SUPPORT FOR NEW METHOD OF PRESENTING UN BUDGET EXPRESSED IN FIFTH COMMITTEE

Press Release
GA/AB/3407

SUPPORT FOR NEW METHOD OF PRESENTING UN BUDGET EXPRESSED IN FIFTH COMMITTEE

As the Fifth Committee (Administrative and Budgetary) began its consideration of results-based budgeting this morning, United Nations Controller Jean-Pierre Halbwachs stressed that the new approach would enhance evaluation of performance, improve monitoring and provide better information on the work of the Organization.

Introducing the Secretary-General’s report on the results-based budgeting, he said that this new programme tool was not going to change the nature of the Organization. The proposed changes were intended not to overhaul the budget process, but to make better use of the existing cycle of programme planning, budgeting, monitoring and evaluation.

[The key element of the proposed format is a statement of objectives for the given biennium, as well as expected accomplishments and performance indicators, presented in a consolidated manner to demonstrate the links between them. In addition, significant external factors that might affect success or failure of a programme and end-users of the programmes are to be identified.]

Introducing the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), its Chairman C.S.M. Mselle, said that the Advisory Committee had tried to alleviate the suspicion that the results-based budgeting would be used to cut resources. The budget proposals could be prepared in the new format and also in accordance with the present rules and regulations governing programme planning, taking into account the unique international character of the Organization.

Introducing the report of the Joint Inspection Unit (JIU), its representative, Andrzej Abraszewski, said that the Inspectors were aware of the political sensitivity of the issue and of perceptions that results-based budgeting might be an attempt to limit oversight by Member States and to undercut the role of the Fifth Committee. However, the benefits of the proposed system would be determined by the care and judgement with which it was applied. Success in budgetary reforms required a climate of trust and understanding between Member States and the Secretariat.

The representative of the Russian Federation welcomed efforts to improve the budget methodology, as everyone was aware of the shortcomings of the present system. Currently, Member States did not receive sufficient information on funds

Fifth Committee - 1a - Press Release GA/AB/3407 25th Meeting (AM) 9 November 2000

allocated and their relationship to results of activities. With strict observance of all management demands, the new approach appeared a more sensible way to prepare the programme budget.

Speaking on behalf of the European Union and associated States, the representative of France said that while the latitude for programme managers would be strengthened by application of the new format, it would be framed by General Assembly decisions. Their greater authority would not stem from altered boundaries but from a different distribution of duties within the Secretariat itself.

The representative of Japan strongly supported a reasonable and gradual approach to introducing this proposed change, based on the proper understanding that the concept of results-based budgeting was not in conflict with programme budgeting. Instead, it added to the existing budgeting system.

The representative of New Zealand, also speaking on behalf of Canada and Australia, said that results-based budgeting could be the best chance for small and developing countries to improve the effectiveness of the Secretariat. The new format would focus the Secretariat on assisting Member States in implementing the priorities of the United Nations.

The representative of Norway said that, for the proposal to lead to improvements, it would be necessary to identify external factors that influenced United Nations operations, and expand and develop information technology.

The Committee will continue its work at 10 a.m. tomorrow, 10 November, when it is scheduled to begin consideration of the United Nations common system and the pension system of the Organization.

Fifth Committee - 2 - Press Release GA/AB/3407 25th Meeting (AM) 9 November 2000

Committee Work Programme

T The Fifth Committee (Administrative and Budgetary) met this morning to begin its consideration of the results-based budgeting, which is part of its agenda item on the review of efficiency.

The Committee had before it a report of the Secretary-General on results- based budgeting (document A/54/456). Results-based budgeting has been proposed as part of the reform measures. Over the past 25 years, the United Nations has maintained a focus on detailed input information at the budgeting stage and on quantitative output data during monitoring and evaluation, the report states. At present, the Organization is driven mainly by the delivery of outputs, and is not in a position to accurately determine their effectiveness. Results-based budgeting seeks to address those concerns.

