PRESS BRIEFING BY UNDER SECRETARY-GENERAL FOR ADMINISTRATION AND MANAGEMENT

Press Briefing

PRESS BRIEFING BY UNDER SECRETARY-GENERAL FOR ADMINISTRATION AND MANAGEMENT

The Under-Secretary-General for Administration and Management, Joseph Connor, briefed correspondents yesterday on the adoption of the programme budget for the 1998-1999 biennium and the new approved scale of assessments. He said there had been three positive results: the budget, as legislated, was down; staffing levels were down; and all of the Secretary- General's reform proposals that had financial implications had been approved.

The 1998-1999 United Nations programme budget totalled $2.532 billion, he continued. By comparison, the budget for the 1996-1997 biennium, as legislated at the beginning of that period, was $2.608 billion. That meant a reduction of $76 million or approximately 3 per cent. Although some of that amount was due to an accounting change, there had been a real reduction in resources. The 1994-1995 biennium had appropriations of $2.632 billion. So, the 1998-1999 budget would be "down $100 million" from that figure.

From 1994, the United Nations budget had been on a downward mode, he said. The 1998-1999 biennium contained 8,741 regular budget posts, down from 10,012 posts in 1996-1997 and represented a net reduction of 954 posts. That reduction was just short of the 1,000 posts identified for suppression in the Secretary-General's proposed budget for 1996-1997.

He said 317 posts had been "reclassified" -- transferred out of the budget. They were still in existence, but were not counted as regular budget posts because they related to jointly financed activities, such as the Joint Inspection Unit (JIU) and the International Civil Service Commission. They had no impact on the actual number of suppressed posts.

He said the 1998-1999 programme budget provided for: all mandated activities and all the Secretary-General's reform measures with financial implications, including the post of Deputy Secretary-General; the establishment of a Department of Disarmament; the transformation of the Department of Public Information (DPI) into the Office of Communications and Public Information; the establishment of the Strategic Planning Unit in the Office of the Secretary-General; the staffing component that was being added to the Management Policy Office; and the merger of the three economic and social departments into a new single department.

New concepts, including a Revolving Credit Fund and results-based budgeting, had been placed on the table and would need elaboration in the months ahead, he continued. As a result of the reforms in the current biennium, $13 million had been added to the initial down payment in the economic and social account. By the end of March, the Under-Secretary-General for Economic and Social Affairs, Nitin Desai, would have to submit his plans

for that money. The Secretariat now had a new role -- how to spend money, instead of just to raise it.

On the new scale of assessments, Mr. Connor said the most significant change was the three-year final "work out" of the scheme of limits -- a device which put brakes on the degree to which economic change was recognized. The first half of the scheme had been removed in the current biennium and the proceeding year, and would be fully removed in the year 2000. That meant Japan would have an increase of more than 2 full percentage points and the Russian Federation would go down 1.5 percentage points in 1998, he said, adding, "Those were very big changes". Countries with uncertain economies would usually be counterbalanced by those with improving economies.

Other fine-tuning of the scale meant a measurement base of 6 years instead of 7.5 years, he continued. There were also modifications in the formula whereby reductions were granted to countries with low per capita income. The minimum assessment rate or "floor" had been reduced from .01 per cent to .001 per cent and the ceiling rate remained at 25 per cent for the regular budget.

However, he said, the General Assembly decided "without prejudice to Rule 160 of the Rules of Procedure, to consider reviewing the scale for the years 1999 and 2000 during its resumed fifty-second session, in the light of all relevant factors, including the periodic reports of the Secretary-General on the status of contributions, and to make determination in this respect, earlier enough to refer the matter to the Committee of Contributions during the fifty-second session of the General Assembly". Mr. Connor said he had read the words precisely, because they had been "very well negotiated".

A correspondent asked what those "finely negotiated words" really meant. Mr. Connor replied that he did not intend to elaborate. Clearly, a review of the scale of assessments for the second and third year was indicated.

