ECONOMIC AND SOCIAL COUNCIL TAKES UP FUNDING OPERATIONAL ACTIVITIES FOR DEVELOPMENT

Press Release
ECOSOC/5909

ECONOMIC AND SOCIAL COUNCIL TAKES UP FUNDING OPERATIONAL ACTIVITIES FOR DEVELOPMENT

How could so much importance be given to conference goals while resources were not made available to back them up, Nitin Desai, Under-Secretary-General for Economic and Social Affairs asked the Economic and Social Council this morning as he presented the report of the Secretary-General on funding operational activities for development.

As the Council began the high-level part of its operational segment on the activities for development of the United Nations system, Mr. Desai said the answer lay partially in the fact that funding was part of a political process, and not a decision made by the Secretariat. Without the commitment of the donor community, the credibility of funds and programmes was eroding. The donor community must back up its conference decisions.

Norway's representative said that if the governments of developing countries were being held to their commitments on development and poverty eradication, they were fully justified in holding developed countries to their commitment to reach the United Nations target for official development assistance (ODA).

He also stated that the heterogeneity and complexity of the rules and procedures of the Organization's system placed a heavy burden on many developing countries. Although the question of reform in that area had been on the agenda for more than 20 years, insufficient progress had been made. It was imperative that the funds, programmes and agencies accorded the highest priority to the issue of simplification of their programming procedures and instruments, and took concrete measures towards streamlining them.

Reiterating that point, China's representative said complex procedures had led to bureaucracy, endless meetings and mountains of documents, impossible workloads, poor working efficiency and stratospheric administrative expenditure.

Colombia's representative said per capita income statistics showed only an average, and did not accurately describe the real disparities that existed in middle income States in Latin America. The regions of Colombia, for example, had very different poverty situations, and some of them had needs that were as urgent as those faced by the least developed countries. It was therefore imperative to think about the appropriate criteria to make an accurate distribution of scarce development resources.

Pakistan's representative said core resources had reached perilously low levels for some organizations, including the United Nations Development Programme

Economic and Social Council - 1a - Press Release ECOSOC/5909 26th Meeting (AM) 17 July 2000

(UNDP). Cut backs had also severely affected the 170 programme countries. In order to attract sufficient funds, programmes had undertaken restructuring efforts. The programme countries had accepted those changes with the understanding that they would reverse the decline in contributions -- but that had not happened. Reform was not the real issue. The reason for decline in core resource contributions was the lack of political will.

Statements were also made this morning by the representatives of France (on behalf of the European Union), Nigeria (on behalf of the “Group of 77” developing countries and China), Brazil, Cuba, Japan, Russian Federation and the Czech Republic. The observer for Switzerland also made a statement.

The Director of the Bureau for Extrabudgetary Funding of the United Nations Educational, Scientific and Cultural Organization and the Assistant Executive Director of the World Food Programme (WFP) also spoke this morning.

The Council will meet again at 3 p.m. this afternoon to continue its consideration of operational activities of the United Nations for international development.

Council Work Programme

The Economic and Social Council met this morning to continue its consideration of operational activities of the United Nations for international development. It was also expected to open the high-level part of this segment.

(For background, see Press Release ECOSOC/5908 of 14 July.)

Statements

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, emphasized the importance of the segment by pointing out that, in the aggregate, the United Nations disbursed $5 billion a year in development assistance. It was the largest disbursing body in the world. This segment of the Council dealt with managing those funds. In addition to the large volume, other characteristics of United Nations funding merited notice. One was universality. United Nations funds and programmes operated in all developing countries. In many of those, the United Nations was the only body through which assistance was available. A third characteristic of United Nations aid was neutrality, a low level of conditionality to the disbursed funds.

Those characteristics were well known, he said. In addition, some concepts were emerging influences in making disbursements. First was an increased linkage of various conference goals, particularly in implementation phases. Partnership rather than conditionality was increasingly characterizing development cooperation. And finally, a significant part of United Nations assistance, which was primarily devoted to relief and rehabilitation, was now being linked to development.

Those emerging elements should have led to increased development cooperation, but that had not happened, he said. The resources of some core funds had decreased and others had stagnated despite the broad-ranging consensus on conference goals. One reason was the continuing decrease in official development assistance (ODA). Despite all the agreement on goals, resources had decreased.

The matter had received attention, particularly from the executive boards, he noted, citing the multi-year funding frameworks that had been introduced. Even so, results had not appeared in terms of resource flow. How could so much importance be given to conference goals while resources were not made available to back them up? he asked. The answer lay partially in the fact that funding was part of a political process, not a decision made by the Secretariat. Without the commitment of the donor community, credibility of funds and programmes was eroding. The donor community must back up its conference decisions.