The report says that results-based budgeting consists of a number of elements that would build on and strengthen the existing programme planning, budgeting, monitoring and evaluation framework and procedures. Such changes in the formulation of programme budgets would enable the Organization to fully use the budget document as a policy tool and as a basis for assessing the extent to which programmes are accomplishing intended changes and benefits. The core programmatic element in the new format will be the statement of objectives for the biennium, expected accomplishments and performance indicators, formulated within a logical framework and presented in one table to demonstrate the links among them. In addition, significant external factors, and end-users or beneficiaries of the programmes, will be identified.

The Secretary-General points out that results-based budgeting does not attempt to introduce production targets, used in the private sector but alien to the nature of the Organization. The aims of results-based budgeting are to increase the capacity of Member States to focus on the policy implications of funds to be expended and to assess the effectiveness, impact and relevance of programmes. The new form of budgeting is also expected to enhance the management capacity and improve the design of programmes. It would also help to determine the most appropriate use of resources.

The report goes on to say that by focusing on expected accomplishments before, during and after budget implementation, results-based budgeting would increase accountability of programme managers. To enable programme managers to carry out these responsibilities, flexibility could be introduced through the presentation of resource requirement data in the programme budget at a more aggregate level, and through greater discretion over the use of resources within the funds allotted to each section of the budget. The Secretary-General seeks from the General Assembly an endorsement of a gradual approach to the introduction of results-based elements in the programme planning, budgeting, monitoring and evaluation cycle, in a manner that fully reflects the specific needs and characteristics of the Organization.

According to the report, a concrete measure proposed for approval is the inclusion -– in all sections of the programme budget for the biennium 2002-2003 -– of performance indicators in addition to statements of objectives and expected accomplishments in a results-based framework, while maintaining the current level of detail on post and non-post requirements. Further steps envisaged by the Secretary-General include measuring, at the end of the biennium for 2000-2001, the performance of the five budget sections against a limited number of expected accomplishments, using selected performance indicators. Another step would be the development of mechanisms and procedures for the gradual implementation of performance measurement as a basis for improved programme monitoring and evaluation. A phased approach would allow the Organization to test the feasibility of these proposals and to make adjustments where necessary.

Also before the Committee were five addenda to the report of the Secretary- General on results-based budgeting (documents A/54/456/Add.1-5), which contain prototype fascicles of the proposed programme budget for 2000-2001, prepared in the format of results-based budget. To allow a comparison of the regular and prototype fascicles, the prototypes have been prepared, for illustrative purposes, on the basis of the regular programmes for the following sections: political affairs; trade and development; international drug control; economic development in Europe; and Office of Programme Planning. The addenda have been prepared pursuant to General Assembly resolution 53/205 of 18 December 1998.

In his note transmitting the report of the Joint Inspection Unit entitled "Results-based budgeting the experience of United Nations system organizations" (document A/54/287 and Add.1), the Secretary-General states that the Joint Inspection Unit (JIU) has highlighted areas of concern that require special attention. It also provides experiences of other organizations in the United Nations system from which lessons can be learned in the development and implementation of results-based budgeting elements, should the General Assembly decide to proceed on the basis of the Secretary-General's proposals in that respect.

The Secretary-General welcomes the Inspectors' recommendation that, in order to resolve the problem of the lack of agreed definitions for key results-based budgeting terms, the updated Glossary of financial and budgetary terms should be reviewed and commented upon by appropriate bodies of the United Nations system. In recognition of the need for clear terminology, the Secretary-General, in annexes I and II of his report (document A/54/456), has endeavoured to provide a clearer definition of relevant terms, as well as suggested guidelines for programme managers in the formulation of objectives and expected accomplishments.

The Inspectors also recommend establishment of an open-ended working group of the Fifth Committee, within existing resource levels, to allow Secretariat and other officials to respond to questions on all aspects of results-based budgeting. The Secretary-General concurs with the need to maintain a clear dialogue between Member States and the Secretariat on results-based budgeting.

The Secretary-General also welcomes the Inspection Unit recommendation that, should the General Assembly decide to use results-based budgeting, the United Nations Staff College and the United Nations Institute for Training and Research (UNITAR) be invited to conduct seminars and workshops to familiarize staff and representatives of Member States with results-based budgeting. Responding to the recommendation that future reporting from the Secretary-General on results-based budgeting should include a comprehensive assessment of the changes involved, the Secretary-General states that he has taken this into account in preparing his report on results-based budgeting.