Was it possible to change it? the correspondent asked. Mr. Connor said a review could mean change or no change, and to go beyond that would be conjecture. There was now a three-year scale with a 25 per cent ceiling and any change would have to be proposed and approved by Member States.

The correspondent then asked how many countries were affected by the reduction and who would "take up the slack". Mr. Connor said 95 countries, about half the membership, had been affected by the prior minimum scale of .01 per cent. A number of countries would "fall to the new floor". The old floor generally resulted in a Member State paying approximately $107,000 in contributions for the regular budget. The new amount was approximately $10,500. A large number were at the "absolute floor". Several Member States had pointed out that they were being assessed at the rate of 300 and 400 per cent of gross national product -- one distortion which was to be removed.

Connor Briefing - 3 - 24 December 1997

Countries with emerging economies had paid much higher assessments in earlier years and those with growing economies would have their assessments increased under the new system, he continued. Several countries would "take up most of the slack". The highest assessed States, in descending order, were now the United States, Japan, Germany, France, Italy and the United Kingdom. Last year, Italy paid a lower rate than the United Kingdom. The removal of the scheme had changed the order. In the third year of the scale, Japan would reach an assessment rate of 20 per cent, which represented "quite a movement" from their current rate of approximately 15.5 per cent.

How was it possible that the United States, which wanted its assessment rate lowered to 20 per cent, would be at the same level as Japan, which had a far lower gross domestic product? a correspondent asked. She also asked about the reasoning behind allowing the Russian Federation to pay 1 per cent and China to pay less than that.

Mr. Connor said they were arrangements among Member States and the effect of the cap and the floor was to introduce an element that caused assessments rates to deviate from the base, which was an absolute allocation of gross national product (GNP). It was a political decision among Member States.

Given the looming financial crisis, what kind of interest was there in the Revolving Credit Account? a correspondent asked. Mr. Connor said the Member States had asked for more details on the recommendation. The workings of the account were explained relatively well, but to make it work, some countries had to come forward with a deposit. The idea of the Fund was to tide the Organization over when the cash flow was lower than it should be.

In reply to a question about the Organization's financial situation in January, Mr. Connor said the letters of assessment would be delivered by the end of the year and payment was due 30 days after they were received. The early payers were usually announced in the first week of February. Traditionally, in February and March, about $5 million was received, usually from a group of 20 to 25 very prompt payers. For example, last year Italy was the first to pay in full. Germany had paid half its assessment in January before the due date. The prompt payers were basically a consistent group and included Canada, Australia and several European countries. The United Nations needed that money to pay back its peace-keeping borrowings and it usually carried the Organization to late summer or 1 September.

Borrowings from peace-keeping monies were "getting to be very tenuous", he said. The receipt side in December was slightly better than forecast because of an unexpected payment of $18 million by the United States. However, the United Nations would still be borrowing a significant amount of approximately $190 million in December.

Connor Briefing - 4 - 24 December 1997

Continuing, he said cash from peace-keeping was decreasing and there was a "squeeze". The United Nations was committed to paying arrears to the troop and equipment providers. Two days ago, the Russian Federation had presented $63 million owed in arrears. The Secretary-General's intention was to reduce the contingent equipment obligations and debt to troop contributors.

A correspondent asked if money that the United States reportedly had available had arrived. Mr. Connor said United States legislation required certification before disbursement, a process which took a little time. Hopefully, the cheques would arrive soon, he added.

In response to a question on development projects to be submitted by Mr. Desai, Mr. Connor said they would be presented to the Member States, who still had to legislate how the money would be spent, although the financing was already in place. Hopefully, the funding for the Development Account would increase remarkably because of administrative savings.

In reply to another question, Mr. Connor said everything the United Nations did from September on was being financed by a group of Member States who were now impatiently waiting for payment. Paid assessments financed the United Nations for 8 months of the year, and Member States who were owed money financed it for the rest of the year.

In reply to a question on arrangements for the Turner Trust Fund, he said that the modalities had been put in place and should begin functioning at the beginning of the year. The Trust Fund would have an advisory board, who would advise the Secretary-General on the types of projects the Turner Foundation would be interested in funding.

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