FIFTH COMMITTEE TO COMMENCE CONSIDERATION OF SCALE OF ASSESSMENTS FOR UNITED NATIONS REGULAR BUDGET ON 2 OCTOBER
Press Release
GA/AB/3385
FIFTH COMMITTEE TO COMMENCE CONSIDERATION OF SCALE OF ASSESSMENTS FOR UNITED NATIONS REGULAR BUDGET ON 2 OCTOBER
20000929 Background ReleaseOn Monday, 2 October, the Fifth Committee (Administrative and Budgetary) is going to begin consideration of the scale of assessments for the regular budget of the United Nations for 2001-2003, which is one of the most important tasks facing the Committee this year. [The scale of assessments is a formula, based on capacity to pay, which is used to determine the amount each Member State must pay towards the regular budget of the Organization.]
Member States decide biennially of the size of the regular budget of the United Nations. The scale of assessment is then used to determine each countrys share of that budget. Payment of a Member State's share of the budget to the Organization is a legal obligation on that State.
The Committee will make its decision on the basis of General Assembly resolution 54/237 D, by the terms of which the Committee on Contributions was asked to submit 12 proposals reflecting the views expressed in the Fifth Committee debate during the fifty-fourth session. Also, in that resolution, the Assembly requested the Committee to review certain elements of the scale methodology and, in particular, to report on the economic impact of sharply depressed levels of primary commodity prices, and of the problem caused to host countries by the presence of refugees.
During its last session, the Assembly reaffirmed that the expenses of the Organization should be apportioned broadly according to capacity to pay. However, it was unable to agree on a single set of methodological elements and, instead, requested the Committee on Contributions to formulate 12 prospective scales based on various sets of criteria. One is based on the set of elements currently in use, and the others reflect proposals put forth by States and groups of States, including the United States, Canada, Brazil, Bahamas, the European Union, the Group of 77, Japan, China and Uganda.
In the debate last year, the representative of the United States, for example, called for a reduction of his country's rate of assessment to 22 per cent. [In November 1999, the United States Congress adopted legislation authorizing the payment of $926 million in arrears to international organizations over a three-year period, subject to the fulfilment of specific conditions. The payment in 2000 of the second year's instalment of $475 million is conditional, among other things, on action by the General Assembly to reduce the regular budget ceiling assessment for Member States to 22 per cent, and to
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reduce the United States assessed share of peacekeeping operations to a maximum of 25 per cent.]
The point of view of the "Group of 77" developing countries and China was expressed in last year's debate by the representative of Guyana, who said that any deviation from the principle of capacity to pay would be unacceptable, and that, accordingly, the current ceiling of 25 per cent should not be lowered. That position was broadly supported by members of the Non-Aligned Movement and quite a few other speakers, who also said that the adjustments for low per capita income and the debt burden should be retained.
The representative of Finland, speaking on behalf of the European Union and associated States, expressed a preference for a three-year base period and an annual recalculation of the scale. He was against a debt-burden adjustment, because the gross national product (GNP) data already adequately reflected the actual cost of debt servicing.
On May 31 2000, total outstanding contributions to the regular budget totalled $821.1 million (including $464 million, or 56.5 per cent, owed by the United States); 92 countries had paid their contributions in full.
The Fifth Committee will be guided in its work by the current report of the Committee on Contributions (document A/55/11), which presents the 12 proposals for the period 2001-2003, as requested by the Assembly.
According to the report, following the adoption of resolution 54/237 D, the 12 proposals on the future scale of assessments were designated by the letters A through L, A representing the current scale. In reviewing the proposals, the Committee on Contributions reports it had difficulty in interpreting several of them, as well as related provisions. In these cases, it generally applied the relevant element from the current methodology in preparing the machine scales contained in annexes IV to XV to the report. An exception was proposal L, for which the Committee decided that the intention had been to eliminate the debt-burden adjustment.
The main elements of the 12 proposals are included in annex III to the report. Annexes I and II elaborate on the current and historical methodology for the preparation of scales of assessments, based on the principles of the capacity to pay and comparative income per head of population. Since the beginning of the Organization, national income data has been the first step in the scale methodology. The scale of assessments for the period 1998-2000 is based on the GNP data, and lately the Assembly has reaffirmed its earlier recommendation that future scales of assessments should also be based on estimates of GNP.
The next step in the methodology is to convert national income data to a common currency - since 1946, the United States dollar. Another multiple of the formula is the base period, which for 1998-2000 was six years. Also used in determining the scale of assessments are: the minimum assessment rate, or
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floor, which allows adjustments for the developing countries, in particular those with the lowest per capita income (0.001 per cent for 1998-2000); least developed countries ceiling (currently at 0.01 per cent); adjustments for debt- burden and low per capita income; and a ceiling over which no country can be assessed (currently at 25 per cent for the regular budget).
The methodology also determines the extent of reduction, or "gradient", for countries with per capita income below the world's average; whether permanent members of the Security Council should benefit from the adjustment for low per capita income; and the phase-out period until 2001 for the "scheme of limits", which is a mechanism to mitigate extreme variations in assessments between two successive scales. In preparing a final scale of assessments, the Committee on Contributions has in the past used its discretion to adjust the results derived from the application of the scale methodology to take account of other relevant factors, such as the temporary dislocation of national economies arising out of wars, economic difficulties and natural disasters. However, the preparation of the scale for 1998-2000 did not involve any mitigation.
The report states that, in reviewing the 12 proposals, the Contributions Committee observed a number of common elements. All of them, for example, are based on GNP and have a floor of 0.001 per cent and a least developed countries ceiling of 0.01 per cent. Although formulated differently, the Committee considered that the provisions for conversion rates are consistent with the general approach that it has recommended for the current scale and that it has used in the preparation of the machine scales contained in annexes to the report. All 12 of the proposals also included an adjustment for Member States with low per capita income.
The Committee on Contributions observed that 10 of the 12 proposals included a debt-burden adjustment, using either the debt-stock or the debt-flow approach. Eleven of them set the threshold for the low per capita income adjustment at the average level of total per capita GNP. Ten of the 12 proposals provide explicitly or implicitly for the complete phase-out of the scheme of limits. Eleven of the 12 proposals have a ceiling, seven at 25 per cent, three at 22 per cent and one at 20 per cent. The results of the application of proposals A to L for all the Member States are contained in annexes IV to XV, respectively.
Under proposal B, Member States benefiting from the low per capita income adjustment would be grouped according to their average per capita GNP for the base period, and the upper 25 per cent would have a gradient of 50 per cent, the middle 50 per cent would have the gradient of 70 per cent, and the bottom 25 per cent would have a gradient of 90 per cent. Another proposal would use the same methodology as for the 2000 scale, but would reduce the ceiling from 25 to 22 per cent and distribute the difference among Member States other than the members of the Group of 77 and China.
As regards the phase-in mechanism contained in proposals D and E for countries crossing the threshold between scale periods, the Committee assumed that points picked up by a Member State from the low per capita income
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adjustment as a result of being above the threshold should be divided into three equal parts. That States assessment rate would increase by one part each year. The Committee on Contributions also observes that three of the 12 proposals (D, E and G) provide for annual recalculation of the scale. As for proposals D and E, a problem may arise with regard to the interaction between equal annual phasing-in of the effects of discontinuity and annual recalculation.
Regarding the assessment of non-Member States, the Committee on Contributions decided to further consider that question at its sixty-first session and renewed its previous recommendation that the flat annual fee percentage for the Holy See should be increased to 25 per cent of the approved notional rate of assessment. The Committee also took up the matter of assessment of new Member States.
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