PRODUCTIVITY, SUSTAINABILITY AMONG ISSUES RAISED AS FIFTH COMMITTEE CONSIDERS UTILIZATION OF DEVELOPMENT ACCOUNT

Press Release
GA/AB/3226

PRODUCTIVITY, SUSTAINABILITY AMONG ISSUES RAISED AS FIFTH COMMITTEE CONSIDERS UTILIZATION OF DEVELOPMENT ACCOUNT

Begins Considering Report of Oversight Office on Habitat II

The Secretary-General should submit another report on utilization of the Development Account, the Fifth Committee (Administrative and Budgetary) was told this morning as it continued discussing the utilization of the Account.

By resolution 52/12 B, on United Nations reform adopted last December, the General Assembly decided to establish the Account in the 1998-1999 programme budget, to be funded from savings from reductions in administration and other overhead costs. Such savings, which could be achieved through simplifying and streamlining procedures and processes, are not to affect the implementation of mandated programmes and activities. The resolution also requested the Secretary-General to submit a detailed report by the end of March on the initiative's sustainability and implementation modalities, among others. The Secretary-General proposes that funds will be transferred from productivity gains until the Account reaches a level of $200 million by the end of the 2002-2003 biennium.

Speaking for the "Group of 77" developing countries and China, the representative of Indonesia deplored the quality of the Secretary-General's note on the Account, and asked that another report be submitted in accordance with resolution 52/12B, before the Committee's third resumed session.

Programme managers should be given the responsibility to increase productivity in their respective areas, the representative of the United Kingdom said, speaking for the European Union and associated States. The Union did not understand how that could be reconciled with a priori approval by the Assembly. Incentives were needed to encourage programme managers to search for innovative and imaginative ways of working.

Rather than scoring points in a technical battle with the Secretariat over what constituted a productivity gain, the Committee should think ahead as to who would lose if the Development Account was not sustained after 1998, the

Fifth Committee - 1a - Press Release GA/AB/3226 61st Meeting (AM) 12 May 1998

representative of New Zealand said, speaking also for Australia and Canada. If the Account disappeared into the annals of United Nations history, the Fifth Committee would be largely responsible.

Member States posed a number of questions on aspects of the Development Account. For example, the representative of Cuba asked how the Account would be sustained once the target level of $200 million was attained. Where would the amount being proposed come from, if the resources to carry out programmes already adopted barely existed? she asked.

Several delegations asked how the amount of $200 million could be obtained through redeployment when, as the Advisory Committee on Administrative and Budgetary Questions had pointed out, some 70 per cent of the Organization's costs were related to staff.

Concern was expressed about the projects to be funded through the Development Account. What would the relationship be between the Account's activities and those funded through section 21 of the budget, on technical cooperation. Some States stressed that the projects to be funded should be of concrete assistance to developing countries, while identified projects seemed oriented towards research and other related activities. A question was also posed on whether the Account would be used to fund activities for countries with economies in transition.

The Under-Secretary-General for Management, Joseph Connor, and the Under-Secretary- General for Economic and Social Affairs, Nitin Desai, addressed the Committee and responded to questions on the Account.

Mr. Connor said that the request for a more specific report was reasonable. Funding the Account was not a matter of budget reduction, rather it was one of redeployment. Redeployment did not mean a loss of jobs, it meant new outputs. If savings were identified, the Assembly should appropriate those amounts to the projects to be listed by Mr. Desai, programme manager of the Account, he continued. If that was not done, he could not guarantee that the resources would not be redirected for other purposes. He urged budgeting, control and use of the funds.

Mr. Desai said the current amount of $13 million in the Development Account was a relatively modest sum in the context of the economic and social sector. Within those constraints, projects were geared towards strengthening technological capacities in developing countries and helping them interact more effectively. The projects proposed for funding through the Account had been focused around the theme of networking for development and had been designed to show results both in the long and short term.

Fifth Committee - 1b - Press Release GA/AB/3226 61st Meeting (AM) 12 May 1998

Also this morning, the Committee continued its consideration of the Organization's administrative and financial efficiency, focusing on an audit undertaken by the Office of Internal Oversight Services of the Second United Nations Conference on Human Settlements (Habitat II) .

The Under-Secretary-General for Internal Oversight Services, Karl Theodor Paschke, introducing the Oversight Office's findings, said while Habitat II was widely acknowledged as an important and successful event in the area of human settlements, the Conference had been marked by grave problems in the management of funds and personnel.

The Committee decided that the item would be kept pending for decision at a subsequent stage.

Statements were also made this morning by the representatives of Algeria, Japan, United States, China, Russian Federation, Bangladesh, Egypt, Latvia, Romania, Poland, Norway, Republic of Korea, Iran, Tunisia, Cameroon, Hungary, Mexico, Uganda, Ukraine, Bulgaria and Canada.

The Fifth Committee will meet again at 10 a.m. on Monday, 18 May, to consider the financing of 18 peacekeeping operations.

(page 2 follows) Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to consider a report of the Office of Internal Oversight Services on the audit of the second United Nations Conference on Human Settlements (Habitat II). It would also continue its discussion of aspects of the 1998-1999 programme budget, specifically reduction and refocusing of non-programme costs and utilization of the Development Account.