On the subject of simplification and harmonization, he said it was always desirable to reduce transaction costs. Each programme had its own structure. A sense of partnership was needed between the Council and the executive boards, with the Council providing not just general guidance, but specific guidance applicable to each fund and programme. In addition, the Council should give policy guidance, as it had done in the poverty-reduction discussions last year. There, the Council’s policy guidance had been apparent from the resolutions passed and was now being implemented.

The Council’s guidance should not be merely procedural, but also substantive, he said. The funds and programmes had prepared a consolidated list of issues, he added.

In conclusion, he said this was the last Economic and Social Council policy review before moving onto the next year. The Council should tie this segment to the one with which it had begun. The role of information technology should be tied in with the operational activities segment in terms of policy. What were the funds and programmes doing with regard to development? he asked. Each segment of the Council’s work should contribute to the others.

CATHERINE GRAS (France) spoke on behalf of the European Union, Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Czech Republic, Romania, Slovakia, Slovenia, Cyprus, Malta and Turkey. She stressed the Union’s long-standing and consistent commitment to international cooperation and development. It had accounted for 29.4 per cent of world gross national product (GNP) between 1995 and 1998 and had supplied 55 per cent of the official aid allocated by donor countries to the development of the countries of the South. It was the Union’s conviction that operational activities for development were one of the pillars of the United Nations action to promote a more peaceful and more mutually supportive world.

The total resources of the different funds and programmes had increased in the 1990s, and they seemed to have benefited from the increase in total ODA recorded in the last two years, she said. However, the funds and programmes showed uneven patterns of improvement and varied from fund to fund. There was also a dependence on a limited number of donors. The structure of the resources had changed radically, and was marked by a sharp increase in non-core resources and stagnation or decline in core resources. She stressed the need for absolute transparency in the use of those resources. She urged the United Nations Development Programme (UNDP) Executive Board to improve its targeting of least developed countries, including the targeting of parts of programmes paid for out of non-core resources.

The Union supported the implementation of Multi-Year Funding Frameworks and a results-oriented approach. At the first pledging conferences in 1999 and 2000, many Member States, and particularly donor countries, had taken the opportunity to pledge higher amounts. One should bear in mind that although the funds and programmes were funded out of compulsory contributions, the United Nations specialized agencies also had difficulties, as did the United Nations Secretariat, because of the accumulated arrears on the Organization’s ordinary budget, she said.

Simplifying and harmonizing procedures should make it possible to cut the costs of managing and implementing the programmes, she said. The forthcoming triennial review of operational activities for development should lead to the preparation of a specific action plan, identifying the measures that needed to be taken most urgently.

A.P. ETANOMARE OSIO (Nigeria), speaking on behalf of the “Group of 77” developing countries and China, said the interface between General Assembly resolution 53/192 (on Council management) and the need for funding was undeniable. Also undeniable was the decline in core resources over the last 10 years. Without those, the funds and programmes could not deliver assistance to developing countries.

He said it was widely acknowledged that core resources constituted the bedrock enabling operational activities to maintain their fundamental characteristics. Those included universality, voluntary or grant forms of assistance, neutrality, impartiality and multilateralism. The core funding also enabled flexibility in responsiveness to the needs of developing countries. It was perplexing that the levels of non-core resources were rising while those of core resources were declining.

The core resources should be increased, he said. Donors should also show more manifest political will, which would promote the operational activities for development to which States had agreed. The additional political will should be reflected in the agreed conclusions to emerge from the Council’s substantive session.

LUIZ TUPY CALDAS DE MOURA (Brazil) said it was a matter of great concern that resources for the operational activities of the United Nations had been persistently insufficient, in particular, with regard to core resources. It was imperative that greater political will and commitment could be mobilized so that regular funding levels could quickly resume a pattern of growth.

While effort to increase core funding had to be steadily pursued, other mechanisms must also be used, such as cost-sharing programmes, trust funds, a closer collaboration with the World Bank and regional development banks, as well as a stronger participation of the private sector and the civil society, he said. Brazil was mobilizing its own financial resources to foster activities aiming at sharing experience and knowledge with other developing countries, reaching such areas as education, health, sanitation, agriculture, environment, public management and financing.

There was a note of hope, he said. The United Nations, through its agencies, had developed a unique capacity to support national governments in the efforts to achieve higher levels of development. “We are certain”, he said, “that in this crucial moment, when the international community has defined a broad agenda for development, the call for a stronger commitment towards enhancing the resource basis for a sustainable response of the United Nations agencies will not go unheeded.”

