GENERAL ASSEMBLY WOULD TAKE NOTE OF SECRETARY-GENERAL'S DOWNWARD REVISION OF 1998-1999 BUDGET TO $2.523 BILLION

18 December 1997

Press Release
GA/AB/3208

GENERAL ASSEMBLY WOULD TAKE NOTE OF SECRETARY-GENERAL'S DOWNWARD REVISION OF 1998-1999 BUDGET TO $2.523 BILLION

19971218 According to Fifth Committee Recommendation; Action on Budgetary Implications of United Nations Reform Draft Deferred

The General Assembly would take note of a report of the Secretary-General revising his proposed 1998-1999 budget to some $2.523 billion gross on the basis of the effects of changes in exchange rates and inflation, if it adopts an oral draft decision approved without a vote this evening by the Fifth Committee (Administrative and Budgetary). The Committee took that action as it considered questions related to the 1996-1997 and the 1998-1999 budgets.

Before action, the Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), Conrad S.M. Mselle, informed the Committee that, subject to some observations, that body had no technical basis to object to the Secretary-General's revised estimates for the budget.

However, he cautioned that, unless the current favourable exchange and inflation rates continued throughout 1998 and 1999, the potential of a budget of $2.523 billion gross to absorb 1999 requirements of about $65 million for peacekeeping missions seemed highly questionable. Indeed, the pressure on the budget would be very severe, should the exchange rate situation deteriorate. He made those remarks after saying that provisions for the missions only covered 1998.

Those costs relate, among others, to the United Nations Verification Mission in Guatemala (MINUGUA) and to the situations in Haiti, Central America and Afghanistan.

The Committee also took action on statements of budget implications related to United Nations political offices and missions, the situation in Afghanistan and the meetings of the International Law Commission.

On the political offices, the Committee approved an oral draft decision that would have the Assembly take note of the Secretary-General's related report and concur with the ACABQ's recommendations.

In relation to Afghanistan, the Committee decided to inform the Assembly that, should it adopt a related draft resolution, an additional appropriation

of some $4 million would be required under the budget section on peacekeeping and special missions. It would be considered in the context of the proposed 1998-1999 budget.

Turning to the Law Commission, the Committee recommended the appropriation of $245,200 under the budget section on legal affairs. Subsequently, it asked the Assembly to note that about $18.8 million would remain in the United Nations contingency fund.

No substantive action was taken on the Secretary-General's second performance report on the 1996-1997 budget, which contained revised estimates that would have served as the basis of the final appropriations for that biennium. Action was not taken due to failure to agree on how to treat $10.4 million sought for the Integrated Management Information System (IMIS).

Action on the budget implications of the draft resolution contained in document A/52/L.72 on United Nations reform was deferred pending the submission of clarifications sought by Committee members.

At the outset of the meeting, the President of the General Assembly, Hennadiy Udovenko (Ukraine), appealed to the members of the Fifth Committee to conclude their work tomorrow.

Statements were also made by the representatives of the United States, Uganda, Cuba, Pakistan, Germany, Cameroon, Egypt and Thailand.

The United Nations Controller, Jean-Pierre Halbwachs, also addressed the Committee.

The Committee's next meeting will be announced.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to continue discussing some aspects of the 1996-1997 budget and the proposed 1998-1999 budget.

On the 1996-1997 budget, the Committee had before it the second performance report on that budget. On the 1998-1999 one, it had the estimates and the costs of draft resolutions on the United Nations political offices, the situation in Afghanistan, the Organization's reforms and on the contingency fund. Also before the Committee were revised estimates on the proposed 1998-1999 budget that would adjust the Secretary-General proposals to about $2.523 billion.

(For background information on the second performance report on the 1996- 1997 budget and the budgetary implications of draft texts related to the United Nations political offices and the situation in Afghanistan, see Press Releases

Fifth Committee - 3 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

GA/AB/3205 of 15 December, GA/AB/3206 of 16 December, and GA/AB/3207 of 17 December.)