Report of Oversight Office on Habitat II

A report of the Secretary-General on the activities of the Office of Internal Oversight Services (document A/52/821) transmits that Office's report on the audit of Habitat II, conducted from September 1996 to March 1997. The audit was to assess the adequacy of the financial controls over the Conference, and the effectiveness of the Habitat II secretariat in preparing for the Conference, which was held in Istanbul in June 1996.

The Oversight Office feels that the expenditures of Habitat II, of $8.5 million, and the financial deficit of $0.3 million reported for the period ended 31 December 1996, were significantly understated, and the financial statements for the period ended on that date were unreliable. The United Nations Centre for Human Settlements (Habitat) now estimates the Conference's financial deficit in the range of $2 million.

In the report, the Oversight Office recommends that the United Nations Centre for Human Settlements recalculate the total expenditures and deficit as at 31 December 1996, and make additional efforts to realize outstanding pledges and, if possible, raise additional contributions. It should also submit a comprehensive report to the United Nations Controller on the financial performance of Habitat II since its inception, and seek approval from the legislative bodies on how to cover the remaining Conference deficit. The Oversight Office recommends that the Centre take appropriate measures to improve the internal controls, in general, and financial management, in particular, in order to be better prepared for future conferences.

The Oversight Office also recommends that the Department of Management review the current rules governing the employment of recipients of United Nations pensions as individual and corporate consultants, with a view to strengthening the enforcement of the policy that restricts the remuneration of United Nations retirees.

The report states that the Oversight Office acknowledges that the Habitat II secretariat played a successful role as facilitator and coordinator of the Conference and thus contributed to the achievement of the Conference's objectives. The Conference also received recognition from Member States, non-governmental organizations (NGOs) and the media. However, the Oversight Office was concerned about the breakdown of internal controls over the financial management and financial reporting of Habitat II.

The report also states that the Habitat II secretariat resorted to extensive hiring of consultants without having the benefits of competitive bidding and, in some cases, with little value received in return. Conference expenditures were shifted to, and money borrowed from, other funds to reduce the Conference's reported financial deficit.

1998-1999 Budget: Non-Programme Costs; Development Account

The report of the Secretary-General on the reduction and refocusing of non-programme costs (document A/52/758) refers to the two overall aims of this exercise. It is to reduce by 1 January 2002 non-programme costs by one third as compared to those for 1996-1997 as presented by the Secretary-General. In actual terms, this represents a reduction of $280 million of the $849 million attributed to such expenses. In so doing, efficiency dividend of some $200 million would be placed at the disposal of the General Assembly, through the mechanism of the Development Account, for reallocation to economic and social activities.

The Assembly decided last December to establish in the 1998-1999 programme budget, a Development Account to be funded from savings from possible reduction of administrative and other overhead costs.

The report states that six elements should be included totally or partially under non-programme costs. These are: direct administrative costs, executive direction and management, programme support, conference services, public information costs and general operating expenses. (For additional information, see Press Release GA/AB/3213 of 10 March.)

In its related report (document A/52/7/Add.10), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) states that the Secretary-General's report is flawed by the lack of a clear concept of what constitutes the nature of activities funded by the regular budget. The report states that the concept of "non-programme" is not applicable in the United Nations regular budget context since regulation 5.5 of the Regulations and Rules Governing Programme Planning, the Programme Aspects of the Budget, the Monitoring of Implementation and the Methods of Evaluation, states that "all activities for which resources are requested in proposed programme budget shall be programmed". (For additional information, see Press Release GA/AB/3213 of 10 March.)

A note by the Secretary-General on utilization of the Development Account (document A/52/848) states, on modalities for its implementation, that the Account is part of the regular United Nations budget and, therefore, will be governed by the same modalities and procedures that govern the regular budget. The Secretary-General will present his proposals for the utilization of the account funds for each biennium along with the budget proposals for that biennium. Specific projects would be implemented within the framework of the General Assembly's decisions on those proposals.

The Under-Secretary-General for Economic and Social Affairs will serve as the Programme Manager for the Account and will oversee its implementation, the note states. The Under-Secretary-General, in consultation with the Executive Committee on Economic and Social Affairs, will assist in the formulation of the Secretary-General's proposals for the utilization of the funds in the Account. The individual entities comprising the Executive Committee will be responsible for the implementation of approved projects. (For additional information, see Press Release GA/9403 of 27 April.)

The Committee also had before it a report from the ACABQ on the Development Account (document A/52/894). The ACABQ states that the note of the Secretary-General did not respond to the requirements of resolution 52/12B, by which a detailed report had been requested before March 1998.

The Advisory Committee recalls that it had indicated that transfer of resources associated with productivity gains into the Development Account was not a budget reduction exercise but rather one of redeployment, and that the total budgetary amount and related assessments would thus remain the same before and after such redeployment. Further, the ACABQ says the performance report must clearly identify savings resulting from efficiency measures so as to enable the Assembly to take the necessary decision to redeploy those savings to the Account. Savings from currency fluctuations and the effects of inflation would not be available for transfer to the Development Account, nor would losses result in a reduction of amounts otherwise available through efficiency savings.

The report recalls that the ACABQ had stressed that in order to avoid confusion, the actual results of efficiency initiatives should be indicated to the satisfaction of the Assembly before the related savings could be approved for redeployment.

