UNDER-SECRETARY-GENERAL FOR MANAGEMENT TELLS FIFTH COMMITTEE UNITED NATIONS' FINANCIAL LIQUIDITY DRYING UP
Press Release
GA/AB/3241
UNDER-SECRETARY-GENERAL FOR MANAGEMENT TELLS FIFTH COMMITTEE UNITED NATIONS' FINANCIAL LIQUIDITY DRYING UP
19981006 Committee Takes Up Organization's Financial Situation, Acts on Scale of Assessments, Continues Discussion of Development AccountThe United Nations' financial liquidity was drying up, the Under- Secretary-General for Management, Joseph Connor, told the Fifth Committee (Administrative and Budgetary) this afternoon as it began considering the Organization's financial situation.
Obligations exceeded cash balances and the availability of peacekeeping cash for "cross-borrowing" to bail out the regular budget was increasingly doubtful, in light of the decrease in United Nations peacekeeping assessments, he said. The good news was that for the first time in recent years over 100 Member States had paid their regular budget contributions in full for 1998 and all prior years.
The regular budget cash deficit could grow as high as $247 million by the end of 1998, and the United Nations continued to depend on cross-borrowing from peacekeeping funds, he continued. Peacekeeping cash was expected to be at its lowest year-end level in five years, and amounts owed to Member States for troops and contingent-owned equipment should be falling but were not. At the end of 1998, $864 million would be owed to troop-contributing countries.
Pakistan's representative asked how long developing countries would be forced to finance the Organization on behalf of those with the capacity to pay. He was one of several speakers who stressed that the United Nations financial crisis was due to the non-payment of assessed contributions, especially by countries with a higher capacity to pay.
The United States was the sole beneficiary of the existence of a "ceiling" -- or maximum rate of assessment -- which reduced the level of its assessments below its capacity to pay, the representative of Austria said on behalf of the European Union and associated States. He urged further consideration of proposals for incentives and disincentives by which Member States would be encouraged to better fulfil their obligations.
China's representative said that the United States, using as an excuse its domestic legislation and in total disregard with the regulations and Charter of the United Nations, had accumulated colossal sums of arrears. Such a violation of the United Nations Charter should never be accepted.
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The representative of the United States said the reason for his country's non-payment was a domestic issue called the rule of law. In a democracy no one could just decide to pay and do so. He hoped and expected that a vote concerning a $197 million possible payment would occur next week, and that this money would be paid by year's end. The $247 million cash deficit would then decrease to $50 million, making the overall financial situation stable -- not good but not deteriorating.
Member States must view the situation realistically, he continued. It was true that the Organization was living on the forbearance of some Member States, and for this, both the United Nations and the United States were grateful. But the regular budget was being funded, and programmes were not being delayed or affected. Nothing was gained by shouting "crisis" when a crisis did not exist.
"You will never hear from me again the words non-programme costs" the Under-Secretary-General told Committee members as they took up the Development Account. Responding to questions, Mr. Connor stressed that "it was up to Member States to determine how much, how quickly and when" the Account would be funded through efficiencies identified in all areas of the United Nations and approved by Member States.
Acting without a vote, the Committee approved a draft decision on the scale of assessments used to share out the Organization's expenses, by which the General Assembly would allow Comoros and Tajikistan to retain their voting rights despite their arrears in excess of the specifications of Article 19 of the Charter. The draft was introduced by the representative of Ireland, who had coordinated discussions on it.
Also this afternoon, the Committee began its discussion of the treatment of savings from the United Nations Conference on Trade and Development (UNCTAD). Reports on the subject were introduced by the Chairman of the Advisory Committee on Administrative and Budgetary Questions, C.S.M. Mselle, and the United Nations Controller, Jean-Pierre Halbwachs.
Statements were also made this afternoon by the representatives of Indonesia (for the "Group of 77" developing countries and China), Philippines (for the Association of South-East Asian Nations (ASEAN)), Belarus, India, Paraguay, Democratic Republic of Congo, Cuba, Mexico, Russian Federation, Syria, Uganda, Costa Rica and Iran.
In response to comments made by Committee members at yesterday's meeting, the Chief of the United Nations Security and Safety Service, Michael McCann, addressed the Committee on security during the general debate of the General Assembly.
The Committee will meet again at 10 a.m. tomorrow, 7 October, to continue discussing the support account for peacekeeping operations; administrative arrangements for the International Trade Centre; and the treatment of savings from improved efficiency in UNCTAD.
Fifth Committee Programme of Work
The Fifth Committee (Administrative and Budgetary) met this afternoon to consider a number of matters: improving the United Nations financial situation; savings from the ninth session of the United Nations Conference on Trade and Development (UNCTAD); the administrative and financial functioning of the UNCTAD/World Trade Organization (WTO) International Trade Centre; the peacekeeping support account and death and disability benefits; and gratis personnel -- considered under two agenda items: review of United Nations financial efficiency and human resources management.
(For background on reports on gratis personnel, the support account and death and disability benefits, see Press Release GA/AB/3240 of 5 October.)