OLE PETER KOLBY (Norway) said in order to enhance the overall development impact and effectiveness through result-based management, an adequate level of core resources had to be achieved. The strengthening of partnerships in recent years between all development actors was a welcome development. In that context, the private sector funding played an important role, but it could never be a substitute for ODA.

If the governments of developing countries were being held to their commitment on development and poverty eradication, they were fully justified to hold developed countries to their commitment to reach the United Nations target for ODA, he said. The failure to reach that target was as much a failure of mind, as it was a failure of heart -- for development assistance was as much enlightened self-interest as it was international solidarity. The heterogeneity and complexity of the rules and procedures of the United Nations system placed a heavy burden on many developing countries, he said. Although the question of reform in that area had been on the agenda for more than 20 years, insufficient progress had been made. It was, therefore, imperative that the funds, programmes and agencies accord the highest priority to the issue of simplification of their programming procedures and instruments, and take concrete measures towards streamlining those procedures.

RAFAEL DAUSA CESPEDES (Cuba) said the Secretary-General’s reform measures should have led to added value for countries receiving United Nations assistance. Enumerating changes made in delivering assistance, including coordination and harmonizing of activities, he said initiatives could not be put in place without implementing countries taking their own policies into consideration.

Operational activities should not just measure administrative efficiency, but also the effectiveness of policies, he said. The United Nations Development Assistance Framework (UNDAF) should not become an administrative initiative. The major problem with an effective system of operational activities, however, was the decrease in resources, which nearly represented an attack on implementing programmes in developing countries. There were new frameworks, but they were not used, and donors were attaching conditions to assistance. If that trend was not reversed, the existence of the funds and programmes themselves would be endangered. Adequate funding was the only way for the new multi-year funding system to work. Also, the national priorities of receiving countries could not be ignored. Complementarity in the field could only be carried out with the consent of the country concerned. The programmes and funds should not be used as instruments for changing the concessional nature of financing, nor should their neutrality be threatened. Operational activities needed continuity.

SHAMSHAD AHMAD (Pakistan), associating himself with Nigeria’s statement on behalf of the Group of 77 and China, said the United Nations was the conscience of humanity. Its operational activities for development cooperation were the manifestation of its commitment to justice, fair play and equity. Unfortunately, its calls for equity had not been heeded. A large majority of humanity still lived in degradation and desperation. The iron curtain had been lifted but the poverty curtain still cut across the face of the earth.

He believed the operational activities of the United Nations for international development cooperation provided one of the best modes of promoting universal prosperity, but depended on the flow of sufficient core resources. Core-resources, however, had reached perilous low levels for some organizations. The UNDP was one of the most severely affected funds. Cut backs of core resources had severely affected the 170 programme countries. In order to attract sufficient funds, programmes had undertaken efforts to restructure. The programme countries had accepted those changes in the understanding that that would reverse the decline in contributions, but that had not happened. Reform was not the real issue, he said. The reason for decline in core resource contributions was the lack of political will.

He emphasized that the perils of globalization had underscored the need for strengthening international development cooperation. United Nations funds and programmes were the most important pillar of the international development cooperation structure. It was the responsibility of the international community, particularly the donor countries, to ensure that those funds and programmes remained viable, he said.

JENO STAEHELIN, Observer for Switzerland, said the multi-year financial framework was an improved form of resourcing funds and programmes, since donor countries would announce their donations in multi-year blocks. The uncertainty of not knowing the level of resources available in any next year had been eroding the strength of the funds and programmes. In addition, while it was necessary to increase funding absolutely, it was also important to broaden the funding base. The private sector was important for that.

Progress in harmonizing activities had been slow and laborious, and something should be done to speed it up, he said. He favoured implementing the Common Country Assistance programmes, harmonizing programme cycles and conducting joint reviews. There should also be flexibility for country teams in terms of procedures. The guidelines instituted by the consultative committee could not guarantee results. They must be made into rules, and implementing operational activities should be binding. Executive boards should harmonize their programmes.

ALFONSO VALDIVIESO (Colombia) said the report of the Secretary-General thoroughly pointed to the serious difficulties faced by the system in financing its operational activities. He was even more concerned about how the reduction and stagnation of resources could harm middle income countries, such as Colombia and other Latin American States. While it was understood that the distribution of scarce resources should primarily cover the needs of the least developing countries, due to the fact that per capita income statistics showed only an average, they did not accurately describe the real disparities that existed in middle income States such as his. The different regions of Colombia had very different poverty situations, and some of them had needs that were as urgent as those faced by the least developed countries. It was, therefore, imperative to think about the appropriate criteria to make an accurate distribution of scarce development resources.