Aspects of 1998-1999 Budget

The Secretary-General's report on the effects of changes in exchange rates and inflation on the proposed 1998-1999 budget (document A/C.5/52/34) uses December 1997 data to adjust the $2.583 billion budget he proposed earlier this year, down to about $2.523 billion. The adjustment takes account of the operational exchange rates, actual inflation experience and the outcome of salary surveys, if any. Significantly, the process -- also called recosting -- incorporates adjustments arising from the budgetary effects of the Secretary-General's reform proposals and of draft resolutions related to the situations in Central America and Afghanistan, the work of the International Law Commission, Haiti, MINUGUA, and the United Nations political and peacekeeping offices. Those costs bring the budget to about $2.636 billion. But, after taking into account a gain of some $120.8 million accrued from the strength of the United States dollar -- offset slightly by the $7 million effects of inflation -- the adjusted 1998-1999 estimate would be $2.523 billion.

Explaining the process, the Secretary-General says that, after preparing a budget, it is "recosted" three times in a biennial cycle. The first -- one undertaken in the current document -- is contained in revised estimates he submits for consideration by the Assembly in order to update the budget's resource requirements before an initial appropriation is approved. The second is contained in the revised estimates submitted in the first performance report connected to the approval of a revised appropriation. The third is included in the second performance report connected to the approval of the final appropriation -- the 1996-1997 budget is at that stage.

Annexed to the report are the effects of the adjustments to the various budget sections, among other details.

Contingency Fund

The Secretary-General's report on contingency fund financing of some budget implications and revised estimates (document A/C.5/52/35) asks the Fifth Committee to request the General Assembly to take note that a balance of some $18.8 million would remain in the fund, should the Committee recommend the appropriation of $245,200 from the fund to pay for a session of the International Law Commission.

Budget Implications of United Nations Reform

A statement on the budget implications of United Nations reform (document A/C.5/52/36) says that, should the Assembly adopt the draft resolution contained

Fifth Committee - 4 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

in document A/52/L.72 on reform measures and proposals, no addition requirements would arise regarding the creation of the post of Deputy Secretary-General beyond those foreseen in an earlier report of the Secretary-General.

On the other hand, the statement says, a cut of $362,300 would be made from the budget section on economic and social affairs due to the discontinuation of the High-level Advisory Board on Sustainable Development. The Board would be discontinued on the basis of a recommendation from the Secretary-General.

As for the post of Deputy-Secretary-General, the statement adds, its 1998- 1999 requirements of $621,100 had been included in the budget's section 1A, on overall policy-making, direction and coordination. The amount consists of salary ($421,800), representation allowance ($30,000) and common staff costs ($169,300).

Appeal by Assembly President

At the start of meeting, HENNADIY UDOVENKO (Ukraine), President of the General Assembly, said that the Fifth Committee was the only Committee that had not yet concluded its deliberations. The work of the Second Committee (Economic and Financial) had included six important resolutions on development. In previous Assembly sessions, those texts had been accepted by consensus, but this year the Second Committee had voted on them. After renewed cooperative efforts, the General Assembly had been able to adopt those resolutions, in its plenary session, by consensus.

The Fifth Committee, also, should reach consensus on the important matters before it, he continued. It was traditional for the Fifth Committee to be the last Committee to complete its work, and its current workload was particularly heavy. He recognized the Committee's achievements to date and appealed to its members to complete their work and thus enable the Assembly to conclude its work tomorrow.

ANWARUL KARIM CHOWDHURY (Bangladesh), Chairman of the Fifth Committee, said that the Committee members were making great efforts to complete their work. A formal meeting was scheduled for 3 p.m. tomorrow, and he was confident that all delegations were striving to complete their work in response to that deadline.

Aspects of 1996-1997 Budget: Second Performance Report

Mr. CHOWDHURY (Bangladesh), Committee Chairman, brought up the question of the Secretary-General's document on the second performance report, which proposed estimates for the final appropriations for the 1996-1997 biennium.

THOMAS REPASCH (United States) said his delegation still had an outstanding question that Secretariat officials might try to address in the meeting. The question pertained to the issue of $10.4 million proposed for the Integrated Management Information System (IMIS). His delegation had not

Fifth Committee - 5 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

received the answers he had sought in previous meetings, on how, for instance, to treat the $10.4 million. The Secretariat should say how much of that amount would be charged to the 1996-1997 biennium and what fraction would be allocated to other bienniums such as the 1998-1999 period. He asked if at least $2.5 million could not be charged to 1996-1997.