UNCTAD/WTO Administrative Arrangements
The International Trade Centre (ITC) is the technical cooperation arm of WTO and UNCTAD for operational and enterprise-oriented aspects of international trade development. It was created in 1964 by a decision of the Contracting Parties of the General Agreement on Tariffs and Trade (GATT); in 1968, UNCTAD joined GATT as co-sponsor of ITC; and in 1974, the Assembly confirmed ITC's legal status as a "joint subsidiary organ" of GATT and the United Nations, the latter acting through UNCTAD. In 1995, ITC's name was changed to International Trade Centre UNCTAD/WTO, in line with the establishment of the WTO, as the successor to GATT.
In the Secretary-General's report on the administrative arrangements for the International Trade Centre UNCTAD/WTO (document A/C.5/52/25), he outlines proposals for revising administrative and reporting arrangements for implementing the ITC's programme budget. The Secretary-General suggests that the Assembly take note of his report and invite WTO's General Council to accept the proposals, including the timetable for the review and approval of ITC's proposed programme budget and related performance reports.[2,13]
The Secretary-General proposes that the ITC budget be prepared on an annual basis, presented in Swiss francs, and structured to satisfy the requirements of the United Nations budgetary process. The budget for the first year of the biennium would contain a projection of requirements for the second year. These arrangements would be based on the understanding that the 1974 agreement between GATT and the United Nations, which established the rights and responsibilities of both organizations vis-a-vis ITC, remained in force, and that the policy provisions of that agreement would not be affected.
A related note by the Secretariat (document A/C.5/52/45) recalls that in April 1995, the General Council of WTO requested its secretariat to negotiate for revised budgetary arrangements with the United Nations Secretariat. In September 1995, the Secretary-General and the WTO Director-General had agreed to recommend that arrangements governing the status of ITC as a joint body be confirmed and renewed. Then, the Secretariat had submitted its proposals for
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possible revisions for ITC administrative arrangements in document A/C.5/52/25 (see above). The WTO, however, says these proposals do not fully address its concerns.
Attached to the note are various documents related to the Centre's administrative arrangements, dating back to 1972. Attachment VIII indicates the arrangements called for by the WTO General Council, the changes proposed by the United Nations and the differences between the two.
An addendum by the Advisory Committee on Administrative and Budgetary Questions (ACABQ) comments on the administrative arrangements for the International Trade Centre (document A/53/7/Add.3). The ACABQ notes that the Secretary-General's report (A/C.5/52/25) did not fully address the need for simplified arrangements, including those called for by the General Council of the World Trade Organization (WTO).
Arrangements should be set in place which take into account WTO's concerns and retain the role of the United Nations in the financial administration of the ITC, according to the ACABQ. A Swiss franc budget outline could be submitted to the General Assembly and to the relevant WTO committee, in May of the year before the United Nations financial period commences, to be approved in the Spring. A proposed programme budget would follow in Autumn. The intergovernmental bodies would then review the proposed programme of work. Administration, financial reporting, auditing and oversight would be implemented as previously instituted.
Programme Budget for the 1998-1999 Biennium
The Secretary-General's report on savings resulting from cost- effectiveness improvements from the ninth session of UNCTAD (document A/52/898 and Corr.1) contains an analysis of the UNCTAD resource situation and use in the 1996-1997 biennium and a review of how funds were "reallocated" for the programme budget of the current biennium. These funds came, in part, from restructuring the intergovernmental machinery and reforming the Secretariat.
The report also contains proposals for use of the $5.5 million in unspent resources at the end of the 1996-97 biennium, including allocating almost $1.2 million for expert meetings and preparations for the tenth session of UNCTAD, $200,000 for executive direction and management, and amounts for various subprogrammes concerned with a wide range of issues including investment, trade negotiations, customs and preparations for the third United Nations Conference on Least Developed Countries.
In a related document from ACABQ (document A/53/7/Add.2), the ACABQ notes the General Assembly's decision of 31 March to retain a balance of approximately $5.5 million for financing UNCTAD activities in the following biennium. The ACABQ cautioned that this decision to carry over funding to the next biennium could create a precedent and should be avoided. It also states that the $5.5 million is not entirely related to decisions of the ninth UNCTAD
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or to Secretariat reform. The ACABQ was advised that the funds would be recorded in special accounts and reported as notes to the 1998-1999 biennium accounts presented to the fifty-fifth session of the General Assembly.
The ACABQ notes that $2 million in "savings" are consequences of reduced conference services expenditure at the ninth UNCTAD, and should be recorded as such. It also advises that the proposed use of savings to increase attendance at expert meetings should not set a precedent for future expert meetings, and that decisions need to be taken on selection and appointment of experts so that these meetings can occur.