The ACABQ notes that the Secretary-General continues to maintain the target of transferring $200 million from other sections of the budget to the Development Account by the end of the biennium 2002-2003. The ACABQ says that the target is overambitious. It has not yet been demonstrated that administrative expenditures constitute 38 per cent of the programme budget, not has it been shown that a one-third reduction in administrative expenditure would yield the targeted savings by the anticipated date.

The Secretary-General proposes that the funds for the account be treated as a multi-year project, the report states. The ACABQ recommends that any

balance of appropriation be transferred to a special account at the end of the biennium, so that the funds will be available in succeeding bienniums.

The report recalls that the General Assembly, in its resolution 52/220 of 22 December 1997, had appropriated an amount of $13.1 million for the Development Account under section 34, on that Account, of the programme budget. The Committee points out that it had not received the report indicated in the Secretary-General's note on the proposals for utilization of that amount.

Statements

KARL THEORDOR PASCHKE, Under-Secretary-General for Internal Oversight Services, introducing the report on Habitat II, said that the OIOS audit found that while the Conference had been widely acknowledged as an important and successful political event in the area of human settlements, it had also been marked by serious financial management problems. A breakdown in internal controls had resulted in inadequate accountability and left the United Nations Centre for Human Settlements with an uncovered deficit estimated to be in the range of $2 million.

While not wishing to de-emphasize the seriousness of the financial and managerial problems of Habitat II, OIOS felt compelled to point out that since the inception of the Conference, pledged contributions had not been realized as expected, and funding from the regular budget had been limited, he said. Criticism of the Habitat II secretariat must therefore be tempered with the understanding that the mounting of a successful international conference on the scale of Habitat II required an appropriate level of financial resources. The Oversight Office also took note of the corrective actions taken to date by the Centre.

DJAMEL MOKTEFI (Algeria) said that his delegation would make only preliminary comments on the matter. The report indicated to what extent lack of internal controls could create major financial problems. There was an urgent need to address those problems and preempt future ones. The question of the current regulations governing the use of consultants should be returned to in the future under another item.

In addition, the report revealed the important role that the Department of Management should play in order to provide some constraint and to set up an effective system to avoid such situations, he said. Informal consultations should be held to examine the report.

KOJI F.X. YAMAGIWA (Japan) said his delegation appreciated the work that had gone into the report and supported its recommendations. The report revealed enormous mismanagement with respect to both finances and personnel. Where was managerial responsibility to be assigned? What disciplinary measures needed to be taken? he asked

Several irregularities were outlined in the report, including those concerning the appointment and service of the Deputy Secretary-General of Habitat II, he said. The number of official trips and annual leave he had taken in the context of those trips seemed to be irregular. During a trip of 17 days to Europe, for example, he had used 10 days as annual leave. There had been other such incidents. The explanations that had already been provided did nothing to allay Japan's misgivings.

It was not Japan's intention to engage in micromanagement, he said. However, it would like to have some clarification in this regard. Japan believed that it was particularly important for it to express its grave concern at this stage, as it was difficult to take appropriate measures after the fact. Had any measures been taken in the past, and what could be done now? he asked.

THOMAS REPASCH (United States) said his delegation had read the report with great interest. The information contained therein had not been a surprise, since the Board of Auditors and OIOS had made similar findings in recent years on audits and inspections of Habitat. Still, his delegation had been outraged by some of the findings. He fully supported the comments made by the representative of Japan regarding the responsibilities of management, as well as rules and regulations on travel and on leave. It was unclear who authorized that a staff member could travel so much of the time, apparently to the neglect of his primary responsibilities. He applauded the OIOS for its good work, and requested that the people in Habitat fully complied with the recommendations made by the OIOS.

DULCE BUERGO RODRIGUEZ (Cuba) said her delegation recognized the importance of considering the audit and had found the comments contained in the report interesting. Her delegation was awaiting instructions from her capital regarding the report, which had originally not been included in the schedule for the resumed session. Decisions on the matter should be taken in the context of subsequent informal consultations.

The Committee decided that the item would be kept pending for decision at a subsequent stage.

1998-1999 Budget: Development Account, Non-Programme Cost

PRAYONO ATIYANTO (Indonesia) speaking for the "Group of 77" developing countries and China, welcomed the establishment of the Account in the budget for 1998-1999. The Secretary- General's aim to deliver a dividend for development merited favourable consideration. The Group of 77 and China deplored the quality of the Secretary-General's note, which was superficial and did not meet the requirements set by the Assembly. He agreed with the ACABQ that a detailed report on the subject had not been prepared. Further, the note contained factual errors, such as the level of resources for the account, which were, in fact, $13.065 million.

It was difficult to understand the Account's sustainability on the basis of the rationale contained in the document, he continued. It was not clear how the Account would become sustainable through the existing budget appropriation process once it reached the level of $200 million. Also, how would it be replenished after 2003? he asked. The Committee should be informed of the means to achieve overhead administrative reduction, as well as those areas where proposed savings were to be achieved. The Secretary-General should provide a sound and technical qualification for his conclusion that non-programme cost constituted 38 per cent of the regular budget, and should explain how he intended to reduce those costs to 25 per cent. What would be the impact of that effort? he asked.

The Group of 77 also wished to know what would be the result of the proposed savings on the level of posts, taking into account the point made by the ACABQ that staff costs accounted for 70 to 80 per cent of the regular budget. Savings of the magnitude anticipated by the Secretary- General's report would inevitably affect hundreds of posts.

