immediate relevance: the rates of exchange and inflation used in the outline; outputs deferred, postponed or curtailed; the breakdown of $204.7 million which refers to the savings from a reduction of 1,000 posts; amounts related to the proposed 6.4 per cent vacancy rate; breakdown of activities related to $8 million for one-time costs in 1996-1997 that would not be required in 1997-1998; and the impact of activities approved in 1996-1997 but which would continue in 1998-1999.

Regarding the reduction of 1,000 posts and a vacancy rate of 6.4 per cent for the Professional and General Service categories forecast for the 1998-1999 biennium, the Advisory Committee points out that the bulk of those posts are already unfunded. Therefore, very little resources will be released by the deletion of posts that have already been kept vacant. In addition, the

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vacancy rate represents a deliberate management decision to keep a certain level of posts vacant. The use of vacancy rates makes the budget process less transparent and the management of staff resources more difficult. It could also have an adverse impact on mandated programmes and activities.

The report states that the representatives of the Secretary-General were not able to justify the level of resources that would be realized for 1998-1999 through intensified efforts for increased productivity, streamlined structures and work processes that have been pursued on a sustained basis. The Advisory Committee was not provided with a breakdown of the items comprising the related amount of $204.7 million. It, therefore, requests that for the 1998-1999 budget the Assembly be provided with the specific components of that reduction, as well as an explanation of the practical implications of that further reduction on the mandated programmes. On the contingency fund, the Advisory Committee recommends that the level of the contingency fund for the biennium 1998-1999 should continue to be set at 0.75 per cent of the overall level of resources, adjusted at 1998-1999 rates. It points out that the contingency fund covers the requirements derived from legislative mandates over a period of three years, namely, the year in which the budget is considered and approved (the year prior to the start of the biennium) and the first and second years of the biennium. The Committee, therefore, questions the validity of using the experience of only one year to propose the level of the contingency fund.

The Advisory Committee expressed concern about the impact on the level of resources of activities that were curtailed, deferred or postponed during the biennium 1996-1997. It was also especially concerned at the impact of reduction of resources for construction and maintenance projects and requests that those issues be addressed in the context of the proposed programme budget for the biennium 1998-1999 as a matter of urgency.

Introduction of First Performance Report on 1996-1997 Budget YUKIO TAKASU, United Nations Controller, introduced the report and reviewed its contents and recommendations. The strength of the United States dollar was one of the main factors that enabled the Secretariat to propose to absorb some costs in the budget. He explained how the adjustments had been made in the performance report and how savings accrued would be disposed of.

CONRAD S.M. MSELLE, Chairman of the ACABQ, introduced his Advisory Committee's report. Some $400,000 out of the $4.5 million in revised estimates and programme budget implications would not be covered by the contingency fund. The Assembly would have to consider how to treat the $2.7 million needed by the International Seabed Authority. In addition to the $4.5 million, additional $17 million in requirements anticipated by the Secretary-General was discussed in the annex of the ACABQ report. Of the $17 million of the anticipated additional requirements, the ACABQ had so far received estimates of $7.1 million as the costs of MINUGUA, $408,000 as the costs for ONUV in El Salvador, and some $3.2 million for Afghanistan. It had

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not yet received estimates for MICIVIH. Of the $17 million additional requests anticipated by the Secretary-General, therefore, the ACABQ had been asked for more than $10 million.

The Secretariat, he said, should explain the relationship between the initial $92 million estimates for additional mandates and the $17 million that the Secretary-General anticipated.

Statements on 1998-1999 Proposed Budget Outline

Mr. TAKASU, United Nations Controller, introducing the Secretary- General's report on the outline of the proposed programme budget for the 1998- 1999 biennium, stressed the importance of the budget outline. Submitted since August, the outline was part of the budgetary process, as mandated in Assembly resolution 41/213. The Committee for Programme and Coordination (CPC) had reviewed the outline, as had the ACABQ. The purpose of issuing the budget outline was to ensure greater involvement of Member States in the budgetary process, so that the budget would be agreed on by consensus.

The outline was the basis for political negotiation among Member States, he said. It had four elements: the preliminary estimates, priorities, real growth and the size of the contingency fund. On the basis of the outline, Member States were expected to provide guidelines for the Secretariat to prepare the budget. The outline only provided the likely level of resources and was not a detailed programmatic analysis. That would follow after the decision made by the Assembly on the outline. Only after guidelines had been provided by the Assembly would the Secretariat finalize the budget proposal early next year. Time was short.

He said that a new feature had been added to the budget outline: an allocation for special missions. That was proposed and should facilitate broad agreement among Member States. If it was not a good idea, the Assembly should say so. Stressing that policy guidance was being sought, he elaborated on the reasons for including the increased allocation. The idea was to avoid a situation that had been experienced by Member States and the Secretariat during this biennium in dealing with additional political mandates.