Scale of Assessments
The Committee also had before Chapter III, Section C of the report of the Committee on Contributions (document A/53/11). That section describes representations by Comoros and Tajikistan regarding application of Article 19 of the Charter, under which States are stripped of their voting rights when their arrears fall below a certain amount. In both cases, the Committee on Contributions agreed that failure to pay the full amount necessary to avoid the application of Article 19 was due to conditions beyond the control of the State involved. In light of this, it recommended that Tajikistan and Comoros be permitted to vote through the fifty-third session of the General Assembly.
JOSEPH CONNOR, Under-Secretary-General for Management, said the financial situation of the Organization was precarious, forcing it to resort to imprudent financial practices. There was little financial flexibility. Liquidity was drying up. Unpaid assessments came to more than $2.5 billion and were resistant to collection. Regular budget cash was now in deficit, and could grow as high as $247 million by the end of 1998, caused primarily by late and non-payment of dues. Peacekeeping cash was expected to be around $775 million at the end of the year -- the lowest amount in five years -- and a significant portion of it will be cross-borrowed to "bail out" the regular budget. The current year was one of a series with declining combined cash balances.
Cash in the peacekeeping accounts at 31 December 1998 were needed to pay ongoing peacekeeping expenditures and little -- if any -- balance would be left to pay the more than $860 million owed to Member States for troops and equipment, he said. In short, obligations exceeded cash balances. With peacekeeping decreasing, the availability of peacekeeping cash to bail out the regular budget was increasingly doubtful.
The projections were based on results during January through September 1998, and estimates for the remaining three months, he said. The prompt collection of assessments was the bedrock of United Nations financial stability, as there was no other source of funds available. The Organization's record in collecting assessments was not good. At the end of September 1998, unpaid assessments came to some $2.5 billion, compared to approximately $2.4 billion as of 30 September last year.
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He said absolute numbers did not tell the whole story. Uncollected assessments as at 30 September 1998 represented about 12 months of assessments. Excluding amounts within the past 30 days, the major contributor accounted for 67 per cent of the total owed, despite a payment of $228 million this year. Nine of the fourteen other largest contributors accounted for 14 per cent, and the remaining 158 Member States accounted for 19 per cent. Current unpaid regular budget assessments as at 30 September were usually higher than at the end of December, since the major contributor began payments only when its new budget year commenced on 1 October. This year it was unusually high -- $683 million -- due in part to non-payment of assessments issued 21 months earlier.
Unpaid peacekeeping assessments had risen steadily since 1990, he said. Total outstanding peacekeeping amounts at the end of September amounted to some $1.7 billion. The largest contributor owed some 61 per cent of the total outstanding, nine of the 14 other largest contributors owed 17 per cent and 158 of the remaining 170 Member States together owed 22 per cent.
For the first time in recent years, as at 30 September, over 100 Member States had paid their regular budget contributions in full for 1998 and all prior years, he said. This improvement was heartening, but other indicators were less favourable. By September, some 81 per cent of the 1998 assessments had been received, down from 88 per cent and 87 per cent respectively in 1997 and 1996.
There was a very erratic pattern of regular budget cash balances in 1998, he said. The present year had begun with a deficit of $122 million and would have been worse but for a budgetary underspend in 1996-1997. Uncertainty about United States payments, which meant cross-borrowing from peacekeeping, was expected for the remainder of the calender year. The projection included $50 million where national legislation was in place, but not $197 million, which would be available to the United States only after enabling legislation. Thus, the estimate of regular budget cash at the end of the year would be a $247 million deficit.
Usable peacekeeping cash at the end of September totalled $844 million, but was projected to drop to $775 million by the end of the year, he said. 1998 was projected to show total peacekeeping disbursements exceeding contributions. There had been a sharp reduction in peacekeeping activity with a 1998 assessment level of around $900 million projected. That situation affected the Organization's financial stability, since cross-borrowing had been used extensively in recent years to compensate for the chronic deficit in regular budget cash.
For most recent years, the amount of combined regular budget and peacekeeping cash had been less than the year before, he said. At year end, combined cash was projected to total $528 million, down from $728 million in 1995. By then, the Organization would have to cross-borrow 32 per cent of peacekeeping cash to cover the deficit in the regular budget cash. Yet the
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Organization was borrowing more and more from a smaller and smaller source. Cash was down precipitously and the future availability of peacekeeping cash for cross-borrowing was increasingly in doubt.
Amounts owed to Member States for troops and contingent-owned equipment should be falling but were not, he said. At the end of 1998, $864 million would be owed to troop-contributing countries. In recent months, payments totalling $108 million to troop providers had been made and an additional payment of $71 million to providers was expected, which would bring the total reimbursement figure for 1998 to $179 million. In accordance with the Secretary-General's stated goal to pay the full amount of obligations during the year in which those obligations were incurred, every effort was made to pay this year's incurred costs. Obligations for 1998 for troops were expected to total $162 million and payments amounting to $164 million would be made for troops and contingent-owned equipment.
He said that in addition to current assessment payments, the United Nations had received from Member States arrearage contributions of $15 million. The Secretary-General intended to pay an amount equal to the total arrearage contributions received. Even with that special year-end payment, and the revaluation of an equipment debt of $3 million, the Organization's debt remained high at $864 million. Therefore, the present level of troop and equipment obligations could not be paid until arrears of peacekeeping assessments were received. Only appreciation could be offered to those Member States who were patiently waiting for relief.