Also, according to the Inspection Unit report, the Secretary-General should present recommendations on how to reflect external factors in the accountability of programme managers under the new budgeting system. The Secretary-General has focused on that issue in his report. The Secretary-General also notes the recommendation that the Committee for Programme and Coordination (CPC) and the Advisory Committee on Administrative and Budgetary Questions (ACABQ) should be invited to comment on their respective roles under results-based budgeting.

In a related report on results-based budgeting from the ACABQ (document A/55/543), that body states that for many years it has found the presentation of the budget to be of uneven quality. While the financial aspects of proposed programme budgets have been highly developed and refined, the same has not been true on the programme side. The Secretary-General's proposals need not represent a revolution, but an attempt to build upon and strengthen the existing processes. A results-based budget format will differ from the current format in its emphasis, not in its nature.

On the question that has arisen on whether proposals to reform the budget process were driven by financial constraints, the ACABQ strongly believes that the prevailing financial situation should not serve as the impetus to change budget methodology, practice and process, the report states. It is equally important that the introduction of new budget procedures should not be seen as a means to reduce the budget or achieve savings. Nor should innovations be considered part of a trend to encourage arbitrary setting of budgetary ceilings. The ACABQ also states that the Secretary-General's proposals should not be interpreted so as to diminish his responsibility to fully justify the financial aspects of budget proposals or to present complete supporting detail and analysis.

It reports that the proposals incorporate much of current practice, and so there is no immediate need to amend financial regulations or rules governing programme planning. Neither the ACABQ's role, nor that of the Fifth Committee, would change as a result of the proposals.

The ACABQ meetings with a number of the specialized agencies and international agencies bodies have reinforced its opinion that careful and thorough preparation is an essential prerequisite for any change, the report states. There must be close and continuing dialogue between the Secretariat and the relevant intergovernmental organs. Basic terms must be fully and precisely defined and consistently applied by all. There must be a comprehensive training programme so that the staff are well versed in the techniques, and there should be an opportunity for staff to contribute to further development.

The ACABQ recommends approval of the Secretary-General's recommendation, the report states. It has been informed that, in view of the timing of the consideration of the report, it is now proposed that instead of a prototype accomplishment report based on the prototype fascicles, the programme performance report for the 2002-2003 will contain, in addition to the current methods of output measurement, an assessment of performance in terms of expected accomplishments, using the indicators of achievement that would be included in the proposed programme budget for 2002-2003. The Committee recommends approval of this amended proposal.

Introduction of Documents

Introducing the Secretary-General’s report on results-based budgeting, the United Nations Controller, JEAN-PIERRE HALBWACHS, said the report contained information on the matter before the Committee, including the changes required, the expected impact of implementation of the proposal and recommendations for action by the General Assembly. Results-based budgeting was part of the overall reform process in the United Nations initiated by the Secretary-General in 1997. The CPC and the ACABQ had commented in the past about a lack of clarity on what the Organization was trying to achieve, and on the limited information available on the quality or impact of its work. Both the Secretariat and Member States had focused most of their attention on the amount of money that was to be spent on a particular activity, and had not focused on what that activity would accomplish.

In connection with those concerns, some revisions had been introduced, he said, such as the inclusion of the concept of “expected accomplishments” in the medium-term plan and the programme budget. Those revisions had been reflected in the proposed medium-term plan for 2002-2005, and further refinements had been made to the presentation of that document through the inclusion of strategies and indicators of achievement, in keeping with the regulations and rules.

The Organization had about 25 years’ experience in programme planning, he said, and from time to time some improvements were required The proposals in the report represented small changes, not intended to overhaul the budget process, but rather meant to better use the potential of the existing cycle of programme planning, budgeting, monitoring and evaluation.

Under the proposal, in addition to the programmatic elements in the current budget, indicators of achievement would be included in the proposed programme budget for 2002-2003. Indicators were contained in the proposed medium-term plan for the period 2002-2005 and, in order to maintain the link with the plan, it was important to take this next step now. The level and quality of financial data available to the Member States for the review of the programme budget would be maintained. The concept explained in the report could be applied to all activities included in programme planning. Of course, the objectives and indicators of achievement of a conference-servicing subprogramme would be different from those of a political one, but the underlying approach to programme design was applicable across the board.