He elaborated further on the reductions proposed on the basis on efficiency gains and the decrease in posts. There was no presupposed number of posts to be reduced. The number would come out of detailed proposals from programme managers. He also explained the reasons for the proposal to reduce the contingency fund. The preliminary estimate for the budget outline was $2,429 million at 1996-1997 prices. The estimate would be $2,498.5 million at the 1998-1999 rates at the present time.

Outlining the process for the preparation of the draft budget, including the role of the programme managers, he said it would be prepared early next

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year. As such, he looked forward to the cooperation and guidance from Member States as to what was acceptable. The recosting would be done at the time of the adoption of the budget. Mr. MSELLE, ACABQ Chairman, introducing his Committee's report on the budget outline, said the Advisory Committee had carefully considered the budget outline. The ACABQ had pointed out that the Secretary-General's report attempted to change existing methodology and practice in a number of areas. That approach had not been fully explained which had made it difficult for the Advisory Committee to arrive at definitive recommendations without further policy proposals from the Secretary-General and guidance from the Assembly. Moreover, some of the projections appear arbitrary since they lack adequate justification. The budget outline was not meant to be a vehicle for change in existing policy.

In reference to the contingency fund, he noted that a change had been proposed by the Secretary-General in spite of a recommendation in Assembly resolution 49/217 which called for details of the use of the contingency fund. The Secretariat should ensure that there was flexibility available in the budget to accommodate new mandates at a time when there was a reduction in funding. The ACABQ recommended that the Assembly take note of the budget outline. Based on the additional information requested from the Secretariat, a more realistic projection of resources should emerge during consideration of the programme budget for the 1998-1999 biennium.

ANA PATRICIA CHAVES (Costa Rica), on behalf of the "Group of 77" developing countries and China, spoke on both the first performance report and the outline of the proposed 1998-1999 budget.

On the performance report, she said that this year's document had gone beyond the usual consideration of the effects of adjustments for inflation and other factors and the funding of new mandates and other unforeseen expenditures. The report indicated that the mandated savings of some $154 million could be achieved through a significant rise in the vacancy rate beyond the 6.4 per cent sought by Assembly resolution 50/214 that approved the 1996-1997 budget. Moreover, the impact of such an increase on mandated programmes had not been fully explained in the report. The Group of 77 and China could not, therefore, ascertain whether or not those savings had been achieved at the expense of the full implementation of all programmes and activities. The representative expressed concern that the Secretariat had used vacancy rates of 10.4 per cent for Professionals and 7.5 per cent for General Service staff in its efforts to save funds. She noted the Secretary-General's assurances that the vacancy rate was not being used to accommodate additional unfunded mandates within the budget. Despite their reservations regarding the level of vacancies, the Group of 77 and China might consider the projected rates under certain conditions.

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First, she continued, the Secretary-General should not exceed those rates and should certify at the end of 1997 that all mandated programmes and activities had been fully implemented. Second, it should be understood that the vacancy rates for the biennium would be accepted on an exceptional basis and that they would not become precedents for future budgets. Third, the vacancy rate would not be used to pay for any more unfunded mandates.

She said that the Secretary-General had proposed to use the savings accrued from more favourable exchange rates to pay for some unfunded mandates related to international peace and security. The Group of 77 and China were surprised that he did not use some of those savings to restore some of the activities that had been reduced or deferred. If current trends in the strength of the United States dollar continued, the Secretary-General should use the resultant gains to restore those activities before applying them to anything else. She reiterated the view that the current budgetary procedures provided that the funding of new mandates that were unrelated to peace and security should be secured by using the contingency fund.

Recalling the Secretary-General's decision not to separate staff involuntarily to save funds, the representative said that those measures were not needed to achieve the savings sought by last December's Assembly resolution 50/214. Accordingly, the Group of 77 and China made some proposals that should be included in the resolution that would be adopted on the agenda item being discussed. First, involuntary separations would not be used to save funds. Second, the redeployment exercise would not lead to the involuntary separation of staff.

Turning to the budget outline, she said that in the absence of detailed justifications, the Group was yet to be convinced that the level of the budget outline was adequate to fully implement all mandated programmes and activities. The Group questioned the validity of the proposed level since it used the level of appropriations for 1996-1997 rather than the level of expenditures. In the absence of any explanations of the manner in which the Secretary-General intended to make further efficiency savings of $204.7 million, and in the absence of any information of how such savings would affect mandates, that amount must be restored in the budget outline.