He also commented on the application of Article 19 of the Charter -- which provides that a Member State whose arrears equal or exceed its contributions due for the preceding two full years shall have no vote in the General Assembly unless the Assembly determines that this was due to conditions beyond its control. He emphasized that final calculations for the application could not be made until the exact figures for assessments issued or to be issued by the end of November were known.
PRAYONO ATIYANTO, (Indonesia), speaking on behalf of the "Group of 77" developing countries and China, said that the Group had always stressed the need to seriously address the financial problems of the Organization. The problem had been discussed at the 22nd annual meeting of Foreign Ministers of the Group in New York last month. The Ministers had said that the primary reason for the problem was the failure of some developed countries to pay both their regular and peacekeeping assessments in full, on time and without conditions, and had reaffirmed the legal obligation of Member States to carry the Organization's expenses in accordance with the United Nations Charter.
At the same time, the Group recognized the need to offer understanding to Member States which temporarily could not meet their obligations, he said. It regretted that, due to cash flow problems, the Secretariat had to resort to cross-borrowing from peacekeeping. The consequences for reimbursements to troop-contributing developing countries was a continuing concern. The Group
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would continue to constructively contribute to resolving the difficulties, but it believed the only viable solution was for all Member States to honour their treaty obligations and pay their assessments in full, on time and without conditions.
MARIA LOURDES RAMIRO-LOPEZ (Philippines) spoke for the Association of Southeast Asian Nations (ASEAN). The United Nations had been in financial distress for years, and there seemed to be no light at the end of the tunnel, despite the Secretary-General's efforts to reform and improve the Organization's efficiency. ASEAN was concerned that the Organization's financial situation was crippling its capacity to implement programmes and activities mandated by Member States.
The financial crisis was due to the late or non-payment by some Member States -- particulary the major contributor -- of assessed contributions, she said. The Association of South-East Asian Nations did not share the view that the scale of assessments had caused some Member States to be unable to fulfil their legal financial obligations to the United Nations. The ASEAN countries took their Charter obligations seriously, and tried to pay their assessed dues promptly. They expected others with higher capacity to pay to exert greater efforts in paying their dues.
It was regrettable that the United Nations had had to borrow from peacekeeping funds to finance regular budget activities, she said. Countries that provided troops and equipment to peacekeeping operations were not reimbursed promptly. That delay caused added burden to troop-contributing countries from the developing world and the situation should be redressed.
The practice of imposing conditionalities on the payment of assessed dues was unacceptable, and should not be allowed to continue, she said. The ASEAN nations regretted that after three years of deliberation, the High-Level Open-Ended Working Group on the Financial Situation of the United Nations was unable to recommend measures to restore the Organization's financial health and ensure Member States' compliance with their Charter obligations. Proposals that would encourage Member States to pay their dues promptly deserved further consideration.
AHMAD KAMAL (Pakistan) expressed serious concern over the Organization's deteriorating financial situation. If it continued, it could lead to the end of an era of commitment to multilateralism. Urgent action was needed to save the United Nations from being crippled.
The critical financial situation had led the Organization to adopt extraordinary practices, he said. The Secretariat had had to accept loaned personnel, leading to a perceived contravention of Articles 100 and 101 of the Charter and geographical imbalances in some areas, particularly the Department of Peacekeeping Operations (DPKO). Further, vacancy rates had been kept high, affecting implementation of mandated programmes.
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The Secretariat continued to cross-borrow from the peacekeeping budget to the regular budget, resulting in delays in the reimbursement to countries that provided troops and contingent-owned equipment, he said. Ironically, those Member States that responded to the call to maintain international peace were having to pay for the non-fulfilment of Charter obligations by other Member States -- particularly the major contributor. How long would developing countries be required to finance the Organization for those that had the capacity to pay their assessed contributions in full, on time and without conditions, but were not? he asked.
He said the Fifth Committee should consider the Organization's financial situation in all its aspects with a view to finding a solution to the problem. It was capable of taking decisions on complex issues and might succeed where the High-Level Working Group on the Organization's Financial Situation had failed. The Committee had taken a step forward by asking the Secretary- General to submit a report on incentives for those States that were current in the payment of their assessed contributions, in Assembly resolution 52/226 on procurement reform. Application of Article 19 of the Charter should be reviewed to make it more effective.
The United Nations financial situation could not be isolated from the financial crisis facing the world today, he said. The economic recession in hitherto solid and prosperous economies called for an innovative approach by the United Nations to address the alarming situation. The financial situation of the United Nations should in no way deprive the Organization of its role in shaping the new global financial architecture. The Organization must be reinvigorated by receiving the necessary resources to enable it to adopt a coherent approach to the global financial crisis, and to save it from being further affected.