Regarding the use of the Account, the Group believed it should focus on concrete objectives, he said. It was deeply concerned about section III of the Secretary-General's note, which simply indicated that the account would be utilized to assist the international community in understanding emerging and persistent challenges having to do with development. The programme objectives should include assisting developing countries in addressing the challenges of globalization, including through enhancing international cooperation in financing economic development, South-South cooperation, eradication of poverty, technical cooperation, and increasing those countries' trade competitiveness. Proposals for the modalities for the utilization of the account should be presented by the concerned units within the United Nations working on development issues.

The proposed reduction in administrative costs should in no way affect the full implementation of mandated activities, he stressed. The transfer of resources associated with productivity gains was not a budgetary exercise, but one of redeployment. Once a productivity gain had been identified and achieved, approval of the General Assembly should be sought on the transfer of the funds. While the Group approved the concept of a dividend for development, it should be implemented without affecting the legislative mandates, and taking into account sustainability beyond the year 2003. He asked the Secretary-General to submit another report in accordance with resolution 52/12B, before the Committee's third resumed fifty-second session.

DULCE BUERGO RODRIGUEZ (Cuba), speaking on a point of order, said her delegation was surprised that the representative of the Secretariat arrived just as the Chairman of the Group of 77 concluded his statement. Cuba was sorry that no representative of the Secretariat had been present during the debate of such an important item. While it was glad that Under-Secretary-General Nitin Desai was now present, it felt that it needed to express its regret.

ANWARUL KARIM CHOWDHURY (Bangladesh), Committee Chairman, said that a colleague of Under-Secretary-General Desai had been present during the statement, but that it was true that there had been no representative of the Department of Management present. That would have been appropriate given the importance of the item.

NICHOLAS THORNE (United Kingdom), speaking on behalf of the European Union and associated States, reiterated the Union's support for the Development Account. He emphasized that efficient did not mean cheap or substandard and that proposed efficiency savings did not necessarily mean overall cuts in the budget. As the ACABQ had said, this was not a budget reduction exercise. Resources freed up through the implementation of efficiency measures should be transferred to the Development Account and used for development activities.

The Union had carefully studied the detailed recommendations as to how the objectives could be achieved, he said. The essence of the concept being discussed required incentives to encourage programme managers to show initiative and flexibility in the search for innovative, imaginative and generally new ways of working, so as to achieve the Organization's objectives. Programme managers should be given the responsibility to increase productivity in their respective areas. The Union did not understand how this could be reconciled with the need for "a priori" approval by the Assembly.

He said the Union entirely accepted the argument that the United Nations could not be treated as a private company. However, the Organization could not be immune from good management practices as currently being applied in many countries -- developed and developing. Thus, while it was believed that each section of the programme budget should include an indication of prospective productivity gains anticipated in the forthcoming biennium, it should be clearly understood that that indication should not be exhaustive nor impose a counter-productive straight- jacket on programme managers' freedom to look for efficiency measures. The responsibility to conduct the search for efficiency measures should remain within the purview of the Secretary- General.

He added that the Union would welcome an indication of the purposes to which the Secretary-General intended to put the resources in the Account, and an indication as to how reporting to Member States on Development Account programmes would be carried out.

CHEN YUE (China) said the underlying premise of using administrative savings to fund a development account was valid. However, measures to reduce administrative costs should not be undertaken at the expense of the full implementation of mandated programmes and activities; otherwise it could not be said that they were true savings. Negatively affecting programme implementation for the sake of cutting costs would deviate from the Organization's principles.

It was necessary to set an objective and realistic target for savings, she said. Noting questions raised by the Advisory Committee on the definition of "non-programme" costs, as well as those pertaining to the methodology used to determine those costs, she said a more precise definition and more practical methods were needed. The Chinese delegation agreed with the ACABQ that the assumption that activities of the Department of Public Information (DPI) were non-programme was untenable. It was not appropriate to incorporate the issue of reorienting or refocussing the Department's activities into the current discussion, which pertained only to how to implement savings measures and redistribute the freed resources to the Development Account.

Regarding the sustainability of the Development Account, she said that her delegation believed that savings were not limitless. The potential of productivity improvements would become depleted. Therefore, her delegation totally agreed with the ACABQ that the target of transferring $200 million to the Development Account by the end of the biennium 2002-2003 was overambitious. It would be difficult to maintain the Development Account's sustainability after that biennium if its only means of replenishment was to be funds gained from savings.

The main objective of the principles governing the utilization of the Account should be to ensure that the projects submitted truly served to assist and promote the development of developing countries, she said. There should not be undue focus on the time schedule for showing results. Given that the main purpose of the Account was to assist in the progress of developing countries, those States should enjoy "full say" in the selection of projects. The Secretary-General should submit proposals to the General Assembly for review and approval.

ALEXEI DVINIANINE (Russian Federation), recalling that his delegation had previously set out its views on the Organization's reform, said that it did not, therefore, intend to reiterate its detailed position on it. Creation of the Development Account was an integral part of the Secretary-General's reform efforts. Given the recent request of the Assembly for speedy consideration of the item, it was the Committee's responsibility to do so.

The Russian Federation did not fully understand the analysis provided by the Secretariat for determining the amount of $200 million and the means for reaching it by the biennium 2000-2003, he said. As the Account would begin to be used during the current biennium, how could the $200 million be reached? he asked. Also, the criteria for separating programme and non-programme activities, had not been fully explained. A full understanding that any redeplyoment of savings should be preceded by a decision by the Assembly should be reached. A constant search for administrative savings must not be an end in itself.