He said the international community should see the financing of operational activities for development as an opportunity to put into practice the principle of co-responsibility in finding solutions to issues of shared interest. Some of those issues were poverty eradication, the fight against drugs, the environment, social development, humanitarian issues and peace and stability. The UNDAF and the Common Country Assessment had generated expectations of changes that would result in the field in terms of cooperation for development in the United Nations system. He hoped the triennial review of operational activities for development made a positive balance of those mechanisms and highlighted the way in which they had reinforced the coherence and clarified the objectives of the different funds, programmes, and agencies of the system at the national level.

BIRGITTE MOLLER, Director, Bureau of Extrabudgetary Funding, United Nations Education, Scientific and Cultural Organization (UNESCO), said extrabudgetary contributions to UNESCO’s activities had increased remarkably in recent years to almost $200 million in 1999. That situation was rather new and had made necessary a real reflection on policies and procedures for the programming of the voluntary contributions. The UNESCO’s Regular Programme and Budget was subject to negative growth in real terms, while the donor governments preferred to channel additional contributions through trust funds and other arrangements that they could better influence.

The trend for decreasing voluntary contributions risked to marginalize the United Nations system in development cooperation and to question the whole concept of multilateralism, she said. It nevertheless remained a fact that several of the major specialized agencies played an increasingly important role in development cooperation and consequently also in resource mobilization. Their main responsibility, however, remained elsewhere. They had a catalytic role to play, through a consistent policy dialogue, in assisting the developing countries in analysing their needs and defining their policies.

Whatever could be done in the shorter term to reverse the trend for decreasing contributions to the United Nations organizations, it would remain a fact that grant resources for development cooperation would continue to be channelled overwhelmingly through bilateral cooperation programmes and through institutions, such as the European Communities and the Bretton Woods institutions. It was, therefore, more important than ever that the respective United Nations organizations remain faithful to their original mandate and focus on doing what they do best.

On the subject of simplification and harmonization, she said it was true that the structure, mandates and operation modalities varied widely among the various United Nations partners in development. To a certain extent, differing procedures could be justified by the need to respond in a flexible manner to the beneficiary countries’ expectations. But it remained a fact that the multitude of procedures and operation modalities represented a major burden on the developing countries, and further efforts should be made to harmonize and simplify procedures within the United Nations system. Those efforts should, however, not be limited to the United Nations organizations. The overwhelming part of voluntary contributions emanated from bilateral government donors, who were also responsible for adding to the already complex system for programming and delivery of aid, and the corresponding substantive and financial reporting.

ATUL KHARE (India) said multilateralism provided recipient countries with greater space in negotiations. It enhanced the quantum and quality of cooperation –- larger projects of that nature with greater financial outlays could be better undertaken by several countries acting together than by one country alone. Multilateral cooperation projects provided for a better division, since the strengths of all participating could effectively be utilized in the furtherance of a single cooperation project or venture. Multilateral development cooperation generally involved multiple donors for a single recipient and enabled that cooperation to become more securely nationally driven by the identified priorities of the recipients than might be the case with bilateral cooperation. Aid could not be effective without full national ownership and a nationally driven process.

Continuing decline and stagnation in funding posed a threat to the viability of operational activities of the United Nations system and severely constrained its ability to work at the country level, he said. Developing countries and the Organization could not thrive on a diet of advice alone. While it was too early to assess the full impact of the new funding arrangements put in place by some of the funds and programmes, initial results of the pledges made in the executive boards were disappointing. India, within its constraints, was nevertheless contributing both to increasing core resources to the funds and programmes and enhancing the predictability of finances provided to the UNDP through a pledge of $4.5 million. That made his country the seventeenth largest contributor to core resources of the Programme and the largest from among the developing countries.

YUKIO SATO(Japan) said Japan had strongly supported United Nations efforts for development and had greatly contributed to those efforts with core and non- core contributions. He emphasized that those contributions had been made despite his country’s prolonged domestic economic difficulties. The economy was showing signs of recovery, but the Government was confronted with huge debts. He noted that 25.8 per cent of Japan’s national budget was to be spent servicing debt. There existed, therefore, domestic pressure to cut spending, and consequently contributions to development activities were under great scrutiny.

He asked for understanding of the background against which Japan was trying to act in regards to its United Nations activities. Given the domestic situation, he asked for funds and programmes to make more efforts to ensure that their activities were cost effective. He reiterated a call, among other things, for improved aid coordination among funds and programmes and better coordination with the World Bank.