NESTER ODAGA-JALOMAYO (Uganda) said the Chairman's consultations on the matter should have been more widespread. Somehow, the consultations had excluded his delegation and its position had not changed from what it was yesterday.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, said there had been no consultations as such, only that he had been provided with some information which he transmitted onwards.

NORMA GOICOCHEA ESTENOZ (Cuba) proposed that the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the item should be produced as an official document of the Assembly, so that its views would be communicated to that body. Any decisions adopted should indicate how approved vacancy rates had been exceeded, and that those rates should not be used to achieve mandated savings. She expressed concern about how savings had been achieved in the 1996-1997 budget, bearing in mind their negative impacts. The $10.4 million for IMIS should be removed from the estimates of the final appropriations for 1996-1997. Keeping the amount would contradict the Organization's budgetary procedures.

JEAN-PIERRE HALBWACHS, United Nations Controller, said the Secretary- General had requested $10.4 million for IMIS. The Secretary-General's report indicated that $3.2 million had been spent for 1996-1997. If any amount was to be kept in the performance report, that would be the $3.2 million.

Mr. REPASCH (United States) proposed paragraphs for a resolution on the proposed funds for IMIS. The main provisions would be to request the ACABQ to examine the progress report on IMIS and report on the matter at the Assembly's resumed session, and decide that, pending the Assembly's consideration, the supplementary provisions of $10.4 million should not be encumbered without prior approval by the Assembly.

Ms. GOICOCHEA ESTENOZ (Cuba) said she could not accept the proposal, which should be considered more carefully. Established budgetary procedures should be respected. The requirements for IMIS for the next biennium should be considered when such funds were needed.

Mr. CHOWDHURY, Chairman, said the oral statement on the views of the ACABQ should be issued as a document.

Fifth Committee - 6 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

Mr. REPASCH (United States) said either the Controller or the Budget Director should provide some clarifications, since his proposal was within the rules of the Organization.

Mr. HALBWACHS, United Nations Controller, said the amount could be appropriated and held, subject to the decisions of the Fifth Committee.

Mr. ODAGA-JALOMAYO (Uganda) supported the Chairman's proposal to have the Committee move to the next agenda item.

Questions Related to 1998-1999 Budget

Mr. CHOWDHURY (Bangladesh), Committee Chairman, introduced the question of the budgetary implications of the United Nations political and peacekeeping offices and missions. He proposed an oral draft decision that would have the Assembly take note of the Secretary-General's report and concur with the recommendations in paragraph 16 of the report of the ACABQ.

Ms. GOICOCHEA ESTENOZ (Cuba) asked why only paragraph 16 had been referred to. The Assembly should be asked to concur with the entire report.

The Committee approved the oral draft decision without a vote. It would have the Assembly concur with the report.

AMJAD SIAL (Pakistan) said that in the Secretariat's responses to the questions raised by his delegation at yesterday's meeting, he noted that large amounts of funds were being directed to travel between Pakistan and Afghanistan. The United Nations Special Mission to Afghanistan should move its office to Kabul, he stated. He then asked for a technical correction to the text.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, proposed that the Committee decide to recommend to the General Assembly the following draft decision:

Should the Assembly adopt draft resolution A/52/L.68B, an additional appropriation of $4,007,700 would be required under section 3 of the proposed programme budget for the biennium 1998-1999. Those requirements will be considered in the context of the proposed programme budget for the 1998-1999 biennium.

The Committee agreed to that decision.

CONRAD S.M. MSELLE, ACABQ Chairman, orally presented that body's views on the budgetary implications of the draft resolution on reform. The Assembly's adoption of the post of Deputy Secretary-General would not give rise to additional requirements over and above the amounts included in the Secretary-General's report on the budgetary implications of his reform proposals (document A/52/303), since that post had been included in it. The

Fifth Committee - 7 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

discontinuation of the High-level Advisory Board on Sustainable Development would result in a reduction of $362,000 from section 7A of the proposed programme budget, Economic and social affairs.