Also, his delegation did not understand the mechanism for the future functioning of the Account, he said. The process of searching for potential savings had its own natural limits. The Financial Regulations of the Organization should be observed strictly. Given the great importance of the question, the representatives of the Secretariat should submit all necessary information so that a decision could be taken.

HUMAYUN KABIR (Bangladesh) said his delegation was disappointed at the way the entire issue had been treated in the Secretary-General's report, which did not fully respond to the requirements of resolution 52/12B.

Bangladesh had noted the Secretary-General's assurances that reduction of administrative costs would be sought without hindering the ability of the Organization to carry out its mandates, he said. It wondered however, what course of action would be followed if the proposed amount of $200 million could not be reached. The characterizing of the idea as "overambitious" by the ACABQ was supported.

He proposed that the fund focus on such projects as transfer of technology to developing countries, he said. The proposed account was predicated on the assumption that all Member States would pay their assessed contributions on time and in full. How would the project proceed when States did not pay their contribution? he asked.

Ms. BUERGO RODRIGUEZ (Cuba) said the Secretary-General's report on reducing non- programme costs and his more recent note on utilization of the Development Account were not consistent with the letter or the spirit of the resolutions by which those documents had been requested. The Secretariat's overemphasis on conciseness, which could be seen in a number of reports submitted on reform and the programme budget, was affecting their quality, since these brief reports lacked analysis. That, in turn, affected the Committee's efficiency and created new costs, since in most cases, it led to increased requests for new reports.

The Secretary-General's note was astounding, she said. It contained incorrect information. What explanation could there be for the fact that the amount contained in the note was incorrect? she asked. She then asked the meaning of the last sentence in paragraph 4: "Once the target level of savings is attained, the Account will become sustainable through the existing budget appropriation process".

Taking into account the proportion of staff costs in the budget, what were the Secretariat's projections for the number of posts to be abolished? she asked. A detailed explanation should be provided on the principles of utilization of the Account, as well as the criteria for evaluating its output. An explanation should also be given on the reference to networking of experts. With the establishment of the new budget section 34, did the Secretariat expect that there would be a change in the nature of the activities traditionally financed by the budget? Had the Secretary-General studied how resources from that section would be related to those in section 21, on regular programme of technical cooperation? she asked.

The Assembly would not be in position to take a decision on the matter until a substantive report had been submitted in accordance with its resolutions, she said. Such a report should include a proposal on a way of utilizing resources adopted for section 34 for the current biennium. Once that report had been submitted, she would discuss the opinions expressed by the ACABQ.

AMANY FAHMY (Egypt) expressed surprise at the length of time the Chairman had taken to respond to her request for the floor. Regarding the statement made for the Group of 77 and China, she said that although many delegations had supported the statement, it had not been heard by the relevant Secretariat officials. She drew attention to the Secretary-General's erroneous reference to the funds appropriated by the Assembly for the Account. Contrary to the report, the amount allocated had not been $12.7 million, but rather $13.065 million.

The section in the Secretary-General's report on the objectives of the programme was very brief, she said. Reference was made to promoting development of developing countries in the context of globalization. Explanation should have included reference to the fact that such efforts should include supporting those counties in meeting the challenges created by globalization. The Development Account should not be used for enhancing the understanding of the international community of development matters.

After so many years of involvement, the international community should be fully aware of development-related issues.

Recalling that the report had indicated that proposals should be limited to those that would show results within two bienniums, she said that development activities and projects could in no way show results in that period, unless they were humanitarian assistance. On the expectation that the proposal should be able to generate other sources of finance, she said that was difficult to achieve and must be carefully studied. The matter was linked to the reduction of official development assistance (ODA) and grants provided by donors. The next report by the Secretary-General should take into account proposals submitted by the United Nations development bodies, including the United Nations Conference on Trade and Development (UNCTAD), and the Department of Economic and Social Affairs.

KAZUO WATANABE (Japan) said his delegation attached great importance to the rapid implementation of the Development Account. An early agreement should be reached on the projects for which the funds would be used during this biennium and on the modalities for the Account in the future. He asked why the document on the concrete proposal for the implementation of the Account had not yet been submitted for the Committee's consideration.

It should be borne in mind that the basic purpose of the Account was to support activities connected with global and regional development efforts that would ordinarily be funded from the regular budget but had not been fully financed in that manner due to insufficient funds, he said. For example, it would be useful to make resources available from the Account for an effort to gather the views of a range of experts and organizations on a new development strategy. The funds in the Account might also be used to conduct a study on the establishment of a data bank of technologies that might contribute to South-South cooperation, or to assist in enhancing the capacity of developing countries to engage in economic research and analysis.

Saving measures should be considered in the context of consideration on the proposed programme budget, he said. A fixed, reasonable level of resources to be allocated to the Account should be agreed to in advance, rather than just accepting the resulting savings at the end of each biennium with almost no substantive discussion. Japan was flexible on the magnitude of the Account, which should eventually be determined by the Committee.

WEN CHIN POWLES (New Zealand), speaking also for Canada and Australia, said they should be in a position to make a statement tomorrow.