ANDRE ADAM (Belarus) said that the Organization's ability to perform its work successfully was directly related to its financial situation. The financial situation, the drop in income and cross-borrowing from extra- budgetary and peacekeeping funds had a negative impact on the Organization's capacity to implement mandated programmes and to effect reform. The financial crisis threatened to become a political problem which could destroy the foundations of the Organization. That could not be allowed to happen.
The mechanisms for dealing with the financial crisis were unwieldy and inflexible, he said. In part, the problems arose because of imperfections in the scale of assessments. He noted the Secretary-General's efforts to improve and streamline the Organization. Other recommendations to address the problem had been made, notably the initiative discussed at the resumed fifty-second session, to establish a revolving credit fund in the amount of $1 billion. Doubts had been expressed about mechanisms for implementing that proposal. He noted that the design, as proposed at present, could leave the General Assembly without appropriate control, and could simply result in increased debt. Member States needed to continue working through that area of reform.
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Desired results would not be achieved by changing the implementation of Article 19 of the Charter, he said. Movement would only come if all States agreed to measures, such as working out a long-term universal scale for expenditures. The current 1998-2000 scale offered Member States a useful period to work out a new scale based on capacity to pay. However, today's problem of indebtedness must also be addressed and could only be resolved by looking at the reasons for indebtedness. Belarus' debts had arisen out of circumstances beyond its control. The General Assembly had exempted pre-1996 peacekeeping arrears from Article 19 consideration, but had not addressed the unfair debt. Belarus was doing its utmost to reduce debt, had paid over $6 million last year, and $500,000 to the regular budget this year. By the end of 1998, it would pay $2.5 million towards peacekeeping.
ERNST SUCHARIPA (Austria) spoke for the European Union and Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Iceland, Liechtenstein and Norway. The Union regretted that for the fourth consecutive year, the Organization could only sustain its regular budget activities through cross-borrowing, which was particularly detrimental to troop and equipment contributors. Even that might cease to be a cash-management option, given the decline in peacekeeping activity.
The continuing high levels of late and unpaid assessments were undermining the Organization's financial stability, he said. It was unacceptable that some Member States had not met their treaty obligations. The United States, as the largest contributor to the United Nations and the sole beneficiary of the existence of a ceiling which reduced the level of its assessments below its capacity to pay should bear in mind its corresponding responsibility for the financial health of the Organization, without which the capacity of the Organization to carry out mandated activities and conduct the reform process were put at risk.
In resolution 52/215, the Assembly had taken a number of decisions, regarding the scale of assessments, to correct situations that seemed unfair, he said. He hoped those decisions would enable countries to meet their Charter objections or propose a schedule for the payment of arrears. He stressed that the Union joined consensus on the eventual compromise proposal, because it did represent more fairness and transparency in the regular budget scale.
The Union was committed to finding solutions to the United Nations financial situation, he said. It was convinced that its proposal to introduce incentives/disincentives, by which Member States would be encouraged to better fulfil their obligations, deserved further consideration. He also invited Member States to consider tightening the application of Article 19, currently the sole disincentive envisaged by the Charter. Turning to the peacekeeping scale, he said it should be revised. The current arrangements needed to be amended to better reflect the principle of capacity to pay.
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SALEEM IQBAL SHERVANI (India) said the United Nations financial crisis was occurring at the same time that its responsibilities had increased. As long as Member States did not abide by the Charter obligation to pay in full and on time, the Organization could not have proper financial planning. Numerous meetings had been held by the Working Group, but after prolonged negotiations no results had been achieved. The United Nations was resorting to imprudent borrowing from the peacekeeping accounts to finance regular budget functions, possible only because funds were currently available in those accounts, and resulting in delayed payments to troop and equipment contributors.
As a country with a consistent record of paying its dues in full and on time, and to whom the United Nations owed around $47.3 million in arrears -- essentially related to peacekeeping operations -- India called on Member States to pay their contributions in full, on time and without conditions, he said. The apportionment of expenses -- scales of assessments -- was best discussed in a time of financial solvency. Discussions on those issues could not solve the present crisis, which emanated from a lack of political will to bear the responsibilities and obligations foreseen in the Charter.
The Organization must make reimbursements to troop contributors on a time-bound basis, with priority for troop-contributing developing countries, he said. It must work on arrangements that would lead to the clearing of the financial backlog and ensure smooth flow of funds in the future.
SHEN GUOFANG (China) said the Organization's financial crisis was caused mainly by the late or non-payment of assessments by Member States. In particular, the United States, on the excuse of its domestic legislation and in total disregard with the regulations and Charter of the United Nations, had accumulated colossal sums of arrears as a result of its intention to achieve political objectives. That violation of the Charter would never be accepted. The United States should follow financial regulations and pay its arrears on time and without conditions.
The financial crisis had affected the Organization's normal functioning, delaying certain activities and affecting programmes, he said. To achieve the aspirations of Member States, the United Nations must have a solid financial basis. Given the necessary political will by all Member States, and if all performed their financial obligations, such a basis was possible.
GENARO VICENTE PAPPALARDO (Paraguay) said his country had met its financial obligations in full in terms of contribution to the regular budget.
