TOTAL ANNUAL COST OF UNITED NATIONS PROGRAMMES ABOUT $4.6 BILLION, WHILE $778 BILLION SPENT EACH YEAR ON ARMS, FIFTH COMMITTEE TOLD

Press Release
GA/AB/3252

TOTAL ANNUAL COST OF UNITED NATIONS PROGRAMMES ABOUT $4.6 BILLION, WHILE $778 BILLION SPENT EACH YEAR ON ARMS, FIFTH COMMITTEE TOLD

The total cost of all United Nations programmes and funds came to about $4.6 billion per year -- $0.88 per person on the planet -- while $778 billion was spent each year on arms, which was roughly $134 per person, the Fifth Committee (Administrative and Budgetary) was told this morning as it continued discussing the scale of assessments used to split the bill for the United Nations among its Member States.

The largest contributor to the United Nations expenses took with its left hand what it gave with its right, Libya's representative continued. There were more staff members from that country in the Secretariat than from any other Member State. Meanwhile, of the $468 million spent on procurement in 1996, United States' companies got 49 per cent of the business.

There should be no representation without taxation, Ghana's representative said. To discourage the ingenious practice of paying just enough to prevent loss of voting rights under Article 19 of the Charter, the Committee on Contributions should consider additional sanctions against those in arrears. Those could include: indexing arrears to take account of the loss of purchasing power, restricting access to recruitment and procurement, and barring States in arrears from presenting candidates for appointment to United Nations bodies.

The representative of Malaysia said the proposal to provide further incentives to pay and disincentives for failure to pay warranted serious consideration. Developing States that paid their contributions should be rewarded through incentives, including in United Nations procurement and contracts.

Speaking for the members of the Southern Common Market (MERCOSUR) and associated States, Brazil's representative said the Fifth Committee should not take hasty decisions on the scale of assessments, which had taken years to evolve. In apportioning the Organization's regular expenses, equity must be preserved.

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On the matter of Article 19 sanctions, the representative of Australia, speaking also for Canada and New Zealand, said the Fifth Committee had taken a piecemeal approach in recent weeks. Members must avoid taking decisions that would "extract the teeth" of that Article. If not, the Committee might find itself undermining Article 19, and the Organization would be headed towards financial peril.

Statements on the scale of assessments were also made by the representatives of Singapore, Cuba, Iran, Bahrain, Ukraine and Costa Rica.

The Chairman of the Committee on Contributions, David Etuket, made a concluding statement and responded to questions on the agenda item.

Also this morning, Fifth Committee members agreed not to take up the reports on the Development Account until the Second Committee (Economic and Financial) continued its related discussion, provided that a deadline for that discussion was set. The representatives of Indonesia, on behalf of the "Group of 77" developing countries and China, and Austria, for the European Union, spoke on that matter.

The Committee also began its review of implementation of General Assembly resolution 48/218B by which the Office of Internal Oversight Services was established. The representative of Austria, speaking for the European Union and associated States, made a statement.

The Fifth Committee will meet again at 3 p.m. today, to discuss the review of the United Nations efficiency and the Joint Inspection Unit (JIU).

Fifth Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to discuss the United Nations scale of assessments; the programme budget for 1998-1999 -- specifically, the development account; and review of implementation of General Assembly resolution 48/218B, by which the Office of Internal Oversight Services was created.

Scale of Assessments

The Committee had before it, the report of the Committee on Contributions, which advises the Assembly on matters related to: apportioning United Nations expenses among its Member States and Article 19 of the Charter, which strips States of their voting rights when their arrears equal or exceed contributions due for the past two years.

(For background on the Contributions Committee's report, see Press Release GA/AB/3250 of 26 October.)

The Fifth Committee also had before it, three requests for exemption to Article 19 sanctions from Bosnia and Herzegovina, Republic of the Congo and Iraq.

(For more information on those requests, see Press Releases GA/AB/3244 of 14 October; GA/AB/3246 of 16 October; and GA/AB/3249 of 23 October.)

Programme Budget for 1998-1999

Regarding the programme budget for 1998-1999, the Committee had before it, reports from the Secretary-General and the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the Development Account, funded from savings accrued from administrative and management efficiencies.

The Secretary-General's report on the use of the development dividend (document A/53/374) presents eight proposals for using the $13,065,000 that the Assembly allocated to section 34 ("Development Account") of the programme budget for 1998-1999 biennium. It also explains the key concept on which these proposals are based: "networking for development".