Mr. CHOWDHURY (Bangladesh), Committee Chairman, said that while he had hoped to conclude discussion on the item today, he believed that it would be possible for her to deliver a statement tomorrow.

ULDIS BLUKIS (Latvia) wished to associate itself with the statement made by the United Kingdom on behalf of the European Union.

EUGEN MIHUT (Romania) said his delegation wished to do the same.

JAN JAREMCZUK (Poland) said his delegation also wished to associate itself with the statement.

TRYGGVE GJESDAL (Norway) said although Norway strongly favoured efforts that were enabling developing countries to take advantage of the globalization of the world economy, it would have appreciated seeing more specific objectives, guidelines and directions regarding the utilization of the Development Account. On the whole, the Secretary-General's report was very general and provided rather vague descriptions of the procedures and principles governing the Account. Furthermore, Norway would welcome a more specific definition of non-programme costs.

The existence of the Account beyond the year 2001 was another important question, he said. He asked whether a continuation of the Account was envisaged, and if further administrative efficiency savings were foreseen to sustain the Account beyond that data. The question was complicated, but it none the less should be addressed.

Mr. MOKTEFI (Algeria) said his delegation fully supported the statement made by the representative of Indonesia and shared a number of the comments raised in the report of the ACABQ. Algeria endorsed the full and complete use in practice of the Account as soon as possible.

The Secretary-General's report did not respond in detail and with precision to concerns raised in the Committee during the first resumed session, he said. Nothing had been shown about the viability of the productivity gains to be used to fuel the Account. The basis of the Account should not be speculation or assumptions of a transitory nature. The amount of $200 million had not been shown to be feasible and was not commensurate with all of the objectives set for the Account. Also, the sustainability of financial resources was not obvious. The Secretariat would have to prepare a more substantive report to respond to concerns of delegations.

HAE YUN PARK (Republic of Korea) wondered whether at this stage the modalities for the implementation of the Account as elaborated in the report would ensure its funding to the proposed level. Concerns of the ACABQ were shared. The time-frame necessary to realize the $200 million needed to be specified with reliable data from the previous biennium. In that regard, the Secretariat should present more conclusive statistics to substantiate its claim that administrative expenditures comprised 38 per cent of the programme budget, and that a one-third reduction in administrative expenditures would yield the proposed amount.

SEYED MORTEZA MIRMOHAMMAD (Iran) said the Development Account was a section in the budget, and should be subject to the provisions of General Assembly resolution 41/213, which had defined the Organization's budgetary process. There should be a programme narrative for the section, based on the views of Member States. That narrative should be studied by the relevant legislative bodies, including the Committee for Programme and Coordination (CPC).

SUSAN SHEAROUSE (United States) said the ACABQ in its report raised several issues that were of concern to her delegation. The Secretary-General should provide more detailed information on the modalities proposed for the utilization of the Account. She questioned the relationship between the Development Account and the budget's section 21, on technical assistance. The United States had supported the establishment of the Account. It agreed with previous speakers that the issues raised by the ACABQ must be responded to prior to taking a decision. She asked the Under- Secretary-General for Economic and Social Affairs when the Committee could expect proposals on how to expend the resources allocated during the current budget.

RADHIA ACHOURI (Tunisia) said her delegation had unreservedly supported the establishment of the Development Account and attached a great deal of importance to its speedy implementation. She deeply regretted the poor quality of the Secretary-General's note. Further, it was surprising that the document was in the form of a note, rather than a report, which would have been more in the spirit of the Assembly's resolutions. The Secretary-General had defied the Assembly's clear directive.

No clear connections had been drawn between the reports on non-programme cost and Development Account, she noted. Yet there was an obvious connection. The General Assembly had decided that the Development Account would be funded from savings from possible reductions in administration and other overhead costs without affecting full implementation of mandated activities. She had expected that the Secretary-General's report would have taken into account the concerns expressed by Member States during the first part of the resumed fifty-second session, when the Committee had first taken up the report. In addition, she had expected the report to take into account the comments of the ACABQ. Yet the report contained none of those matters.

The Committee must be provided, as soon as possible, with an additional report -- which should have been the original report -- responding to the letter and the spirit of the Assembly's directives, she said. The Secretariat should deal more seriously with the desires of Member States.

She expressed support for the statements made by the Chairman of the Group of 77, and delegates from Cuba, Egypt and Algeria. The Secretary-General had not taken into account the Organization's financial crisis when elaborating his proposals. The fact that the United Nations was experiencing a financial crisis must be considered in all reform efforts.

PAUL EKORONG A NDONG (Cameroon) stressed the superficial nature of the report, and the inconsistency of some of the ideas contained in it. Was the Committee to believe that the ability for analysis had disappeared in the United Nations? he asked. He preferred to think that implementing the Development Account was a difficult idea. How could it be said that a definite amount was going to be saved by the year 2000? he asked. Gains from currency fluctuation rates could not be directed to the Account. An in-depth consideration of the matter would be difficult within the current session.

ZSOLT HETESY (Hungary) associated himself with the statement made for the European Union. By creating the Development Account, the Secretary-General was implementing a new concept, which was always difficult, however worthy it might be. Borrowing from a statement made by the representative of Uganda, he said the foundation for a building could not be laid without adequate understanding of the future plan for the building. Questions posed by Member States and the ACABQ had remained unanswered. Based on those questions, the Secretariat was now in a better position to come up with a more specific and revised set of proposals, which would enable the Fifth Committee to take an informed decision. Such a decision could be taken only if the Secretariat acted accordingly and swiftly.