Flexibility and accountability would be required to implement the proposal, he continued, in addition to staff training. Both the ACABQ and the JIU had provided input on the matter. Concerns expressed in connection with the proposal seemed to involve some confusion over the term “results-based budgeting”. It did not mean that the allocation of resources would be connected with how successful the programme had been. Funds would be allocated using the same criteria that were used now. Requests for resources would still need to be justified in terms of output delivery, in accordance with the regulations and rules.

He said that the new approach would enhance the way in which the United Nations looked back at its performance during a given biennium. It would also allow monitoring of activities and provide better information on the work of the Organization. Results-based budgeting was a programme tool which was neutral on budget increases or decreases. It was not going to change the nature of the Organization or the way resources were allocated. It would, however, help more clearly identify what the United Nations was trying to achieve.

Introducing the report of the ACABQ, its Chairman, C.S.M. MSELLE, said that the report of the Committee may not be to the liking of every delegate, but it reflected the delicate nature of the matter. The Secretary-General had prepared a series of documents recommending a number of measures, principal among which was an introduction of result-based elements in a manner that would reflect the specific characteristics of the Organization. The changes would be refined in the light of experience.

The proposal would lead to inclusion of performance indicators in all sections of the proposed programme budget, he continued. Indicators had already been approved by the General Assembly as part of the rules and regulations governing programme planning. The proposed medium-term plan already included those indicators. The ACABQ recommended that the 2002-2003 budget document should be prepared with similar indicators, taking into account the present report of the ACABQ. Further input would be provided in the future.

Greater responsibility and accountability of managers was an important subject, he continued, which should not be resolved in a hurry. It was a foundation of trust between Member States and the Secretariat. The process needed to be fully transparent and understood. In its report, the ACABQ had tried to alleviate Budget proposals would be prepared in It was also necessary to take into account the unique international character of the Organization.

Indicators of achievement could not be included for all aspects of United Nations activities, and, for that reason, he stressed that they should be included only where possible. Performance indicators could be applied to all sections of the United Nations budget, however. Among other observations, the ACABQ also noted that the proposals were based on current practice. The financial situation should not be the impetus to change the budget methodology, and the Secretary- General would still have the responsibility to justify the resources he requested. The process would be facilitated by the installation of information technology and extensive training of personnel. The proposal would not be successful, however, unless there was mutual trust between the Secretary-General and Member States.

ANDRZEJ ABRASZEWSKI, of the Joint Inspection Unit, introduced the report of that body, contained in document A/54/287. He said that in preparing the report, the JIU was very aware of the political sensitivity on the issue and of some perceptions that the proposal on results-based budgeting might be really an attempt to limit so-called intrusive oversight and micromanagement by Member States and to undercut the role of the Fifth Committee. That gave the Inspectors added reason to stick precisely to the mandate they were given “to undertake an analytical and comparative study of the experience of the bodies of the United Nations system that were implementing an approach similar to results-based budgeting”. There clearly was a need for the report to be factual and neutral. In that context, the JIU had restricted its recommendations to just matters of procedure aimed to assist the Fifth Committee in coming to a decision on the results-based budgeting.

The Secretary-General’s official comments on the JIU report had been presented in the addendum to the report, he continued. The overall approach to results-based budgeting could be described as follows: on the one hand, it was very positive and there were high expectations. On the other, a careful approach was advocated, with due attention paid to questions about the rate of development and the practical application of various attributes of the new concept. The report of the JIU emphasized the evolutionary character of this reform, which aimed to develop the programming and budgeting cycle and improve the monitoring and evaluation phase. Experience with results-based budgeting had shown it could address specific needs and characteristics of each organization and enhance the governance function of Member States. It would also provide a neutral management tool and enhance the role of the medium-term plan.

The overall conclusion of the JIU report was that expectations for what could be accomplished with results-based budgeting must be tempered by a recognition that, like any other methodology, the level of benefits would be determined by the level of care and judgement employed by the Secretariat and Member States. Success in budgetary reforms required a climate of trust and understanding between Member States and the Secretariat.