Networking for development is premised on the idea that information flows, and consequently information technology, are a major engine of globalization, according to the report. Developing countries are still at the margin of the global economy, and their data requirements for policy management are extremely high. Providing information technology for a better exchange of knowledge, experience and ideas presents a low-cost solution for the integration of developing countries into the world economy.

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The eight proposals were formulated by the individual entities of the Executive Committee on Economic and Social Affairs, a committee established by the Secretary-General to maximize coordination of policy development, management and decision-making in economic and social affairs, the report explains. These same would be responsible for project implementation.

The proposals aim to promote: electronic commerce; capacity-building in economic and social policy analysis in Africa; extension of access to the Mercure satellite telecommunication system; computer and telecommunication systems for drug control; capacity-building for implementing the Habitat Agenda in least developed countries; an on-line development centre; a research network for global policy analysis; and activities for the implementation of Agenda 21, the Copenhagen Declaration and Programme of Action from the World Summit for Social Development and the Beijing Declaration and Platform of Action from the Fourth World Conference on Women.

An annex provides estimates of the resource requirements of each proposal:

Promotion of electronic commerce $1,980,000 (United Nations Conference on Trade and Development)

Capacity-building in Africa 2,500,000 (Economic Commission for Africa)

Extending access to Mercure satellite system 2,215,000 (United Nations Environment Programme)

Computer/telecommunication system for drug control 1,100,000 (United Nations International Drug Control Programme)

Capacity-building for implementing the Habitat Agenda 945,000 (United Nations Centre for Human Settlements)

On-line development centre 510,000 (Department of Economic and Social Affairs)

Research network for global policy analysis 725,000 (Department of Economic and Social Affairs)

Implementing conference outcomes 2,330,000 (Department of Economic and Social Affairs)

In its related report (document A/53/7/Add.4), the ACABQ notes that the Secretary-General's proposals draw upon and contribute to the priorities and subprogrammes established in the medium-term plan for the period 1998-2001. Proposed projects are to complement and not substitute for existing

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activities, and future submissions should contain information to confirm that projects are regional and/or interregional in nature, and that they are not substitutes but complementary. Also, the ACABQ feels that resources budgeted under section 34 should fund new projects rather than existing mandated activities. Once submitted by the Secretary-General and approved by the General Assembly, these new projects would become mandated activities.

The Assembly should consider whether the term "complement" applies to activities funded from the regular budget only or whether it also covers extrabudgetary activities, the ACABQ states. Using the Development Account to fund extrabudgetary activities would mean transferring resources from the regular budget to extrabudgetary activities. For example, the Secretary-General's proposal to fund the Mercure satellite stations project -- an extrabudgetary activity -- from the Development Account, would result in regular budget resources funding extrabudgetary activities. Projects outlined in the Secretary-General's report that deviate from the above principles should not be considered precedent.

While the Assembly had appropriated some $13.1 million for the Development Account by resolution 52/221 A, the total requirements for the projects come to a little over $12.3 million the ACABQ notes. Since the total amount would probably not be programmed and used during the biennium, the proposed programme budget for 2000-2001 should include proposals for the full use of resources under the account, including any remaining balance.

While welcoming the Secretariat's attempt to provide indicators in the project proposals, these should be refined, and include a description of the situation before projects are implemented so results can be better measured, the report states.

The ACABQ was told that the proposed projects' resource requirements did not involve staff costs, according to the report. The question of how to fund ongoing maintenance costs for projects had not been addressed. Future reporting should contain fully costed project proposals, the ACABQ says. Annexed to the report is a breakdown of the costs of each project.

Implementation of Resolution 48/218B

The Office of Internal Oversight Services was established by Assembly resolution 48/218B (1994) to assist the Secretary-General in fulfilling his internal oversight responsibilities in respect of the resources and staff of the Organization by monitoring; internal audit; inspection and evaluation; and investigation of reports of violations of United Nations regulations, rules and pertinent administrative issuances.

By the same resolution, the Assembly indicated that the Oversight Office should submit to the Secretary-General for transmittal to the Assembly,

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together with any comments he might deem appropriate, reports providing insight into the effective utilization and management of resources and the protection of assets as well as an analytical summary of its activities for the year. The Board of Auditors and the Joint Inspection Unit (JIU) should be provided with copies of all reports produced by the Office, as well as the Secretary-General's related comments, and should provide the Assembly with their comments as appropriate.

