CONSIDERATION OF UN REFORM PROPOSALS SHOULD BE COMPLETED SWIFTLY SECRETARY-GENERAL SAYS IN PRESENTING BUDGET TO FIFTH COMMITTEE

22 October 1997

Press Release
GA/AB/3174

CONSIDERATION OF UN REFORM PROPOSALS SHOULD BE COMPLETED SWIFTLY SECRETARY-GENERAL SAYS IN PRESENTING BUDGET TO FIFTH COMMITTEE

19971022 Despite Reduction, Budget Proposal Seeks Increased Resources for Economic and Social Development

Secretary-General Kofi Annan said this afternoon that consideration of his reform proposals should be completed swiftly, as the future of the United Nations was hanging in the balance.

Speaking at the Fifth Committee (Administrative and Budgetary) as he formally presented his first budget, he said it sought some $2.583 billion for 1998 and 1999, with real cuts of some $124 million from the revised 1996-1997 appropriations. Despite that, it had increased the money allotted to economic and social development by $56 million. As for staffing, the budget proposed 8,839 posts, with a net reduction of 1,182.

The Secretary-General said the budget's distribution of resources had been based on the priorities of the medium-term plan for 1998-2001 and the resources in the budget outline approved last year by the General Assembly. Since the implementation of the budget and his reforms would be impossible unless the Organization's financial soundness was restored, Member States must provide assured political and financial support.

Introducing the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), its Chairman, Conrad Mselle, said change and reform -- which were processes not events -- should be managed. Their proper management required trust between the Secretariat and Member States, each of which should play its appropriate role. The United Nations budget process must be followed to fully consider the Secretary-General's proposals in an orderly manner.

Commenting on the abolition of posts, the ACABQ Chairman said the organizational necessity for each of those actions should have been clearly stated in the budget proposals.

Cuts in United Nations staffing could not be considered in isolation from the issue of gratis personnel loaned from governments, Pakistan's

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representative said. As the issuance of reports on such personnel had been inexplicably delayed, the Secretary-General's proposed staff cuts might have to be taken up after the regular session, when the reports came out.

A main omission from the proposed budget, according to Norway's representative, was the lack of funding for peacekeeping and special missions which did not yet have mandates. The Committee should reconsider its decision to exclude the $70 million the Secretary-General had proposed last year for inclusion in the 1998-1999 budget outline.

The representative of the United Republic of Tanzania said, on behalf of the "Group of 77" developing countries and China, that the medium-term plan should remain the basis for the budget and development activities should be provided with adequate resources.

Vacancy rates should not be used to achieve savings as they hampered implementation of mandates, he added. Although the proposed budget would reduce staff and increase funds for consultants and experts, such personnel should be used only when their expertise was not available within the Organization.

During the discussion, the Vice-Chairman of the Committee for Programme and Coordination (CPC), Anuson Chinvanno (Thailand), said his Committee had failed to agree on what to recommend to the General Assembly on several sections of the Secretary-General's report on the financial implications of his reform proposals. The sections included those on disarmament, human rights, humanitarian assistance, and communications and public information.

The 34-member CPC is mandated to ensure that the budget proposals accorded with programmes approved by the Assembly.

Statements on the budget and related documents were made by the representatives of Mexico, Syria, Cuba and Egypt. United Nations Controller Jean-Pierre Halbwachs also spoke.

The Fifth Committee is scheduled to meet again at 10 a.m., tomorrow, 23 October, to begin considering the financing of the United Nations Angola Verification Mission (UNAVEM III) and the United Nations Observer Mission in Liberia (UNOMIL).

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to hear Secretary-General Kofi Annan formally present his proposed 1998-1999 budget -- his first -- and to begin discussing its provisions in various stages. In the first step, the members of the Committee would debate the budget's general contents. It would subsequently engage in a second reading of the budget, which would involve a section-by-section review of the estimates. In the second reading the revisions proposed during the Committee's formal and informal meetings, revised estimates and the budgetary implications of resolutions of other legislative bodies are considered to help put together the final appropriations. At that stage, factors such as inflation and currency fluctuations are also taken into account, before the budget is approved.

(For background on the Secretary-General's 1998-1999 budget proposals, see Press Release GA/AB/3173 of 22 October.)

In addition to the Secretary-General's proposals and the accompanying reports from the Advisory Committee on Administrative and Budgetary Questions (ACABQ) and the Committee for Programme and Coordination (CPC), the Committee also has before it documents on various aspects of the 1996-1997 and the 1998-1999 budgets.