He said the ACABQ recommended that the Committee advise the Assembly that the adoption of draft resolution A/52/L.72 would give rise to additional requirements of $621,000, which would be considered in the context of the programme budget for the biennium 1998-1999 and that an amount of $362,300 would be reduced under section 7A.

The draft resolution also contained a number of decisions with potential financial implications, he continued. Such matters were subject to future reports of the Secretary-General, and the ACABQ would deal with them in the manner indicated in the text and also in chapter 1 of the Advisory Committee's first report on the proposed budget.

Ms. GOICOCHEA ESTENOZ (Cuba) said she had problems with the statement of budget implications that had been submitted, as it had not fully covered all the budgetary implications of the draft resolution on United Nations reform. Paragraph 16 of the draft resolution, for example, would lead to the transfer to the United Nations Development Programme (UNDP) of an amount that was now under the budget's section 25 -- on humanitarian assistance -- as a grant. The establishment of the development account had not been commented upon in the statement of the programme budget implications. [Note: Paragraph 16 of the draft resolution states that the Assembly would decide to transfer to the UNDP the responsibilities of the Emergency Relief Coordinator for operational activities for natural disaster mitigation and preparedness, with the understanding that the resources for the task would be separate and additional to the resources of the UNDP for development activities and that they would be provided by a grant from the regular budget for 1998-1999.]

She said that, since the ACABQ had stated that the establishment of the post of Deputy Secretary-General could be based on two distinct options, the Fifth Committee, too, should consider them. The statement of budget implications of the draft on United Nations reform should be considered in the context of the Secretary-General's report on the programmatic and financial implications of United Nations reform (document A/52/303), she stressed.

Mr. MSELLE, ACABQ Chairman, said the Advisory Committee had dealt with the provisions of that paragraph. The Fifth Committee could advise the Assembly that, if it adopted draft resolution A/52/L.72, certain amounts would arise at the current stage. It could also say that the amounts would be considered in the context of the proposed 1998-1999 budget. That way, both the immediate and potential future financial and administrative requirements would be addressed.

Fifth Committee - 8 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

Ms. GOICOCHEA ESTENOZ (Cuba) said since the element was linked to the consideration of the budget in general, it should be examined in the context of document A/52/303. Therefore, the Committee should be given time to consider the matter before taking a decision.

Mr. MSELLE, Chairman of ACABQ, said that when he stated that the budget implications would be considered in the context of the 1998-1999 budget, he had had document A/52/303 in mind.

Ms. GOICOCHEA ESTENOZ (Cuba) said the Committee Chairman should provide more time for a consideration of the matter, even though she clearly understood the ACABQ Chairman's statement.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, said the statement of budget implications had been issued in the context of rule 153 of the General Assembly rules of procedure. But the programmatic and financial implications for the entire reform proposals were contained in document A/52/303. He asked whether the Committee could decide to tell the Assembly that the implications of adopting draft resolution A/52/L.72 could be considered in the context of other, wider budget documents.

Ms. GOICOCHEA ESTENOZ (Cuba) said she had to consult with her Ambassador on the matter and decisions on that issue should be postponed.

KLAUS-DIETER STEIN (Germany) said the Committee Chairman should have completed his proposal and noted that a cut of some $362,300 regarding the termination of the Advisory Board would be required.

TOMMO MONTHE (Cameroon) said that the three options the ACABQ had recommended on the creation and grading of the post of Deputy Secretary- General should have been considered by the Fifth Committee.

Mr. ODAGA-JALOMAYO (Uganda) said he concurred with the comments of his colleague from Cameroon. He hoped the oral report of the Chairman of the ACABQ would be issued as a document. In view of the concerns expressed by delegations, the issue should be considered at a later date.

Mr. CHOWDHURY, Committee Chairman, agreed and said the programme budget implications should be considered in the context of the programme budget for 1998-1999. Potential financial implications which might arise at a later stage should be considered in the 1998-1999 biennium and beyond.

Mr. ODAGA-JALOMAYO (Uganda) said the Committee should have the Chairman's comments in writing.

Fifth Committee - 9 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

Statements on Contingency Fund

Mr. MSELLE, ACABQ Chairman, said that body had not taken up the matter of the budgetary implications of the contingency fund, but he doubted it would disagree with his statement. He took note of the amounts contained in the Secretary-General's revised estimates of the contingency fund.