Statements

CATHERINE GRAS (France), speaking on behalf of the European Union and associated States, said that the Assembly had a great wealth of information on results-based budgeting. The European Union believed results-based budgeting was important because it was dissatisfied with the quality of current budget work. Results-based budgeting proposals stemmed from concern to make the Organization better able to fulfil its objectives and enhance the transparency of its activities, for the benefit of all Member States. The programme planning, budgeting, monitoring and evaluation cycle was out of balance. The necessary link between planning and budgeting had been lacking until now. Results-based budgeting would bring about several changes but there would be gradual changes in budget debates, not a revolution. It would increase the level of available information and would provide an additional tool to monitor the Organization’s activities and make sure that its mandates were effectively implemented.

The Secretariat would have to do a great deal of preparation and learning, she added. Terminology must be uniform and definitions must be disseminated throughout the Organization. External factors should be better defined. The new budget format should be adapted for particular sectors of the Organization. Information and accounting systems would also have to be enriched. The approach taken by the Secretary-General seemed to be the best one. The level of financial information in the proposed budget for the next biennium would be the same. It would include objective indicators, expected accomplishments, outputs and financial resources. The European Union had full confidence in the Secretariat’s ability to carry out results-based budgeting, with the assistance of the CPCn and the ACABQ. Change would have to be gradual. The experience of changes in the medium-term plan, as well as in the report on programme performance for 1998-1999, demonstrated that the Organization was able to work quickly. While the latitude for programme managers would be strengthened, it would be framed by General Assembly decisions. The greater latitude would not stem from altering boundaries but from a different distribution of duties within the Secretariat itself.

Results-based budgeting would provide the Secretariat with an additional tool for monitoring, she said. The programme planning, budgeting, execution and evaluation cycle would become more balanced. Evaluation would become an essential part of decision-making when presenting the proposed budget. Many countries had adopted a more results-based approach to budgets. The United Nations must also adopt a results-based model that met its needs, in a gradual fashion. The European Union supported the comments made by the ACABQ in paragraph 17 of its report, that the format of the budget document was neutral from the point of view of resource levels. Results-based budgeting should not be applied out of a desire for budget reduction but out of a need for transparency. The European Union expected that the new budget format would deepen the nature of the Assembly’s monitoring of the Organization’s activities.

ERLING SKJONSBERG (Norway) said that at present the Organization was mainly driven by the delivery of outputs, and did not sufficiently focus on determining the continued relevance and effectiveness of those outputs. Member States focused on input control, whereas programme managers focused on output delivery. The current monitoring system compelled programme managers to focus on output delivery by reporting the number of outputs delivered, reformulated, postponed or terminated against what had been programmed. As there were weak links between outputs, expected achievements and objectives, the overall desired achievements of the Organization’s efforts were not receiving sufficient attention. Results-based budgeting required programme managers to focus on achievements. The emphasis on expected achievements would increase the capacity of Member States to determine the effectiveness and continued relevance of the Organization’s work.

A results-based budgeting format would differ from the current format in its emphasis, but not in its nature, he continued. All the elements of a results- based programme budget were present in the current budget. There was a need to identify external factors that influenced United Nations operations. A key element in achieving that was to expand and develop information technology. He supported the ACABQ’s request for an analysis of the capacity and limitations of information and accounting systems involved in results-based budgeting. The medium-term plan was the framework for the proposed programme budget. The introduction of the new budget procedures should not be seen as a means of reducing the budget or achieving savings. Neither should a new budget procedure be part of a trend to encourage the arbitrary setting of budgetary ceilings. The introduction of a results-based format should take the form of a carefully designed, gradual process of change. Comprehensive training programmes would be necessary. Staff should be able to contribute their expertise.

He recommended that the Assembly approve the Secretary-General’s proposal on the development and use of performance indicators in the proposed programme budget for 2002-2003. He also supported the ACABQ’s recommendation that the programme performance report for 2002-2003 include an assessment of the performance of the Organization in terms of expected achievements, using the indicators of achievement included in the programme budget. Norway supported the gradual change to a results-based budget that focused more on overall objectives.