The Committee had before it the report of the Oversight Office (document A/53/428) on its activities from 1 July 1997 to 30 June 1998. In a note transmitting the report, the Secretary-General says that the Oversight Office has matured since its inception in 1994, and that its reports continue to be a valuable source of reference and guidance in the ongoing process of United Nations reform.

In the report, the Under-Secretary-General for Oversight Services writes that in the period under review, almost three quarters of the Oversight Office's recommendations to programme managers were directed at improving management control and operational efficiency or effectiveness. The Office had largely focused on the United Nations substantive activities: peacekeeping missions and humanitarian affairs had been identified as priorities along with procurement and new United Nations bodies. Now, it was gradually shifting its attention to some of the more systemic deficiencies of the United Nations and the area of human resources management.

Implementation of the Oversight Office's recommendations had steadily increased since its inception, the report states. The implementation rate was one of the most meaningful indicators of the Office's success, and those figures were generated through a system of compliance monitoring. Until June 1998, a gratis personnel had handled the system; the Oversight Office would now be asking for an additional regular budget post for that work. Additional posts would also be requested for the Audit and Management Consulting Division, to achieve an audit cycle of three to four years.

Over the years, the Oversight Office had increased dialogue with its clients, the report states. Also, coordination between it, the Board of Auditors and the JIU had intensified. While there might still be overlap, "oversight indigestion" was largely a matter more of perception than reality. The number of reports published by the Office had increased from 12 in 1995 to an anticipated 20 in 1998, according to the report. More than 60 per cent of reports written today were mandated, an increase from 50 per cent in 1995.

The Oversight Office's emphasis on implementation of its auditing, inspection, evaluation and investigation recommendations had caused changes within the United Nations management culture. The sense of accountability and responsibility thus instilled could be expected to reduce further the

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occurrence of abuse and to enhance the efficiency and effectiveness of management.

In terms of cost savings and recoveries resulting from the Office's actions, some $21.2 million had been identified and recommended, the report states. In peacekeeping, it had identified administrative weaknesses and concentrated on mission subsistence allowance payments and problems connected with the liquidation of missions. The Office had also looked at insurance, rental and space management, and aviation services.

On human resources management, the Oversight Office had identified the average time required for recruitment: 460.5 days. Classification of a post averaged about 38 days; preparation of the vacancy announcement took some 45 days; circulation took about 30 days; screening of candidates' curricula vitae took about 19 days. Review by the substantive department took some 121 days; presentation to the appointment body took almost 87 days; review by that appointment body took about 63 days; review and approval of that body's recommendation took about 21 days; and the time from approval to entry on duty averaged 36 days.

Statements on Scale of Assessments

HENRIQUE VALLE (Brazil) spoke for the Southern Common Market (MERCOSUR) countries, as well as Bolivia and Chile. The Committee on Contributions and the Fifth Committee should not take hasty decisions, he said. The United Nations scale of assessments had taken years to evolve. It was important to preserve equity in apportioning the United Nations regular expenses. After having carried out radical changes in the economy over the years, MERCOSUR countries were strongly affected by market changes.

The scale of assessments for peacekeeping operations was a separate issue and was not under consideration, he said. That scale should be institutionalized and maintained on the basis of current criteria. In considering the regular budget scale's methodology, certain points should be taken into account. The scale resulted from application of all the elements of the methodology.

He said the MERCOSUR countries supported the use of gross national product (GNP) as a point of departure, but this should also be adjusted by taking into account other elements. The statistical base period should be long enough to ensure stability and predictability, particularly in times of uncertainty. Extreme fluctuations should be reduced. Only long-term comparisons would make it possible to include all the variables of each country's economy, and better represent its capacity to pay. On exchange rates, MERCOSUR agreed with the suggestions of the Committee on Contributions, since fluctuations and distortions could cause great mistakes in the scale.

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Some countries' assessments had increased far beyond the real increase of their economies.

Another fundamental element in measuring capacity to pay was the debt burden adjustment -- both in principle and payment of interest, he said. The low per capita income adjustment was another essential element. Special consideration must be given to developing countries which, simply because they had gone beyond the threshold, were overburdened in their assessments beyond their capacity to pay. That situation contradicted fiscal logic and should be corrected by the current system with a slight improvement: countries below the threshold should be given discounts; countries that had recently gone above it should be protected by a certain grace period. The ceiling was a poor reflection of States' capacity to pay and a further reduction would worsen existing distortions.