AMANY FAHMY (Egypt) asked to revert to the earlier matter. Was she correct that the Chairman had proposed that the cancelled provisions of $362,300 should be considered in the context of the programme budget for the biennium? she asked. Mr. CHOWDHURY said that yes, the amount would be deleted from the budget, but before the Assembly adopted the draft, a statement of programme budget implications had to be included.

Ms. GOICOCHEA ESTENOZ (Cuba) expressed concern about the fact that a draft resolution had been adopted in the context of the Third Committee (Social, Humanitarian and Cultural) that had been the subject of two statements of budget implications. In the first, funds had been allocated to pay the travel of representatives from developing countries to attend preparatory meetings. The revised implications had stated that the amount would be absorbed, in violation of Assembly resolution 41/213.

Mr. HALBWACHS, United Nations Controller, said that when a Committee was about to take a decision, the Secretariat issued a statement on the related financial implications. In some cases, that decision was then revised. The reference made by Cuba's representative pertained to the travel costs of representatives from developing countries to a conference relating to population. The United Nations Population Fund (UNFPA) had offered to absorb those costs, and, therefore, there had been no need to inform the Committee on the matter.

Mr. MONTHE (Cameroon) said that the current discussion proved that the Committee acted responsibly and that the new budgetary mechanisms were working properly. Mr. CHOWDHURY proposed that the Committee recommend to the Assembly the appropriation of the required amount of $245,200 under section 6, Legal affairs, of the proposed programme budget for the 1998-1999 biennium. The General Assembly should take note that a balance of some $18.8 million would remain in the contingency fund.

Acting without a vote, the Committee approved that recommendation.

Effects of Exchange Rates, Inflation on 1998-1999 Budget Mr. MSELLE, ACABQ Chairman, introduced that body's views on the Secretary- General's report on the effects of changes in the rates of exchange and inflation. It had requested that future revised estimates on those changes

Fifth Committee - 10 - Press Release GA/AB/3208 44th Meeting (PM) 18 December 1997

should indicate not only shifts in expenditure and income but also total revised gross and net budgets. The ACABQ had noted that the Secretary-General's report had incorporated adjustments arising from the implications of United Nations reform proposals and the costs of MINUGUA, the meetings of the International Law Commission and those related to the situations in Haiti, Central America and Afghanistan. But those provisions had only covered 1998. Since the missions would continue in 1999 and require about $65 million, the ACABQ had pointed out that, unless there were favourable exchange rates and inflation throughout the 1998-1999 biennium, the potential of the revised budget of some $2.523 billion gross to absorb requirements of such magnitude seemed highly questionable. Indeed, the pressure on the budget would be very severe, if the exchange rate situation deteriorated.

Subject to some observations, he continued, the ACABQ had found no technical basis to object to the Secretary-General's revised estimates arising from the recosting of the effects of changes in exchange rates and inflation.

CHINVANNO ANUSON (Thailand) said he was pleased that something positive had evolved from the currency difficulties his country had been going through. Some of the positive effects of the currency situation had been felt by the United Nations regular budget due to the decrease in the operating costs of United Nations establishments in Thailand. Member States should, therefore, take advantage of the state of the Thai currency -- the baht -- and decide to relocate other establishments to Bangkok.

Mr. MONTHE (Cameroon) said the United Nations should be prepared to tighten its belt, should the currency exchange rates cease to be favourable to the Organization.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, proposed that the Fifth Committee recommend that the Assembly take note of the report of the Secretary-General on the revised estimates based on the effects of changes in the rates of exchange and inflation.

The Committee approved the oral draft decision.

Other Matters Mr. ODAGA-JALOMAYO (Uganda) reverted to the Committee's first agenda item this afternoon: the second performance report on the 1996-1997 budget. He asked whether the Committee would consider a draft a decision or a draft resolution in relation to it. Should the Committee decide to consider a draft resolution rather than a draft decision, he would submit some proposals of his own.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, said he had intended to submit a two-paragraph draft decision that would make recommendations on the final appropriations for 1996-1997, excluding the $10.4 million for IMIS, and on the revised income to be recorded for 1996-1997.

* *** *