MICHAEL POWLES (New Zealand), speaking also on behalf of Canada and Australia and the members of the Pacific Forum Group, said that the reports before the Committee had addressed the concerns which emerged in the Committee in 1998 when results-based budgeting was last discussed. The connection between the existing United Nations budget format and a results-based format was clearly described in the reports of both the Secretary-General and the ACABQ. Results- based budgeting was intended to build on and strengthen what currently existed. It was part of a gradual and continuous process of improving the current budgetary framework. Simply stated, results-based budgeting was a further evolution of the current programme budget framework and not a new invention.

He said that results-based budgeting would focus the Secretariat on assisting Member States to implement the priorities of the United Nations. Results-based budgeting would keep Member States and the Secretariat focused on what had to be achieved. While it would not change the nature of the budget, it would emphasize the effective achievement of programmes. That was highly desirable and should be welcomed by all Member States concerned about the United Nations’ ability to rise to the formidable challenges of the new century. He believed that results-based budgeting would also enhance budgetary transparency. With the current emphasis on inputs and outputs instead of results, Member States did not have meaningful measures by which to determine the effectiveness of activities. The emphasis in results-based budgeting was on the results that the Secretariat was able to achieve with the resources provided by Member States. Those results were measurable by performance indicators and linked to the mandates set by Member States.

While all Member States would benefit from a more effective Organization, results-based budgeting was the best alternative for small States and developing countries to improve the effectiveness of the Secretariat, he said. He fully endorsed the recommendations contained in the Secretary-General’s report as well as the conclusions in the ACABQ’s report. As that body pointed out, the time had come to include in the programme performance report for the biennium 2002-2003 an assessment of the overall performance of the Organization, using indicators of achievement to be included in the proposed programme budget for that biennium. It was obvious that Member States wanted action and results on the targets set in the Millennium Declaration. It should be the primary responsibility of the Secretary- General and the Secretariat to help Member States achieve those targets. Results- based budgeting was an operational tool intended to improve the Secretariat’s ability to manage its responsibilities. Should the Committee prevent the Secretariat from using results-based budgeting, it would be failing in its duty to fulfil the collective wish of Member States as expressed in the Millennium Declaration.

ARATA FUJII (Japan) said many of the opinions contained in the ACABQ report would greatly contribute to work on the reform of the budgeting cycle of the Organization. The ACABQ, in a well-balanced manner, had taken into consideration both elements of continuity and change necessary in the process of the reform. The ACABQ was also suggesting that reform should occur gradually on the basis of experience. Japan strongly supported a reasonable gradual approach, based on the proper understanding that the concept of results-based budgeting was not in conflict with programme budgeting. Instead, it develope the existing budgeting system. For Member States, it was important to ensure the transparency and accountability of the United Nations budget. The existing system had contributed to the maintenance of budgetary discipline through its control over budget inputs. He supported the recommendations contained in paragraphs 16 and 28 of the ACABQ report concerning managers’ flexibility in redeployment of funds, and the continued need for the Secretary-General to fully justify his budget proposals.

NIKOLAI V. LOZINSKI (Russian Federation) said that a brief journey into the history of the development of the budget methodology testified to the fact that throughout the existence of the United Nations, Member States had been searching for the best way to use material and human resources. Taking into account the new tasks before the Organization, changes had been introduced to ensure greater stress on qualitative accomplishments in the allocation of financial resources. He welcomed the efforts to improve the methodology, for all were aware of the shortcomings of the present system. Currently, Member States did not receive sufficient information on how funds were being spent, nor on the implementation of mandated activities. Member States could not determine the optimum ratio between funds allocated and results.

With strict observance of all management demands, the new approach appeared a more sensible way to prepare the programme budget, he continued. However, ideal conditions did not exist now. For that reason, he supported a gradual approach, which should be well thought out. The report of the Secretary-General should become the basis for further consideration of the issue. He shared the view that the Secretary-General’s proposals included much of what already existed. In fact, they promoted a fuller disclosure and transparency of programme aspects of the budget and programme evaluation. The new approach to management would improve the system of accountability and responsibility. Those aspects of reform were closely connected to proposals for human resources management, the development of professional skills, and delegation of authority accompanied by additional accountability. Taking into account the new methodology, the budgeting process should be gradual, and a fruitful dialogue with Member States would be essential. Input from the CPC and the ACABQ was also important.

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