These documents relate to the Secretary-General's reform proposals to move the Decolonization subprogramme from the Department of Political Affairs; on the administrative costs of the United Nations Joint Staff Pension Fund; and on the effects of the cuts of $154 million from the 1996-1997 regular budget on United Nations mandates.

The report of the Standing Committee of the United Nations Joint Staff Pension Fund on the Fund's Administrative expenses (document A/52/278) presents the Fund's expenses for the 1996-1997 and the 1998-1999 bienniums. The Fund was set up in 1949 by the General Assembly to provide retirement, death, disability and other benefits for staff of the United Nations and other organizations that might join it, of which there now are 19. It is run by the United Nations Joint Staff Pension Board, consisting of 33 members, a staff pension committee for each organization and a secretariat to the Board and to each pension committee. The Board reports to the Assembly on the Fund's operations and investments. Expenses in running the Fund -- mainly the cost of its central secretariat in New York and Geneva and of managing investments -- are met by the Fund.

The Standing Committee proposes that the $40.2 million approved in 1995 by the Assembly for the Fund's administration should be revised to

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$45.4 million. As for the 1998-1999 budget, it proposes some $50.9 million for administering the Fund, comprising $16.4 million for administration, $33.9 million for investment costs and about $579,300 for audit costs. About 106 posts (34 Professional and 72 General Service) are sought for the administration of the Fund secretariat.

By the end of 1996, the Fund had 67,997 participants, 43,896 or 64.6 per cent of whom worked for the United Nations and entities such as the United Nations Development Programme (UNDP) and the United Nations Children's Fund (UNICEF).

The Fifth Committee had before it a letter dated 18 September, from the Chairman of the Special Committee on decolonization to the Secretary-General (document A/52/379), recalling the Special Committee's appeal that the Decolonization Branch be strengthened and kept in the Department of Political Affairs. It draws attention to the Secretary-General's proposal to move subprogramme 1.6, decolonization, to the new Department of General Assembly Affairs and Conference Services. However, section 1B of annex II of the Secretary-General's report on the budgetary implications of his reforms omits references to the Branch, implying that it had been downgraded. The section contains an organizational chart of the new Department.

In a report on the impact of saving some $154 million from the 1996-1997 regular budget on the implementation of United Nations mandates (document A/C.5/51/53), the Secretary-General says that mandated work will be implemented, but at a level that might vary, sometimes, from that initially planned. Meanwhile, technological innovations and improved working methods have helped simplify processes, streamline procedures and eliminate excessive paperwork needs. While the Secretariat has mitigated the immediate impact of budget cuts by modifying work methods, there has been an impact on the Organization's long-term work. (For additional information, see Press Release GA/AB/3167 of 7 October.)

In a relevant part of its first report on the proposed 1998-1999 budget (document A/52/7), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) says that the document on the effects of the savings did not meet the need for adequate analysis. Even though it is very general in nature, some of its statements should cause concern.

In the report on its work (document A/52/16), the Committee for Programme and Coordination (CPC) states that the delay in the presentation of the Secretary-General's report did not allow it to identify in all cases the possible effects of his proposals. It recommends that the Assembly consider that report in discussing the proposed 1998-1999 budget.

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Statement by Secretary-General

SECRETARY-GENERAL KOFI ANNAN said he was making his presentation when the world was looking to the United Nations to revitalize itself to better serve the needs of the international community in the new century. It was also at a time when the General Assembly's informal plenary sessions were deliberating on the comprehensive and far-reaching measures for organizational reforms he submitted on 16 July. Since the Organization's very future hung in the balance, Member States should move expeditiously to complete considering the reform proposals at this session.

He said his first budget proposal also fell within the medium-term plan for the period 1998-2001. The funds sought for 1998 and 1999 was about $2.583 billion. While it showed real cuts of some $124 million, it had been possible to raise the money allotted to economic and social development. Compared with the previous biennium, such fund had grown by about $56 million. The staffing of 8,839 posts represented a net reduction of 1,182 posts. That number reflected the abolition of 865 posts, the transfer of posts as a result of net budgeting, conversions from temporary assistance to established posts and the proposed creation of new posts.

The distribution of resources had been guided by the priorities of the medium-term plan and by the level of resources in the budget outline approved by the Assembly, the Secretary-General said. The proposed budget did not provide for special missions that lacked legislative mandates in 1998-1999.

The programmatic and financial implications of the reform proposals appeared in document A/52/303, he said. They were mainly organizational and managerial in nature and did not affect mandated activities. Once the Assembly was ready to decide on reform, this Fifth Committee would have to advise on the implications of those decisions for the budget.