Turning then to Article 19, he noted dramatic increase in the number of countries requesting exemption in the past several years. The Committee on Contributions should advise the Assembly on measures to be taken on that issue. Reaffirming the role of the Committee on Contributions, he said it was important that the Fifth Committee continue to benefit from that body's advice.

PENNY WENSLEY (Australia), speaking also on behalf of Canada and New Zealand, said that feedback on the Committee on Contributions report was essential to maximise the value of that body's work. At issue, in discussions of procedures for exemptions to Article 19 sanctions referred to in the report and currently a focus of this Committee, was the effectiveness and viability of Article 19.

The United Nations had carried on over the past four years despite a parlous financial situation, she said. Canada, Australia and New Zealand had proposed incentives and disincentives on payment, but agreement had not been reached on those so Article 19 remained the only encouragement for early payment. The single purpose of that article was to encourage countries to pay. The Committee on Contributions needed to refine the procedures, but that could only happen if the Fifth Committee provided the necessary guidance.

She said the Fifth Committee had taken a piecemeal approach in recent weeks, even granting waivers without advice from the expert body. That was regrettable, and members must avoid taking decisions that would extract the teeth of Article 19. Otherwise, the Fifth Committee might find itself heading down the path of undermining Article 19, and the Organization would be headed towards financial peril.

The Committee on Contributions must undertake proper technical analysis of any requests, and the Fifth Committee should avoid setting back that fair, consistent and technical treatment, she said. After dealing with the

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immediate requests, she proposed that the Fifth Committee encourage the Committee on Contributions to continue considering the matter. A key issue was the timing of the calculation, and concrete proposals on that would be welcome. Given the financial problems of the United Nations, Article 19 was not sufficient. The Committee on Contributions was mandated to report on action to be taken when member's default, and it should do so.

On the methodology of the scale, she said that there had been improvements made last year, but the scale still did not fully reflect current realities and certain elements should be modified. The scale should be based on current circumstances and so a short base period should be used. Annual recalculation was also important. The methodology would remain unchanged for three years, but the data would be updated. That was one tangible way the scale could reflect major changes.

She said she hoped the Contributions Committee would reaffirm that the debt flow measure was the most technically sound available. The low per capita income allowance also deserved attention. The Contributions Committee should explore options to reduce benefits some elements provided to a small number of large developing States. The concept of a ceiling benefited the largest, wealthiest contributor at the expense of others.

HASMY AGAM (Malaysia) said Malaysia attached high importance to the item. He reaffirmed that expenses should be borne according to the apportionment by the General Assembly, and that the principle of capacity to pay should be the basis of Member States share. The financial situation of the United Nations, and its impact on the implementation of mandates, remained a concern. Malaysia had consistently fulfilled its obligations, despite the current financial crisis affecting the country and the some $21 million currently owed Malaysia for peacekeeping troops and equipment.

The proposal to provide further incentives to pay and disincentives for failure to pay warranted serious consideration, he said. Developing States that paid should be rewarded through incentives such as in United Nations procurement and contracts. Malaysia also supported tightening the application of Article 19, and noted the observation that such tightening was possible and would have financial benefits. However, any tightening should not result in an increase in developing countries losing their voting rights, as this would be detrimental to the Organization's work.

Article 19 alone would not solve the financial problems, he said, as non-payment by large contributors was a far bigger problem than non-payment by small contributors. Means should be explored that would allow timely and fair responses for exemptions to Article 19. All requests should be given fair and equal treatment, and it was crucial for the General Assembly to come up with clear and fair guidelines. The peacekeeping assessment should be considered under a separate item.

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IBRAHIM ELMONTASER (Libya) said the annual recalculation of assessments would lead to technical distortions in the scale, whose effects could unfairly impact the assessments of certain Member States. Reintroduction of the ceiling on a per capita basis would be contrary to the principle of capacity to pay and would result in the assessment of 13.062 per cent of the total scale by States with low and medium per capita shares of gross national product, which was unfair.