Ms. POWLES (New Zealand), speaking also for Canada and Australia, said the three delegations had been consistent in supporting the Secretariat's effort to streamline administrative procedures and thus effect savings. The Secretariat's suggestion to reduce administrative costs to 25 per cent of the budget was worthy of support. In his reform proposals made in July (contained in document A/51/950), the Secretary-General had informed the General Assembly that efficiency proposals carried out by the staff had contributed to the Organization's ability to live within the reduced resources appropriated by the Assembly.

Until all Member States were willing to increase their annual contributions and pay in full and on time, the Secretariat had to work within its means in the most efficient way, she said. Member States should encourage such efforts. If the level of the Organization's administrative costs continued to exceed 35 per cent, then there was an obvious need to reduce it.

She agreed with the ACABQ that the primary focus should be on increasing productivity of all activities undertaken by the Organization. At the same time, there was value in setting indicative forward targets, to ensure that administrative managers improved their cost efficiency, she said. Without such targets, there was no incentive or pressure on programme managers to improve their cost-efficiency.

Resolution 52/12B, paragraph 24 stated that the General Assembly decided to fund a Development Account to be funded from savings, without affecting implementation of mandated activities. If the Development Account was not sustained after 1998, it would disappear into the annals of history, and the Fifth Committee would be largely responsible. Many development needs would benefit from the funding. However, if the Committee chose instead to focus solely on why productivity gains should not be pursued, why a target of $200 million by the 2002-2003 biennium was "overambitious" and why the General Assembly should certify and approve every productivity gain before placing it into the Development Account, rather than encouraging the Secretariat to come up with feasible ideas on how the Account might be sustained in the future, with a view to endorsing them, then the Committee "might as well be rearranging the deck chairs on the Titanic".

Rather than scoring points in a technical battle with the Secretariat over what constituted a productivity gain, the Committee should think ahead to who the losers would be if it went the "Titanic route", she said. The concept underlying the proposal was a reallocation of resources rather than a resource reduction. She would not want to return to the situation where the only way of reducing the Organization's administrative costs was to reduce the overall level of the budget, she added.

ERNESTO HERRERA (Mexico) said that his delegation supported the idea of the Account. However, after analysing the documents Mexico still had doubts on the way the Account would be financed. Mexico would not want the financing of the account to damage other programmes.

JOSEPH CONNOR, Under-Secretary-General for Management, said that the Secretary- General had entrusted to him, with the cooperation of the ACABQ and the Fifth Committee, to devise a methododolgy and an approach that would ensure that by the end of the year 2003 about 10 per cent of the Organization's resources would have been redeployed. That was a manageable exercise. He stressed that it would not mean any change up or down in the level of resources that Member States would be asked to supply.

He wished to apologize for not having announced earlier that the procurement manual had been produced, he said. All delegations could have a copy. He also apologized for not having arrived in time to hear the statement of the representative of the Group of 77.

The original concept paper had laid out a target and methodology for the Account, he said. It had also shown a refocusing of certain costs into closer support of development activities. It had always been the intention that relevant Assembly approval would be given to redeployment of resources; projects would be submitted for Member States scrutiny and revisions would be made accordingly. It had been clearly believed that the Assembly had the right to be involved in the exercise. If the budget of the United Nations went up, the target of $200 million would change, as it would if it went down.

The purpose of the exercise was to build to the level of $200 million, he said. Projects would be ongoing and a project account would be set up to handle them. Redeployment did not mean a loss of jobs; it meant new outputs. This was not a budget reduction exercise; rather it was a redeployment. Accordingly, for example, there had not been any projection made on potential changes in staff levels. That was not the heart of the exercise.

If at the end of the day, Member States were not happy with what they were receiving then the exercise would be a failure, he said. The repeated request for a more specific report was reasonable. All mandates would be performed, while work was accomplished with maximum efficiency. A long list of things in the Organization that could be done more efficiently had been prepared.

The Under-Secretary-General shared the concern that there not be two budgets for the biennium -- one that could be spent and one that could be looked at. A two-level budget would present enormous problems for programme managers. The Committee discussion had been very closely followed. Additional contributions by Member States to the Account was not part of the exercise.

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said his concern was with the utilization of the Development Account. He would, therefore, focus on that dimension in his comments. The Secretary-General's paper was very general. He would now present material that would be submitted later to delegations.

The current amount of $13 million was a relatively modest sum in the context of the economic and social sector, he said. The fund could be used for examining how information technology could be used to greater effect in order to strengthen capacities in developing countries and to help them to interact more effectively.

Several proposals with a focus on helping developing countries had been made, he said. They included those from UNCTAD, in the area of electronic commerce; the United Nations Environment Programme (UNEP), regarding accessing regional and global environmental databases; and the Economic Commission for Africa (ECA), on a way of networking African research institutes to help them better interact with each other and feed into ECA work.

Proposals had been to use the modest amount of money to enhance capacities in developing countries, he said. Clearly there was a focus on enhancing international cooperation. What was lacking in the world today was an ability of experts from developing countries to interact with one another on a South-South basis. One of the key objectives was assisting countries in meeting the challenge of globalization. The proposals had been focused around the theme of networking for development and had been designed to show results both in the long and short term.