KAZUO WATANABE (Japan) shared concerns expressed over the Organization's financial crisis. He asked for clarification regarding Under-Secretary- General Connor's chart -- 33 -- on how long the present situation could continue. The answer, that it could continue as long as there was peacekeeping cash to borrow and as long as Member States tolerated non-payment of funds owed to them, was incomplete. It should be added that it could
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continue only so long as the largest contributor continued to pay the amount it owed from last year, otherwise the situation would get worse. He confirmed his country's continued contribution to the Organization's financing.
THOMAS DOBE-MBALANGA (Democratic Republic of the Congo) said the United Nations' financial situation was resulting in delays to programmes and reimbursement. The United Nations was called upon to build peace and promote development around the world. The Secretary-General had launched reforms designed to strengthen the Organization's role in that regard. Yet those reforms might not have a great effect if they did not have a reliable financial base.
He called on all Member States to meet their financial obligations in full and on time, and to cease to impose conditions not based on law -- conditions that contravened the pertinent parts of the Charter. The United Nations needed sufficient resources to cope with the large number of challenges facing the world, such as hunger, unemployment and poverty. His Government was striving to keep its contributions within acceptable limits, despite the tremendous economic difficulties it faced.
RICHARD SKLAR (United States) responded to Under-Secretary-General Connor's presentation and subsequent statements by Member States. The United States recognized it had an obligation to pay its dues and wished it could have them paid today. The Administration had worked hard to do so, and took no pride in its failure.
The representative of China had said the reason for non- payment was a United States domestic problem, he said. That problem was called the rule of law. There was a price to pay when one lived in a democracy under the rule of law. No one could just decide to pay and do so. The mechanisms of the system must be followed.
It was also important not to behave like "Chicken Little" and claim the sky was falling when it was not, he said. As Under-Secretary-General Connor had stated, until national legislation authorizing payment was passed into law, the United Nations could not count on receiving money. But he hoped and expected that a vote concerning a $197 million possible payment by the United States would occur next week, and that this money would be paid by year's end. If that was the case, the $247 million cash deficit would decrease to $50 million -- a better position than in previous years. That would also improve many other numbers in Mr Connor's forecasts, and while the overall situation would not be good, it would be similar to previous years. Thus, the financial situation would be stable -- not good but not deteriorating.
Some delegations had said that peacekeeping contributors were not being paid, but that was only half true, he said. It was true that the Organization was living on the forbearance of some Member States, and the United Nations and the United States were grateful, but today's peacekeeping contributors were being paid on a regular basis for today's missions. The non-payment for
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some past missions was the problem. Additionally, the regular budget was being fully funded, and there was no diminution in the carrying out of mandates. The year-end balance had not been dropping. Programmes were not being delayed or affected. Nothing was gained by shouting crisis when a crisis did not exist. Let us deal with reality, he said.
DULCE MARIA BUERGO-RODRIGUEZ (Cuba) said the Organization's financial situation was precarious. Cuba associated itself with the statement made on behalf of the "Group of 77" and China. Cuba had made significant efforts to reduce its debt, despite the difficult situation in that country. The fundamental cause of the critical situation was the failure to pay of the major contributor. Cuba hoped the messages being sent would be properly taken into account, and that a breakthrough would occur that would allow the United Nations to continue properly with its work.
Mr. Connor, Under-Secretary-General for Management, then responded to matters raised by delegations. He said that since 1995, when the major contributor had paid approximately one-half of its usual regular budget assessment, the United Nations had had a negative regular budget cash position at the end of each year. Until that 1995 underpayment was corrected by an overpayment, or until there was an expansion in the aggregate amount of assessments, the United Nations would continue to be in the current position.
He joined the representative of the United States in hoping that the $197 million would be paid. If it was paid by December 31, the "catch up" would be about half of that amount. He hoped that the forecast he had presented would add incentive to the payment of assessments on time, which was the only prospect of salvation. He hoped it would occur this year.
Statements on the Development Account
Mr. ATIYANTO (Indonesia), speaking on behalf of the "Group of 77" and China, said that the Secretary-General's proposals on the Development Account were still unclear, and even cryptic, especially where the sustainability of the account was concerned. It seemed that sustainability would be achieved through the appropriation process, not just by efficiencies. That seemed to represent a deviation from the original concept as approved by the General Assembly, and he sought clarification on this matter.
He noted that the Secretariat had dropped the concept of non-programme costs and accepted that efficiency gains would be sought throughout the Secretariat without affecting mandated programmes relating to development. Both the Secretary-General and the Advisory Committee on Administrative and Budgetary Questions (ACABQ) recognised that efficiency was achieved if costs were reduced without lowering the level of services and programmes. However, how that would happen had not been demonstrated.
The Group remained concerned about the impact on staff levels and wanted detailed information on areas to be affected and numbers of posts to be
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abolished, he said. He was also concerned that productivity gains would only be submitted to the General Assembly in a performance report -- after measures had been implemented. The Secretariat should submit reports every 6 months on efficiency measures and their effect on mandated programmes. He looked forward to ACABQ comments on the specific proposals in the Annex to the Secretary-General's report.