There were clear disparities in the scale, which were inconsistent with the principle of capacity to pay, he said. The United Nations regular budget, which covered operations of the Secretariat in New York, Geneva, Vienna, Nairobi and the five regional commissions, came to about $1.3 billion annually. If the budgets of the various funds and programmes, including the United Nations Children's Fund (UNICEF) and the United Nations Development Programme (UNDP), were totalled, the amount would be around $4.6 billion annually. The total budgets of the United Nations system, including the World Bank, the International Monetary Fund (IMF) and the specialized agencies, came to some $18.2 billion. Yet, the budgets of those agencies were calculated independently. In addition, the peacekeeping budget came to about $3 billion annually.

The United States paid 25 per cent of the regular budget, Japan almost 18 per cent and Germany about 9.6 per cent, he said. The share of the largest contributor seemed high, but it took with its left hand what it gave with its right. There were more staff members from that country in the Secretariat, UNICEF, UNDP and the International Postal Union than from any other Member State. Of the $468 million spent on procurement in 1996, United States companies accounted for 49 per cent of the business. Diplomatic and consular presence in New York resulted in the spending of $3.2 billion annually in the city. That city's Mayor, Rudolph Guiliani, had said that the United Nations created 30,000 jobs in New York, worth $1.2 billion per year.

The share of the largest contributor for the regular budget came to only $1.11 per citizen, compared to $4.26 for each citizen in a small country like San Marino, he continued. The total of all United Nations programmes and funds, some $4.6 billion per year, came to $0.88 per person on the planet, while annually, $778 billion was spent on armaments -- amounting to $134 per person on the planet.

The United Nations had been living in a state of austerity, he said. Its regular budget had been frozen for two years and the level of staff had been cut by 25 per cent since 1984. The ceiling should be repealed, and the scale of assessments should be based only on Member States' capacity to pay.

Some delegations were calling on the Committee on Contributions to look into the peacekeeping scale of assessments, and prepare a new one, he said. That was unacceptable. The matter did not fall within that body's competence.

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He underlined the responsibility of permanent members of the Security Council for shouldering additional burdens commensurate with the privilege they enjoyed as permanent members. When privileges were rescinded, the additional burdens would also be.

Turning then to the application of Article 19, he said his country sympathized with all countries which experienced economic difficulties, irrespective of the cause. His delegation was ready to consider any request for exemption. He then addressed some questions to the Committee on Contributions. In application of Article 19, did the calculation of arrears include the combined total under the regular, peacekeeping and international criminal tribunal budgets? he asked. What was the accounting base for determining arrears in peacekeeping contributions for a period equal to two years or more?

LAURENCE BAY (Singapore) said that since this was not a "scale year", the Committee could avoid getting bogged down in technical details and instead focus on the scale's parameters. Everyone wanted a fair and equitable scale. It should apportion the Organization's costs according to their capacity to pay. There was nearly universal agreement on that. However, when it came to measuring that capacity, consensus was difficult. The scale was a "zero-sum game". Every proposed change affected the interests of Member States. Vested financial interests were often masked in principles of equity or progressivity. The scale aimed to reflect inequalities by assessing Member States on the basis of their gross national product averaged over a few years while extending to developing countries a discount for low per capita income and external debt.

While the majority of States opposed the United States proposal to lower the ceiling rate, they had agreed to consider it again to show flexibility, he said. However, the United States had failed to include funding for United Nations arrears in its recent budget agreement. His delegation did not support Canada's proposal to introduce positive progressivity in the distribution of points above the low per capita income threshold. In attempting to solve a small problem that affected a handful of countries near the threshold, the proposal introduced greater distortions to the scale methodology. He was pleased to note the Committee on Contributions had unanimously decided that the proposal was not acceptable.

As long as no delegation sought to attempt to unravel the carefully balanced package of the current scale, Singapore did not foresee any major difficulty for consensus being reached on the item, he said. Regarding the proposal to revise the peacekeeping scale under the current agenda item, he said that the "Group of 77" developing countries and China, and the Non-Aligned Movement, supported the existing scale, and felt that developing countries should be classified in a category no higher than Group C for that scale. That was based on the fact that those countries faced economic and

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structural difficulties not experienced by the developing world, and so should be assessed differently from developed countries for the maintenance of international peace and security.

