In progress at UNHQ

GA/AB/3171

FIFTH COMMITTEE HEARS CALL FOR LOWERING OF FLOOR RATE AS DISCUSSION CONTINUES ON SCALE OF ASSESSMENTS

21 October 1997


Press Release
GA/AB/3171


FIFTH COMMITTEE HEARS CALL FOR LOWERING OF FLOOR RATE AS DISCUSSION CONTINUES ON SCALE OF ASSESSMENTS

19971021 The floor rate of the United Nations scale of assessments was discriminatory towards several small countries and should be lowered from the current 0.01 per cent, if it could not be abolished, the representative of the Marshall Islands told the Fifth Committee (Administrative and Budgetary) this morning as it continued discussing that agenda item.

Speaking also for the Solomon Islands and like-minded States, he said, "We have few resources to finance our membership in the United Nations. The high cost involved due to the anomaly in the scale of assessments means that we are spending more of our funds on the membership than we are on our actual presence here at United Nations Headquarters. I do not think that there are many developed countries who face such problems."

The representative of the Republic of Korea proposed a six-year base period as an appropriate compromise between the proposed nine- and three-year base. A longer base period would stabilize the scale and Member States' dues.

Ethiopia's representative said the low per capita income adjustment, which further reduced the rates of some developing and least developed countries, should be retained. The existing amount of adjustment should be maintained or increased to objectively reflect the condition of developing countries.

The representatives of Nepal and Mexico also spoke.

The Fifth Committee will meet again at 10 a.m. tomorrow, 22 October, to begin considering reports of the Joint Inspection Unit. In the afternoon, it would hear an address by Secretary-General Kofi Annan.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to continue discussing the scale of assessments for the apportionment of the expenses of the United Nations. It had before it the report of the Committee on Contributions (document A/51/11 and Corr.1), containing eight proposed scales. One of the eight is currently in use, the other seven represent proposals put forth by States and groups of States during the fifty-first session of the General Assembly. (For background on the report, see press release GA/AB/3169 of 17 October.)

Statements

BISHEWOR SUBEDI (Nepal) said the principle of capacity to pay, based on a country's share of world income, remained the fundamental criterion for assessing Member States because a better element could not be conceived. However, the current assessment system indiscriminately lumped small countries together and, irrespective of their share of the world gross national product (GNP), obliged them to pay a fixed amount which, in most cases, far exceeded their capacity to pay. That was unfair and unscientific. Despite that anomaly most of them, including the least developed, had been faithfully paying their dues in full and on time.

He said most of the scale proposals transmitted by the Committee on Contributions called for a lower minimum assessment rate of 0.001 per cent for the next scale period. The Committee on Contributions had made it clear that the need to set a new floor level arose from the current scale's serious departure from the principle of capacity to pay for many smaller countries. Nepal endorsed the position of the "Group of 77" developing countries and China, particularly the need to safeguard the interests of the least developed countries, by putting a cap of 0.01 per cent on individual rates for them.

LAURENCE N. EDWARDS (Marshall Islands), also speaking for the Solomon Islands "and other like-minded States", said the issues that should be settled in the first round of the United Nations reform should be the floor rate, the base period and the low per capita income adjustment used to determine the scale of contributions. "The floor rate in the scale of assessments has presented a number of smaller countries with a completely discriminatory situation", he said. "We have few resources to finance our membership in the United Nations. The high cost involved due to the anomaly in the scale of assessments means that we are spending more of our funds on the membership than we are on our actual presence here at United Nations Headquarters. I do not think that there are many developed countries who face such problems."

Since the General Assembly had stressed the need for fairness many times, the floor rate should be revised downwards from the current 0.01 per cent, if it would not be abolished. It was hard to understand why there had been little progress towards a scale that was fair for all, based on

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technical criteria. "The obligation to pay is not an issue, but a fairer scale might make our Minister of Finance a little bit more happy about paying."

PARK SOO GIL (Republic of Korea) noted that the capacity to pay was the guiding principle for determining the scale of assessments. Stability and predictability should also be regarded as important factors, since they prevented excessive fluctuations in Member States' expenditures.

The scheme of limits and a longer base period had both been devised to ensure stability, he continued. As reflected in its report, the Committee on Contributions had agreed that the scheme of limits should be phased out gradually. He supported adoption of that premise. A longer base period also ensured stability of the entire methodological system. The six-year base period was an appropriate compromise between the proposed nine- and three-year periods. [The scheme of limits is a mechanism to slow down the rate by which a Member State's dues can vary between two successive scales.]

The debt-burden adjustment and low per capita income relief should remain elements in the scale, he said. The Republic of Korea supported the proposed floor rate of 0.001 per cent. The current floor of 0.01 per cent departed from the principle of capacity to pay. Reducing the ceiling from 25 to 20 per cent would have the benefit of lessening over-reliance on one Member State. At the same time, however, such a change would result in a further deviation from the principle of capacity to pay, and unfairly transfer additional burdens to other Member States.

The simple solution to the Organization's fiscal crisis could be found in political will, he said. Member States must discharge their financial obligations in full, on time and without conditions. His country was considering a move from Group "C" [economically less developed Member States] to Group "B" [specifically named economically developed Member States that were not permanent members of the Security Council] for the purpose of determining contributions to peacekeeping operations. His Government would submit a concrete plan on that transfer following adoption of a resolution on the regular budget scale for 1998-2000.

GUSTAVO ALBIN (Mexico) said the scale proposed by his delegation was termed "proposal B" in the Committee on Contributions' report. Mexico was ready to participate constructively in negotiations on the scale of assessments. Any negotiations must be based on the following three general principles: the principle of capacity to pay must be respected; all Member States must uphold their responsibility to contribute equitably to the Organization's expenses; and predictability and stability in the level of Member States' contributions must be taken into account.

Determining Member States' assessments was not a unilateral decision, he said. That was the Assembly's responsibility. Once that amount had been

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determined, voluntary contributions could be made. He agreed with the view of the Committee on Contributions that requests for exemptions from the provisions of Article 19 of the Charter should be considered as exceptions. Criteria for granting exemptions must not be applied in a uniform manner. Granting exemptions repeatedly could nullify the Charter's provisions for cases of non-payment.

Member States had the obligation to fulfil their financial commitments, he continued. Simply modifying the scale would not provide the solution to the Organization's fiscal crisis. States must make their payments in full, on time and without conditions. He invited the Fifth Committee's Chairman to coordinate the negotiations on the scale, in light of the importance and political sensitivity of the question.

ZERIHUN RETTA (Ethiopia) associated himself with the statement made yesterday by the representative of the United Republic of Tanzania on behalf of the Group of 77 and China. All Member States must pay their contributions in full and on time. The scale's revision would play only a marginal role in alleviating the Organization's financial crisis. He said he accepted the principle of granting exemptions to Article 19, but emphasized the need for clear guidelines to be formulated and applied when the Committee on Contributions considered such cases.

The present rate of liberalization and globalization had marginalized developing countries from the global economy, he said. To accurately reflect countries' economies, the base year period should be six years or more. Low per capita income, which further reduced the rates of some developing and least developed countries, should be retained. A gradient of 85 per cent or higher was needed to objectively reflect the conditions of developing countries. He agreed that countries below the threshold should be assessed at a rate reflective of their incomes, subject to a floor rate of 0.001 per cent. In its future work, the Committee on Contributions needed to address the conditions of least developed countries. [Countries' assessable incomes are reduced by the proportion by which their per capita income falls below the world average, the threshold, multiplied by a percentage figure called the gradient. Currently, the gradient is 85 per cent.]

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For information media. Not an official record.