ERNESTO HERRERA (Mexico) said the Development Account was one of the most important elements of United Nations reform. Additional information concerning the sustainability mechanism would be welcome. Mexico agreed with the Secretary-General's proposal on carrying balances over into new bienniums.
Ms. BUERGO-RODRIGUEZ (Cuba) said her delegation was concerned about the role of the General Assembly in the process of reviewing efficiency measures - - and the related savings estimates -- prior to their being put into effect. Cuba noted the budget performance reports were proposed as the place for such a review, but those were too late. The Assembly should be informed of proposed measures in the outline of the proposed programme budget. There was need for further information on the $40 million of proposed efficiency gains. Her delegation was concerned about the impact those would have on staff. The Committee should be informed about the number of posts -- and in what departments they were located -- that were to be abolished. Additional information was needed on the impact on mandated activities and estimated savings to be achieved through efficiency measures. As the process of consultation proceeded, her delegation would return to certain points.
NIKOLAI LOZINSKI (Russian Federation) said The Account's sustainability mechanisms should be made crystal clear. The Secretary-General's programme of reforms and the General Assembly's resolution 52/12B had unambiguously stated that the Account was to be financed by savings through administrative efficiencies. Any savings from recosting or delays in implementing mandated programmes should not be shifted to the Account.
The United Nations rules and financial regulations must be strictly complied with, he said. The Secretary-General's reports on budget performance should indicate the amount of savings resulting from administrative efficiencies. When the Assembly had approved it, that amount could be transferred to the Account. How would any balance in the account affect the level of the next budget? he asked.
There was no need to establish a separate budget section for the Account, as had been done in the current budget, he said. However, the Russian Federation had no problem with having expenditures for the account channelled through the regular budget for technical reasons.
ANANS NAKECHBANDI (Syria) asked about the Secretariat's understanding of those costs which it had considered non-programmatic, such as conference and information services. The Secretary-General's report mentioned using new technology, and the Under-Secretary-General for Management had made reference
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to applying remote translation at conferences. While his delegation welcomed the use of modern technology in conference services, it was concerned about the ill effect on the level of performance of translation and interpretation, and that its use might result in abolishment of those posts.
The achievement of savings through efficiency measures was not an end of itself, he said. The first priority was the implementation of mandated programmes in accordance with the Assembly's resolutions and the medium-term plan. As for the effect of efficiency and savings arrangements on staff, the Secretary-General's report was not clear. It indicated that the transfer of resources to the Account would have an affect on the staffing of the departments achieving the savings. The Secretariat should submit comprehensive information on that question, within the framework of the budget performance report. He stressed the role of the General Assembly in the decision-making process.
CHEN YUE (China) said savings through efficiency measures would not be unlimited. A comprehensive study of the sustainability of the Account was needed to ensure that it truly benefitted United Nations development activities. Efficiency measures should be carried out throughout the Secretariat and not limited to certain departments. Nor should a fixed figure for savings be established, and those savings should not be gained at the sacrifice of mandated activities.
NESTER ODAGA-JALOMAYO (Uganda) asked for clarification on certain points. The report indicated that regional commissions were included in preliminary conversations to identify savings. However, regarding the budget section on economic and social development in Africa, (section 16) the Assembly had asked the Secretary-General to redeploy to the subregional centres any savings realized during the 1998-1999 biennium as a result of reform measures and efficiency gains from within the Economic Commission for Africa (ECA). Would the ECA be exempted? he asked.
He also asked about use of the language "whenever possible" regarding the Assembly information on a timely basis. Regarding criteria for use of resources, the Secretary-General mentioned that projects should have a strong South-South cooperation content. What would be the role of the Chairman of the office of the South-South Centre? he asked.
Mr. CONNOR said the concurrence of Member States was absolutely necessary for any change in the Development Account. Member States would look at the Account first when the programme budget was submitted, which identified potential efficiency gains and how they were identified. As a second step, Member States had to be satisfied that the first performance report showed what efficiency gains had been identified. They decided whether to redeploy those to the Account, or redirect them. They also controlled how far the Development Account should "grow". "It is up to Member States to determine how much, how quickly and when", he said.
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The concept of non-programme costs versus programme costs had been an attempt to characterize certain activities, since the Secretary-General's original proposal had been to focus on reducing administrative and related costs, he said. However, that concept was no longer used and now all programme sections would be looked at for potential redeployment.
The Secretariat was focusing on dollars in identifying efficiencies, and focusing on people for redeployment to serve the output of the Organization, he said. The Secretary-General had repeatedly stated that redeployment would not result in involuntary separations. The first performance report was not an ex-post-facto review of actions taken. No redeployment could be undertaken without Member States' review and approval.
Funding was to be the result of improvements, he said. The cumulative total would become the Account's content. The Fifth Committee would have the opportunity to study the Account thoroughly through the programme document. The budget outline was a preliminary indication of the Secretary-General's resource requirements compiled at a high level of aggregation.