[The current arrangements for apportioning the costs of United Nations peacekeeping activities involve the placement of Member States in four groups. Peacekeeping costs are assessed in such a manner that Member States in Group D pay 10 per cent of the assessment rates established for the regular budget; Member States in Group C pay 20 per cent; Member States in Group B pay 100 per cent; and Member States in Group A pay the amounts not otherwise apportioned.] DULCE BUERGO-RODRIGUEZ (Cuba) said that regarding the methodology for the scale of assessments, capacity to pay should be the fundamental principle. Cuba reaffirmed the need to keep the low per capita income adjustment and the debt adjustment. The established criteria should be retained. A ceiling would represent a serious distortion of the capacity to pay, and therefore should not be applied. Serious thought was required on the procedures for requests for exemptions from Article 19, and she expressed deep disappointment at the lack of consistency on the part of some delegations on this question. Selective treatment was unacceptable.

She reaffirmed the Committee on Contributions advisory role, but said that the Fifth Committee should grant exemptions for Bosnia and Iraq for the same period for which it had granted them to Guinea Bissau and Georgia. It should also consider, in informal consultations, the best means for the General Assembly to deal with those requests. The majority of speakers had recognised that the critical financial situation of the United Nations was unrelated to the scale of assessments. It was caused by non-payment by the main beneficiary of the existence of the United Nations, which was also the largest contributor.

Cuba reaffirmed the legal obligation of all States to pay. It had willingly complied with obligations to the lofty objectives of the Organization. Additional proof of Cuba's commitment were its enormous efforts to make payments to the peacekeeping and regular budgets, which had allowed it to reduce its debt despite its difficult economic situation caused by circumstances everyone was aware of. The peacekeeping scale was unrelated to the current item under discussion, she added.

SEYED MIRMOHAMMAD (Iran) noted the Committee on Contributions intended to make consolidated recommendations on the scale to the fifty-fourth session of the General Assembly. A system using only income measure did not really reflect capacity to pay. Other elements, such as low per capita income and debt adjustments should be taken into account, and the parameters of the current formula met the needs of countries with low per capita income. A reduction to a three year base period would have the advantage of using the most recent, and therefore the most realistic, estimate of capacity to pay. He shared the reservations of the Committee on Contributions on purchasing

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power parity rates. Regarding a ceiling, he endorsed the view that it was contrary to the principle of capacity to pay.

The Agenda item before the Committee was not related to the peacekeeping scale, he said. On Article 19, he noted that changes to the timing of calculations could have procedural consequences and those should be taken into account. Due attention should also be paid to the discrepancy between the financial periods of the United Nations and those of some Member States.

ABDULLAH ABDULLATIF ABDULLAH (Bahrain) noted that some items were to be further studied by the Committee on Contributions. He hoped it would adopt recommendations to submit to the Assembly's fifty-fourth session. It was fortunate that this year the Committee was not considering the scale and would take up the question of resolving the question of States going beyond the threshold. Bahrain felt that the content of paragraph 63 of the report should be reviewed. Further, his delegation supported the comment of the Group of 77 and China that the current agenda item related only to the regular scale budget.

LUIS RAUL ESTEVEZ-LOPEZ (Guatemala) said the report of the Committee on Contributions was a good point of departure for elaborating the methodology for preparing the 2001-2003 scale. That negotiation process would take place in 2000, and the analysis of the relevant elements must be carried out prudently and with time for adequate review. Given the current complexities and difficulties of the international financial situation, the methodology should remain basically the same, particularly its predicability and stability.

Guatemala reaffirmed the importance of the principle of capacity to pay, he said. It should be elaborated by a transparent process in which information on the economic situation of Member States was available. Retention of the reductions allowed for external debt and for low per capita income should remain part of calculations of capacity to pay, and the incidence of interest rates used to measure various economies was important. The current scale was not a revolution, but the result of 53 years of evolution. Guatemala therefore favoured gradualism, because changes also generated distortions. Only the regular budget scale should be considered, not the peacekeeping scale, which was affected by other factors.

The elaboration of the scale amounted to an International taxation system for many intergovernmental organizations, he said. Therefore, justice and equity were important, particularly when considering the situation of vulnerable developing countries. Statistical data and mathematics were not always adequate reflections of social and economic problems, yet those influenced conditions of life in a country and hence the measurement of capacity to pay. The Committee should evaluate as a whole statistical data and technical reports, together with other factors that came into play.

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VASYL PARFENOV (Ukraine) said the formulation of an effective apportionment system was among the Committee's most important tasks. In formulating the current scale of assessments, the system had been improved. The present scale reflected to a greater extent, States' capacity to pay. At the same time, a number of problems remained. On low per capita income adjustment formula, many countries had different views. During resumed negotiations, his delegation would be ready to support the further reduction of the low per capita incomes adjustment gradient. Further corrections were required regarding the debt-burden adjustment. The proposals to conduct annual recalculation deserved due consideration. At its next session, the Contributions Committee should give special attention to the issue and take a new look at the application of exchange rates in recalculating GNP into dollars.