NIKOLAI TCHOULKOV (Russian Federation) said the voluntary nature of resource funding was being threatened. The multi-year funding framework linked funding with performance in the field. The new system had to prove its worth in the course of application, including through the results oriented annual reports. The resource base for operational activities should be broadened if the work of the sector could be improved through interagency coordination and enhanced partnership relationships. Of particular importance was for funds and programmes to harmonize their funding cycles. Oversight activities should be rationalized so as to avoid duplication.

At the country level, coordination should be achieved by improving already existing measures such as country assessments, he said. Also, coordination between the Bretton Woods institutions and the United Nations system would improve the effectiveness of development aid. That should be done through continued dialogue. That same dialogue should occur with regard to delivering humanitarian aid. There should be more consultation between those coordinating crisis management and those involved in post-crisis development activities.

JEAN-JACQUES GRAISE, Assistant Executive Director, World Food Programme (WFP), said that in 1999 the overall level of contributions provided to his agency was $1.5 billion. That amount reflected the average level of resources provided to the Programme over the last 10 years. Adequate funding was critical to ensure that the WFP would be able to perform its mission. Even though the agency had been blessed over the past years with generous support from its donors, further efforts were needed to ensure that such support was more stable, predictable and flexible.

He said that in 1999 the WFP received a total of $275 million for its development portfolio. That was a decrease from the previous year. In order to reverse the declining trend and improve the effectiveness of that form of assistance, the Programme undertook a major participatory review of the role of food aid in development. The outcome of that review included a number of recommendations, which called on the Organization to provide more targeted, focused and results-oriented development assistance. It outlined priority areas for development assistance and stressed the need for enhanced partnership arrangements. As a result, the WFP's role and participation in the Common Country Assessment and UNDAF had become an integral and important aspect of its development assistance.

He said that the pledging conferences for the WFP promoted enhanced predictability of resources. Even though the effectiveness of such forums had diminished over the years, the agency still believed that there were options that could be pursued to help reverse that trend. Now that systems were being put in place, resources were needed. Little would come of perfect systems if they were not fuelled with adequate resources, he stressed.

VLADIMIR GALUSKA (Czech Republic), aligning himself with France’s statement on behalf of the European Union, said he attached particular importance to simplification and harmonization of the operational and administrative procedures in terms of enhancing cost-effectiveness of development aid and reducing the workload on both national authorities and United Nations funds and programmes. Diffusion of national execution, greater decentralization, delegation of authority to the field, and requirements for accountability and transparency should be considered part of the process.

The fact that the United Nations funds and programmes were too heavily dependent on a few donor countries was a concern, he said. The nominal increases of the European contributions had often been diminished or eliminated by existing unfavourable exchange rates for most European currencies. Even though private sector funding represented a substantial proportion of total resources, private sector resources could not be a substitute for official contributions. Only governments, by providing their core voluntary contributions, decided on the future of United Nations operational activities.

Some of the development funds and programmes, namely, UNDP and the United Nations Population Fund (UNFPA), were in serious financial the crisis. The continuing decline or stagnation of core funds posed a serious challenge to the ability of the funds and programmes to undertake the task they were mandated to do. He made a strong appeal to increase the core contributions, to reduce the over-dependence on a limited number of donors and to ensure fair burden-sharing as the only way to preserve United Nations operational activities for the years to come.

HUANG XUEQI (China) said that regrettably a solution to the issue of funding the operational activities of the United Nations had not yet been found. The decrease in core resources had greatly undermined the working competence and capacity of the agencies and seriously compromised the interests of a great number of developing countries, including those in Africa. While the development agencies of the Organization had done a lot to try and raise core resources, the results had been quite moderate.

Without strong political enthusiasm and will, any fundraising method would fail to increase resources, he said. His country also felt that core resources should continue to come mainly from the ODA by the developed countries. The simplification of programming, operational and administrative procedures was first brought out more than 20 years ago.

That goal had not been fulfilled up to now, he said. The complex procedures had led to bureaucracy, endless meetings and mountains of documents, impossible workloads, poor working efficiency and stratospheric administrative expenditure. As to coordination, he noted that the United Nations system for development had made some tentative initiatives –- the formulation of the Common Country Assessment and UNDAF for instance.

The development system had used common premises in 36 countries and was prepared to extend that approach to others, he said. He believed, however, that the most important objective of coordination was to focus on major issues in current socio-economic development, give play to the role of the relevant agencies, optimize the use of resources and try to solve the biggest concerns of Members States in the shortest possible time.

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