The implementation of the proposed budget and the reform plan would not be possible unless the financial soundness of the Organization was restored, he said. Member States must provide continuous, predictable and assured political and financial support. The Organization's future also depended on the quality and competence of its staff. The proposed human resources programme focused on improved procedures for recruitment and placement that would provide better support to managers in the management of their staff resources. He was proposing a 25 per cent increase in the resources for training. Expressing deep gratitude to the dedication of United Nations staff around the world; he said many had to acquire new responsibilities, not as a logical step in career development but as a result of budget cut and reorganization. Many worked under difficult conditions in areas of conflict and strife and risked their lives.

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As both the ACABQ and the CPC had pointed out, the United Nations in recent years had faced almost constant change, he said. Recurring waves of financial difficulties had been with the Organization since 1987. That had made the entire budget process -- from preparation and approval to implementation -- much more complex. The application of General Assembly resolution 41/213, on the budgetary process had come under severe pressure. The ACABQ, the Fifth Committee and the Secretariat had found it difficult to discharge their functions in an orderly fashion.

He expressed the hope that by the time the budget for 1998-1999 was approved and the Assembly decided on the reform proposals, the Organization would leave that state of flux. It was time for stability.

Statements

CONRAD MSELLE, Chairman of the ACABQ, introducing the views of the Advisory Committee, said that change and reform, including the phenomenon of downsizing, was affecting a majority of the administrations in Member States, and the United Nations could not remain aloof from such developments. "The Secretary-General has reminded Member States that change and reform are processes not events. That being the case, it is the view of the ACABQ as expressed in the report before the General Assembly, that such a process must be managed; a prerequisite for the proper management of change and reform is trust and confidence between the Secretariat and Member States, each of which should play its proper executive and legislative role."

In Chapter 1 of its report, he said, the ACABQ had indicated that developments in the Secretariat and in the legislative process, which if not addressed, would have adverse effects on the climate necessary for managing change and reform. A good example was the application of General Assembly resolution 41/213 in the light of recent decisions, by which budgets had been cut without reference to the level of programmes that could be efficiently delivered. Since no prior analysis was made to ascertain whether the agreed budget level and full implementation of mandates were compatible, there was no way of knowing whether the demand to implement programmes fully could be honoured. "This inevitably leads to suspicion and controversy."

For activities of the Secretariat to engender trust and confidence among Member States, he said, the commendable transparency shown by the Secretary- General should be consistent throughout the administration, in the quality of reports and pronouncements.

Turning to the proposals in the budget, he said the Secretary-General's initial estimates asked for about $2.583 billion, with a net reduction of some $123.9 million, compared with the revised 1996-1997 appropriations of about $2.603 billion. The estimates were considered by the ACABQ before the submission of the document on the financial implications of the Secretary- General's reform proposals (document A/52/303).

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The net cut of $123.9 million included the deletion of the costs of special missions financed from the regular budget, he said. For 1996-1997, their costs were about $49.8 million, and the extent to which additional funds would be needed for them in 1998 and 1999 would depend on action by the Assembly and the Security Council. In order to avoid a repetition of the debate of the fifty-first session, it was necessary to recall the procedure for handling such extraordinary expenditures when the proposed budget was considered. Similarly, the treatment of the effects of inflation and exchange rate fluctuations was another issue that had generated considerable interest lately. In the Secretary-General's initial budget proposal, the sum of some $103.7 million represented the net effect of inflation and currency fluctuations which will be further reviewed at the end of the year.

Turning to the number of regular budget posts proposed for 1998-1999, he said they would be clearer after the ACABQ had considered the Secretary- General's report on the financial implications of the reforms. But the initial estimates showed a net reduction of 895 posts. But 317 of the posts, while transferred out of the regular budget, would continue to be funded from it. The so-called net budgeting treatment of those posts had brought about confusion rather than transparency in the actual number of continuing established posts funded from the regular budget. Further, there were many instances in which proposals to abolish posts lacked explanation. The organizational necessity for each of the abolitions should have been clearly stated, as well as their impact on the delivery of services. Since those posts had been originally sought and approved to carry out certain functions, the Secretariat should have explained how those functions had changed to warrant such abolition.

If there was a theme in this year's consideration of the Secretary- General's budget and related recommendations of the ACABQ, he said, it was that the budget process must be restored so as to promote full consideration of each of the Secretary-General's proposals in an orderly and unhurried manner in the light of relevant and technical analysis.