Turning then to Article 19, he said the tightening of its application transcended financial matters, and was also in the political realm. Tightening application would mean an increase in the number of countries deprived of voting rights, which would alter the present balance of power in the process of adopting resolutions and decisions by vote. That would not correspond to the interests of the Organization. The question of amending the current rules for application of Article 19 should be considered both by the Committee on Contributions and the Special Committee on the United Nations Charter.

Regarding the more frequent application of Article 19, there were some technical grounds to that suggestion, he said. At the same time, the "net/net" formula in calculating the amounts of arrears and assessed contributions was a departure from the current rules for assessment. By the present system, States were assessed in "gross" form and were subsequently credited through staff assessments and the return of unencumbered balances. It was unclear why the legally established system should be departed from to tighten application of Article 19.

In the process of adopting decisions on non-application of Article 19, Member States should take into account the political, economic and financial situation, as well as the correspondence between rates of assessment with countries' capacity to pay, he said. Despite a complicated economic, financial situation, his Government had already contributed $13 million to the United Nations and intended to make an additional payment. Ukraine had become one of the largest debtors to the United Nations due to circumstances beyond its control. The largest part of the debt had accumulated as the result of establishing for Ukraine an overestimated assessment rate which did not reflect its real capacity to pay. His delegation would continue to insist on the need for adopting a special decision concerning the solution of its debt problem, in particular by transferring a significant part of it to the special account.

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JACOB B. WILMOT (Ghana) said his delegation had consistently maintained that the length of the base period should reflect changes in Member States economic development and ensure stability in the scale of assessments. It had supported the six-year period as a compromise between different delegations' views. The Committee on Contributions should bear those facts in mind when it discussed the possibility of further reducing the base period in the context of the scale for the period from 2001 to 2003.

On the issue of debt burden adjustment, he said that the socio-economic development of many developing countries had been adversely affected by the heavy debt burden which affected capacity to pay. Therefore, the use of debt burden adjustment must be an element in determining States' capacity to pay. Low per capita income adjustment met the needs of developing countries with low per capita income and reflected Member States' capacity to pay. At the same time, he noted criticism by some members of the Contributions Committee regarding the correct level of the gradient of that adjustment and the problem of discontinuity experienced by countries moving up through the low per capita income threshold between scale periods. The decision on the issue should not work to the detriment of developing countries.

On the matter of Article 19, he said his delegation accepted the need for sympathetic consideration of requests from Member States that were facing serious economic problems because of natural calamities, wars and other negative factors. The Committee on Contributions should deliberate on requests for exemption in a timely manner and make available its technical advice to the General Assembly. States seeking exemption must provide adequate information to assist the Contributions Committee in considering application for exemption.

While action on Article 19 would not solve the United Nations financial problems, changes in the process of applying it might have a positive impact on payments, and thus on the Organization's financial situation, he said. Therefore, the Committee on Contribution should further consider the issue at its next session.

He said the United Nations was in dire need of resources to fully implement its mandated programmes and activities, but it continued to face cash flow problems created by the wilful and unjustifiable refusal of some Member States to honour their financial obligations. The ingenious practice of some of paying just enough to prevent loss of voting rights must be discouraged.

The Committee on Contributions should consider additional sanctions against Member States in arrears, and make appropriate recommendations to the General Assembly as soon as possible, he said. Such sanctions could include indexation of arrears to take account of the loss of purchasing power of the amounts in question, restricting access for Member States in arrears to

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recruitment and procurement opportunities, and barring them from contesting elections to various United Nations bodies or presenting candidates for appointment to positions in those bodies. There should be no representation without taxation.

NAZARETH INCERA (Costa Rica) said that Costa Rica supported the decisions of the General Assembly in granting exemptions from Article 19 sanctions for Comoros, Tajikistan, Guinea Bissau and Georgia. Member States that had made subsequent requests for exemptions must be give the same treatment, but each request must be dealt with separately. In the future all requests must be referred to the Committee on Contributions. Article 19 was the only instrument to sanction Member States which did not fulfil their obligations.