The Group of 77 and China, she said, questioned the need for the reduction of 1,000 posts and an average of 6.4 per cent vacancy rate for the Professional and General Service staff categories during the 1998-1999 biennium. The Group agreed with the ACABQ that the bulk of the 1,000 posts referred to in the Secretary-General's report were already unfunded and, therefore, very little resources would be released by the abolition of posts which had already been kept vacant during the 1996-1997 biennium. Without any clear justification, the Group of 77 and China could not agree with the Secretary-General's proposal to keep a vacancy rate at 6.4 per cent in 1998 and 1999.

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Regarding the contingency fund, the Group endorsed the ACABQ's recommendation that the level of the fund for 1998 and 1999 should be set at 0.75 per cent of the overall level of resources, adjusted at 1998-1999 rates. The Secretary-General faced a dilemma in the current biennium on the need to achieve substantial savings without affecting the full implementation of mandates. However, by proposing the level of resources contained in the 1998-1999 budget outline, he would be creating a new dilemma of his own by requesting insufficient resources that would not ensure the full implementation of mandated programmes.

AHMED FARID (Saudi Arabia) expressed support for the statement by the Group of 77 and China. The Secretariat should respond to the view of the ACABQ regarding the deletion of 1,000 posts and the maintenance of an average vacancy rate of 6.4 per cent in 1998 and 1999. It should also explain the basis of its proposal to reduce the level of the contingency fund to 0.25 per cent of the United Nations budget's overall resources. He asked whether the decision had been scientifically thought out.

ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said that the Controller's statements on the agenda items should be distributed in writing. The questions raised by the ACABQ report on the outline should be answered. [Note: Those questions relate to the rates of exchange and inflation used in the budget outline, the outputs deferred, postponed or curtailed, and a breakdown of the $204.7 million reductions proposed by the Secretary-General.]

VLADIMIR KUZNETSOV (Russian Federation) said that the level of next biennium's appropriations should not exceed those in the budget outline. Any decision to exceed that level should be based on serious analysis. The outline document had not provided information regarding where the savings proposed by the Secretary-General would be realized. The Assembly would need some guidance as to the areas from which cuts would be made. The Secretariat should make proposals in the ways and means by which savings would be made in order to help Member States' budgetary decisions.

The representative expressed support for the outline's proposal of some additional $70 million for establishing and maintaining special missions, even though it had departed from past procedures. The amount should be reflected in the proposed budget. Russia would be flexible on the matter. While he was ready to work with the proposed level of 0.25 per cent proposed for the contingency fund, the matter could be considered further.

HERBERT GELBER (United States) said his Government welcomed the Secretary-General's budget outline and endorsed the objective of achieving negative nominal growth. It was an important first step in the overall budget process for 1998-1999. He was hopeful that the Organization would arrive at an overall dollar level of the budget which would meet the Organization's needs, as well as reflect negative nominal growth.

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The budget outline made no provision for the absorption of potential cost increases relating to exchange rate fluctuations, he said. Those increases could be substantial and Member States would be asked to pay for the added costs. The Secretary-General should examine the issue and offer possible alternatives for dealing with it to ensure that any future fluctuation would not adversely impact on the negative nominal growth.

Regarding the allocation for possible mandates relating to special missions, he said there should be an understanding that the amount would not be appropriated or assessed until the relevant legislative bodies had mandated continuation of the activities in question into the 1998-1999 biennium.

He supported the proposal to set the contingency fund at 0.25 per cent of the budget rather than the 0.75 per cent rate. However, there should be an understanding that the proposed $6 million level of the fund, when added to the projected total expenditures, would not exceed the 1996-1997 total budget of $2.6 billion. Additional expenses should be met by efficiency savings, current budget reductions or savings from eliminating marginal or obsolete programmes. To that end, his Government continued to support the adoption of a "sunset policy" which would terminate programmes of unproven value after a specified period of time.

Regarding net expenditures for jointly financed activities such as the ICSC and the JIU, he said the Secretary-General should also include net expenditures for all such jointly financed activities, such as the Administrative Tribunal. It was important for the United Nations to make genuine efforts to streamline and consolidate its staffing pattern. Priorities of the budget outline should reflect the need for greater reductions in public information activities. That issue would be taken up by his delegation in consultations on the matter. The Office of Internal Oversight Services should be given the necessary resources to keep positions in that Office filled.

Quoting United States Senator Rod Grams, he said the United States Senate would be examining the United Nations budget process very closely. Congress believed that the maintenance of a no-growth budget in the current biennium and the enactment of a 1998-1999 budget reflecting negative nominal growth were crucial steps on the path to comprehensive United Nations reform. Helping the United Nations become an organization that used its resources more wisely was simply good policy and it was what the American people supported.

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