He did not envision any effect of redeployment on mandated programmes, he said. In many cases, efficiencies would result in better output in that they would enhance focus. He agreed with the representative of the Russian Federation that the Account's sustainability must be crystal clear.
The Account was subject to all the United Nations regulations, including audit, he said. It would subjected to the same scrutiny as other parts of the programme budget.
"You will never hear from me again the words non-programme costs", he said. In the original paper, non-programme costs had become an exclusive flow of funding for the Development Account -- but that idea was gone. All areas could be a source of funding for the Account. He said remote translation had taken place at many conferences, with a high level of satisfaction from Member States. There would always be some need for hard copy, but electronic information was extremely useful.
Efficiencies went in waves, often conforming to changes in technology, he said. He would respond in writing to the representative of Uganda's question on the regional commissions. The phrase "whenever possible" was not meant to raise questions, but rather, was a cautionary phrase. The Secretariat would welcome ideas on the request of the involvement of the Chairman's office of the South-South Activities as well as any other ideas from Member States.
TAMMAM SULAIMAN (Syria) said neither translation nor interpretation should be done remotely, since that could reduce the standard of that translation, and affect the United Nations multilingualism. While modern technology should be introduced, his delegation was not enthusiastic about
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such technology that affected the Organization's multilingualism. Member States should be kept apprised.
Mr. CONNOR said that if multilingualism could be improved through technological advancements, the Secretariat would want the chance to do it.
Statements on the Scale of Assessments
FRANK SMYTHE (Ireland), who had conducted informal consultations on the matter, introduced a draft decision by which the Assembly would endorse the conclusions of the Committee on Contributions recommending that the Comoros and Tajikistan should be able to avoid application of Article 19 because their failure to pay had been due to conditions beyond their control. Also, any extension of that should be subject to review by the Committee on Contributions.
The Committee then approved the draft without a vote, which is to be document A/C.5/53/L.4.
Statements on Treatment of Savings in the United Nations Conference on Trade and Development
JEAN-PIERRE HALBWACHS, United Nations Controller, introduced the Secretary-General's report on savings in UNCTAD. The Assembly had decided to retain $5.5 million with a view to financing the activities of UNCTAD. The Secretary-General had prepared proposals, of which the Trade and Development Board had taken note. All the proposed activities were new, self-contained, and limited to the $5.5 million.
C.S.M. MSELLE, Chairman of ACABQ, introduced the ACABQ report on UNCTAD savings.
THOMAS SCHLESINGER, (Austria), speaking on behalf of the European Union and associated States, said that the purpose for which the General Assembly approved the reallocation of savings was to strengthen the capabilities of the Conference in priority areas. Its main goal was to reinforce existing elements of work programmes. The European Union exceptionally approved that financing -- on the understanding that it would only occur once within the 1998-1999 biennium, and that it would not set a precedent. He asked the Secretary-General to report on the achievement of those goals.
Statements on Other Matters
Michael McCann, Chief of the United Nations Security and Safety Service, addressed several matters raised by Member States at yesterday's meeting. He said it was important to put security measures during the general debate of the General Assembly in context. Threats to dignitaries, Secretariat staff and the complex itself were at record highs, and were real, direct and
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proximate. During the general debate, a number of incidents had occurred and there had been nearly twenty demonstrations.
The United Nations could only address those threats with support of the host country, therefore host country security people had been in evidence during that period, he said. The measures taken on First Avenue had been outside the Secretariat's control, but the position of the Security and Safety Service was that all heads of delegations should be able to use the Delegates Entrance and that pedestrian and vehicular freezes should be reduced. He suggested that the Committee on Host Country relations might be the appropriate place to raise these matters.
The towing-away of diplomatic vehicles had been raised with the United States Mission, he said. That Mission had advised that such towing should not have happened, and had expressed regret.
He responded to a number of specific concerns about access to the low- rise elevators to the second floor, access to the Delegates Entrance, the use of draping, access to the Delegates Lounge, and problems with the cash machines on the first floor. He advised that greater security and mobility could be provided during the general debate, but only if resources were increased. He added that accusations made that he was not independent were groundless and unacceptable.
NAZARETH INCERA (Costa Rica) said that her delegation had not called for an explanation from the Security and Safety Service, but had rather made a statement on problems during the General Assembly's general debate. She was grateful to Mr. McCann for explaining the security situation. Unfortunately, however, security problems continued to worsen. Cash machines had not worked for a week because cash deliveries had not been permitted to enter. Given other security measures, surely the elevators had been secure. She asked whether the Security Service had requested more resources.
SEYED MIRMOHAMMAD (Iran), said he found Mr McCann's explanations convincing, given resource considerations and the sensitivity and importance of the task. He congratulated the Security Service on its efforts.
Ms. BUERGO-RODRIGUEZ (Cuba) said she understood Mr. McCann's explanations, and accepted the need for some matters to be considered within the Committee on the Host Country.
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