ANUSON CHIVANNO (Thailand), CPC Vice-Chairman, said he and his colleagues had noted that the total amount of resources sought by the Secretary-General was significantly lower than the revised 1996-1997 appropriations. The CPC had also noted the Secretary-General's assurances that such cuts would not affect the full implementation of all mandated work in the 1998-1999 biennium. It had considered 36 sections and subsections of the proposed budget and recommended that the Assembly approve some of their programme narratives. Some modifications had been made to some of the sections, though. However, the CPC had not made any recommendations on the budget section 11B (International Trade Center of United Nations Conference on Trade and Development (UNCTAD)/World Trade Organization).

The CPC had considered the Secretary-General's report on the financial implications of the United Nations reforms (document A/52/303) and decided to

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recommend that the Assembly take into account the medium-term plan when it considered the Secretary-General's proposed reforms. Regarding that document's revised section 1B (General Assembly affairs and conferences services), and section 7A (economic and social affairs), the CPC drew attention to the variations between their proposals and the medium-term plan. As for section 2B (disarmament), section 22 (human rights), section 25 (humanitarian assistance) and section 26, (communications and public information), the CPC could not agree on the conclusions and recommendations to transmit to the Assembly. That body should take note of the views expressed by CPC members on section 14 (crime control).

MUHAMMAD YUSSUF (United Republic of Tanzania), speaking for the "Group of 77" developing countries and China, said there was no legal basis by which member States with the capacity to pay withheld their assessed contributions. If member States did not fulfil their financial obligations to the Organization, the present discussion on the budget was meaningless.

The Fifth Committee had been entrusted by the Assembly with responsibilities for administrative and budgetary matters, he said. He noted with concern that other bodies were involving themselves in such matters, in violation of the Assembly's Rules and Procedures. He reaffirmed the importance of the recommendations of the Committee for Programme and Coordination (CPC) in budgetary matters.

The Organization's medium-term plan should remain the basis for formulation of the programme budget, he said. In particular, development activities required adequate resources. The shortfalls reflected in the Secretary-General's report on the impact of savings measures on mandated activities should be considered during the Committee's consideration of the proposed 1998-1999 budget.

He recalled that the budget outline approved by the Assembly had been of a higher amount than that proposed by the Secretary-General. All mandated programmes and activities should, therefore, be fully implemented, in light of the fact that the resources requested for carrying out approved mandates had already been authorized by the Assembly. The Secretary-General's budget proposal should be submitted on a full cost basis. Such was not the case with many sections of the current proposed budget.

Noting the Secretary-General's intention to phase out the use of gratis personnel loaned to the Organization by member States, he emphasized the need for detailed examination of the proposed staff reductions. Vacancy rates should not be used to achieve fiscal reductions. Higher vacancy rates hampered mandated programmes. A proposal in the 1998-1999 proposed budget sought to reduce the Organization's staff while increasing resources for consultants and expert groups. Recourse to consultants should be made only when the required expertise was not available within the Organization. Consultants should be selected from the widest possible geographic basis.

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He then turned to the proposal for net budgeting for certain bodies. Pending recommendations from the ACABQ and a specific decision by the Assembly on net budgeting, the current system should be maintained. The Group of 77 and China were ready to participate constructively in the effort to approve a budget by which all mandated activities could be fulfilled.

OLA BREVIK (Norway) said budgeting meant prioritizing, particularly in a climate of resource constraints. The proposed budget responded to those realities, while respecting the priorities delineated in the medium-term plan for 1998-2001. He supported the proposal to allocate additional resources to development activities, focusing on Africa. International peace and security was another priority. To prevent and manage conflict, the regular budget should provide adequate resources for staffing. Peacekeeping should be funded through the regular budget to the largest extent possible, in light of its importance.

The proposed budget had not contained provisions for those special missions which did not yet have legislative mandates, he continued. A proposal had been put forth by the Secretary-General in the programme budget outline, by which $70 million was to have been provided for those missions whose mandates might be renewed for the 1998-1999 biennium, and for the potential establishment of new ones. The Committee had not approved that proposal. It should reconsider its decision on that matter.

Budget cuts should not be goals in themselves, he continued. Rather, the objective should be increased efficiency to enhance the Organization's priority activities. The proposed reduction of posts, together with redeployment and administrative reform, would increase the Organization's productivity. He welcomed the new emphasis on staff development and management training, and also supported the proposal for 10 new posts, in particular the three for the Office of the Special Adviser on Gender Issues.