"What we have are truly interesting proposals", he said. Those proposals would be fleshed out in the future. It was hoped that a degree of flexibility for implementation would be allowed.

NESTER ODAGA-JALOMAYO (Uganda) said his delegation was eager to see the proposals in detail. He asked for clarification on the criteria used for selecting proposals. Did various institutions put forward the proposals or were they solicited? he asked. What was meant by the term "best practices"? As the amount available was not large, who prioritized what should be implemented first? The proposals mentioned by the Under-Secretary-General were very interesting, but it was important to bear in mind the maxim "all that glitters is not gold".

IHOR HUMENNY (Ukraine) said his delegation had raised questions during the plenary which had not been answered in the Secretary-General's report. Did the Department of Economic and Social Affairs plan to utilize some part of the Development Account's resources in the interest of countries with economies in transition? he asked.

Mr. BLUKIS (Latvia) supported the above question. The Account was a new project, and thus might at first appear more complex than later. He was puzzled about how the parts of the project fit together. It was clear that performance criteria was related to project selection. It was difficult to expect clear outcomes, or performance criteria, from some of the projects being discussed. A project's outcome really amounted to what people did with it, rather than the mechanics. What kind of performance criteria could be expected from such projects? A more comprehensible package should be presented in the future.

Ms. BUERGO RODRIGUEZ (Cuba) said the comments made by the two Under-Secretaries- General had been very useful. She noted their comments that there would be no direct effect on programmes mandated by the General Assembly, and that the refocusing of resources would not represent any loss of jobs in the Organization. Many questions remained unanswered. She had asked how the Account would be sustained once the target level of transfer was attained. Where would the amount being proposed come from, if the resources to carry out programmes already adopted barely existed? she asked.

It was not clear how savings needed to fund the account would be achieved without affecting the number of posts, she said. On the difficulties for programme managers resulting from the fact that they must work on two budget levels during the biennium, she noted the Secretariat's awareness, and asked what concrete measures could be taken to resolve that difficulty.

She thanked Mr. Desai for his comments on the relationship between the budget's sections 21 and 34. Perhaps there was need to consider each project in each section more thoroughly. At the same time, there was need to be more specific on the proposals to be included under the budget section on the Development Account. Since developing countries were to be the main beneficiaries of the proposals, it was important that projects implemented were truly capable of yielding concrete results. Instead, it appeared that projects were primarily focused on research and similar activities, which departed from the real needs of developing countries. The Cuban delegation eagerly awaited written replies from the Secretariat.

Mr. IVANOV (Bulgaria) said his delegation aligned itself with the statement made for the European Union. Programme managers should not be placed in a "straight-jacket", affecting their freedom to look for efficiency measures. The DPI had been the target of most refocusing activity. It would be useful to hear the comments of the new Under-Secretary-General for Information on the exercise. The Committee on Information was currently preparing a relevant resolution, which was expected to express concern at the proposed reduction in the Department's budget.

Mr. EKORONG A. NDONG (Cameroon) said further elaboration should be provided by Mr. Desai on his statement, and on the Habitat conference. Was there talk of transferring the Internet to villages that did not even have water in the wells?, he asked. How would priorities be set? Also, he wondered how the Account was going to be extended beyond the 2003.

SAMUEL HANSON (Canada) had the same question about the extension of the Account. He sought clarification regarding his understanding of the methodology for that extension.

Mr. WATANABE (Japan) asked when the document on the utilization of the Account would be received. The amount of $13 million was not enough to cover all the proposed ideas. Where would the rest come from? he asked.

Mr. DESAI, Under-Secretary-General for Economic and Social Affairs, said that if the $13 million was spread through all the programme areas, diffusion would be the result. Clearly, if the amount was 10 times larger, different proposals and priorities would be considered.

The proposals he had described had come from individual organizations, which had sought to identify what supplemental activities would best enhance the effectiveness of their work and would be beneficial to the developing countries, he said. He stressed that he had a responsibility to ensure that the entities involved were fully engaged.

"Best practices" was the terminology often used in Second Committee (Economic and Financial) discussions regarding the transfer of technology, he said. Regarding prioritization, many different ways had been considered, and those areas that would have the largest synergistic effects had been selected. Emphasis was placed on networking because of the modest amount of $13 million. It has been deemed better to focus on a few key areas. It was hoped that more could be done later.

No alternate funding was being sought, he said. However, it was possible, given the nature of the activities, that other funding would come in. Performance criteria would have to be identified. This was done all the time. The current amount was a very small percentage of the amount used for development in the regular budget.

Mr. CONNOR, Under-Secretary-General for Management, said that he had worked a long time on the report on reducing and refocusing non-programme costs. There were two ways to address the issue of sustainability: it could be left to chance or it could be made to happen. Paragraphs 49 to 52 in Section III of the report had focused on ways to ensure the Account's sustainability.

The $13 million allocated in the current budget would be kept in the Development Account; further savings would be added to it and the process would be repeated in subsequent bienniums, he said. That amount would not be subject to exchange fluctuations. That was the principle control mechanism to guarantee that resources did not vanish unless it was the stated wish of Member States.

He said if savings were identified, the Assembly should appropriate those amounts to be projects listed by the programme manager of the Account. If that was not done, he could not guarantee that the resources would not be redirected for other purposes. He urged budgeting, control and use of the funds.

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