The peacekeeping scale was a different matter from the regular budget scale, she said. Costa Rica supported calls to institutionalize the special scale. The current financial difficulties of the Organization were weakening its ability to carry out its mandates, so payments must be made on time in full and without conditions.

DAVID ETUKET, Chairman of Committee on Contributions said that members of the Contributions Committee appreciated the continued support of the Fifth Committee, and its comments would be taken into consideration during the Contributions Committee's fifty-ninth session next year.

In the debate in the Fifth Committee on Article 19 there was a broad consensus on the need for fairness in addressing requests, he said. He assured the Fifth Committee that need would be met. It was also widely agreed that the General Assembly should develop guidelines for handling requests.

In response to a question, he advised that the amount of arrears used for Article 19 calculations included all assessments due and assessed.

Statements on Programme Budget 1998-1999

PRAYONO ATIYANTO (Indonesia), speaking on behalf of the Group of 77 and China, said that the Group had previously stated that a substantive response to the reports under consideration would only come from the Group after it had the opportunity to consider the ACABQ comments and the Second Committee discussions on this issue. The ACABQ comments were available, but the subject was still under discussion in the Second Committee (Economic and Financial). Therefore, he proposed that the Fifth Committee discussion be postponed until it had received the final outcome of the Second Committee deliberations, and asked the Chairman to ask the Second Committee to complete its discussions as soon as possible. The Group wished to address the issue in the Fifth Committee as soon as possible, but it also believed there was a need for a full and considered discussion.

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THOMAS SCHLESINGER (Austria), speaking on behalf of the European Union, said that the Bureau had scheduled discussion for today and the ACABQ comments were available. The European Union was prepared to make a statement based on the Secretary-General's report and the ACABQ comments, but it would not block consensus on the proposal put forward by the Group of 77, provided there was a deadline for Second Committee deliberations. He proposed a deadline of two weeks.

Mr ATIYANTO (Indonesia) said the Group of 77 and China shared the view of the European Union that there should be a time-frame for ending Second Committee discussions, and therefore he hoped the Chair would transmit the sentiments of the Group of 77 and the time-frame proposed by Austria to the Second Committee. He believed there was no disagreement, and he proposed again that the Committee should follow that course.

MOVSES ABELIAN (Armenia), Committee Chairman, said he would submit a letter conveying those sentiments to the Second Committee, including the proposed two-week period deadline for discussions.

Statements on Implementation of Assembly Resolution 48/218B

The Chairman recalled that the General Assembly had decided to review the workings of the Office of Internal Oversight at its fifty-third session. He provided background on resolution 48/218B by which the Oversight Office had been established to assist the Secretary-General in fulfilling his internal oversight responsibilities in respect of the United Nations resources and staff.

MR. SCHLESINGER (Austria), speaking for the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Iceland and Norway, said that prior to the establishment of the Office of Internal Oversight Services, oversight functions had been scattered over small units throughout the Secretariat, and their recommendations had been rarely noted or acted upon by senior management. The new arrangements allowed for greater effectiveness and efficiency of programme management. They met the needs of a modern organization.

The role and functioning of the Office as an oversight mechanism, by definition, had to be distinct from other oversight mechanisms in the Organization, he said. He concurred with the JIU conclusions that internal oversight must be preserved as a critically important tool of Executive Heads for fulfilling their management responsibilities. He further concurred with the JIU that internal oversight was accountable first to Executive Heads for providing advice on internal control and management practices based on a systematic and independent review of an organization's entire operations.

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The Union had supported resolution 48/218B for creating a viable and effective oversight function in the United Nations, he said. It did not view the Oversight Office as a vehicle for spending cuts, but rather as a mechanism for allowing the most effective use of the Organization's resources. After four years, it retained that view. The Oversight Office had been critical in making the Organization more responsive, efficient and accountable than it had been a few years ago.

Other Matters

JUDITH CARDOZE (Panama) apologized for not having been present during the consideration of the scale of assessments. Her Mission was extremely small, and she had been in the General Assembly. She reaffirmed her delegation's complete support for the statement made by the representative of Indonesia for the Group of 77 and China. Then she announced that the Committee's party would be held 20 November at the Mission of China.

ZHANG WANHAI (China) said his delegation was pleased to provide the Fifth Committee with the place for its annual party, and welcomed delegates and colleagues from the Secretariat.

Ms. CARDOZE (Panama) said music for the party should be presented to the representative of Ireland.

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