The proposed budget also reflected the importance of strengthening the Office of Internal Oversight Services (OIOS), he said. More of the posts in the area of humanitarian assistance should be funded by the regular budget. Net budgeting was justifiable so long as the full budgets were still presented to the Assembly for consideration and approval.

The Fifth Committee spent too much time debating the issue of vacancy rates, he said. Vacancy rates were a management tool to be used by the Secretary-General at his discretion. Regarding the budget's format, he agreed with the ACABQ that proposals under the various sections of the budget should include more specific information on outputs.

AMJAD HUSSAIN B. SIAL (Pakistan) said that gratis personnel should be a priority issue. It would be regrettable if the Fifth Committee could not take action on that matter during its regular session because the relevant documentation was not available on time. Members of the Fifth Committee had

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requested on three separate occasions that the relevant documents should be made available during the current session. The Secretariat had yet to reply to the Committee's request for information on the delay of the reports.

The proposed budget for 1998-1999 contained a proposal for reducing the Organization's staff, which would have a direct bearing on the issue of gratis personnel, he continued. The two issues were closely interconnected; they must be considered together. He urged the Secretariat to issue all the relevant reports at the earliest possible date. One issue of human resources management could not be considered in isolation from other aspects. The Committee might have to defer consideration of the proposed reduction in staff until the resumed session in March 1998, which was when all the reports on gratis personnel would be available.

MARTA PEÑA (Mexico) asked that the statement made by the Secretary- General be distributed. She regretted that he had not been present during the presentation of the CPC report on the budget, as that external oversight body played an important role in the programmatic and budgetary process. She endorsed the comments made by the representative of Pakistan regarding gratis personnel.

TAMMAM SULAIMAN (Syria) said there was no justification for the Secretariat's lack of response on why the documents on gratis personnel could not be made available to the Committee earlier than the anticipated March date. How would the matter of eliminating staff posts be debated without consideration of gratis personnel? he asked. The issue could be considered seriously only in the context of the budget.

Mr. YUSSUF (United Republic of Tanzania) said he concurred with the statement made by the representative of Pakistan. The matter of gratis personnel merited serious consideration by the Committee.

DULCE BUERGO (Cuba) reaffirmed the importance of the mandate and role played by the CPC. It had real influence on the consideration of programming and budgetary questions. When the Secretariat participated in Committee meetings in the future, she requested that its representatives listened to the introduction of all the reports before the Committee. She endorsed the statement made by the representative of Pakistan.

AMR NOUR (Egypt) said the matter of gratis personnel should be considered together with the proposed cuts in staff positions. The relevant reports should be submitted to the Assembly so the matter could be considered. If there were reasons for the delay in issuance, member States should receive such information.

JEAN-PIERRE HALBWACHS, United Nations Controller, said the Secretary- General had not intended to be disrespectful by leaving early; he had done so only because of the heavy demands of his schedule. Regarding the reports on

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gratis personnel, he reminded the Committee that he had formally addressed it in an earlier meeting. At that time he had said that the Secretariat would not be able to issue some of the reports in time for consideration during the first part of the regular session.

Mr. SIAL (Pakistan) said he had seen from the document on the status of documentation that some of the reports on gratis personnel would be available only next March. However, no one had informed the Committee that it would be difficult to submit them in a timely fashion. He had asked for the timely submission of those reports to enable the Assembly to take a decision in the first part of the current session. The issue of gratis personnel must be considered before action was taken on the budget.

Ms. PEÑA (Mexico) said it seemed "we have embarked on a dialogue of the deaf". The Assembly had asked for the submission of those reports on gratis personnel by the end of the year. She would not accept the fact that a statement by the Secretariat would change the fact that the reports had been sought for the current session by legislation. If the reason for delaying their submission was staff shortage, why did the office preparing them not ask for the resources to produce the reports? she asked. It seemed, therefore, that the saving imposed on the budget might be undermining the ability of the Secretariat to provide required services. She would not accept the explanations that report could not be submitted before the end of the year.

Mr. NOUR (Egypt) said he expected the Secretariat to fully respect and implement Assembly resolutions. It should give member States a written letter explaining what was preventing it from implementing the resolution on gratis personnel on time. The Controller or even the Secretary-General should state why they could not implement the resolution in full.

Ms. BUERGO (Cuba) said any elaboration from the Secretariat would be useful to the debate on the proposed budget for the biennium. The information requested should be submitted in writing.

ANWARUL KARIM CHOWDHURY (Bangladesh), the Committee Chairman, reiterated members' views that the documents on gratis personnel be submitted in time for the Committee to take decisions as appropriate.

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