Fifty-sixth General Assembly

Fifth Committee

11^th Meeting (AM)

UN BUDGET SITUATION EASED BY UNITED STATES PAYMENT

OF $621 MILLION, FIFTH COMMITTEE IS TOLD

Priority To Be Given to Peacekeeping Reimbursements;

Some Speakers Warn That Underlying Financial Problems Persist

Current total payments to the United Nations by the United States amounted to $621 million, the Fifth Committee (Administrative and Budgetary) was told this morning as it continued its consideration of the financial situation of the Organization.

The representative of the United States confirmed that last week legislation on the long promised $582 million in peacekeeping arrears had been signed into law by President Bush and that those funds would be in the hands of the United Nations by 9 November.  Payment of $571 million in current peacekeeping dues had already reached the United Nations together with payment of $23 million for the International Tribunals.  For its regular budget assessments, payment of

$27 million had been made, and the remainder would be paid as soon as the United States Congress completed its work on the budget, which should be a matter of days.  The United States remained staunchly committed to paying debts to the Organization.  He noted the contribution of $31 million by Ted Turner.

Speakers in today’s debate welcomed the fact that, at the end of 2001, after years of crisis, the United Nations had a prospect of improving its financial situation due to the payments expected from Member States, particularly the largest contributor.  It was said to be particularly satisfying since many countries had assumed an added financial burden, following painstaking negotiations on the scale of assessments at the end of last year.  Delegates   also expressed satisfaction that reimbursement of the amounts owed countries contributing troops and equipment to peacekeeping operations was being accorded high priority.

Several speakers, however, expressed concern that fewer countries had paid their assessed contributions in full this year and stressed the need for all Member States to make such payments in full, on time and without conditions, thus carrying out their financial responsibility under the Charter.

The representative of Belgium (on behalf of the European Union and associated States) said that the financial situation remained precarious. 

As the Under-Secretary-General for Management had pointed out last week, as of

30 September, only 122 Member States had paid their regular budget contributions in full –- the lowest number in the last three years.

The representative of Iran (speaking on behalf of the “Group of 77” developing countries and China) expressed the Group’s concern over late and irregular reimbursements to the troop- and equipment-contributing countries.  That situation could not continue indefinitely, for it placed a strain on those (mostly developing) countries.  Processing of claims on time should become a priority, and sufficient staff should be assigned to the task.

The representative of Singapore asked whether the expected payment of arrears and assessed contributions by the United States and other countries had truly solved the negative cash-flow situation.  He said that beneath the veneer of payments exceeding assessments, several fundamental problems remained.  The cash balance of the regular budget habitually went into deficit in the second half of the year.

Also speaking this morning were the representatives of New Zealand (also on behalf of Australia and Canada), Pakistan, Norway, Philippines, Indonesia, Morocco, Russian Federation, China, Republic of Korea, Bangladesh, Kenya, Cuba and Thailand.  At the end of the meeting, Under-Secretary-General for Management, Joseph E. Connor, responded to comments and questions from the floor.

The Committee will continue its consideration of the proposed budget for 2002-2003 at 3 p.m. today.

Background

This morning, the Fifth Committee (Administrative and Budgetary) met to discuss the means of improving the financial situation of the United Nations.  The latest information on the matter was presented to the Committee by Under-Secretary-General for Management Joseph E. Connor last week, and has since been issued as an official document (A/56/464).  For detailed information, see Press Release GA/AB/3456 of 10 October.

Statements

BAGHER ASADI (Iran), speaking on behalf of the “Group of 77” developing countries and China, reaffirmed the legal obligation of all Member States to collectively bear the financial burden of the Organization and to pay their assessed contributions on time, in full and without conditions.  At the same time, he understood the need to extend sympathetic understanding to countries which found it difficult to meet those obligations due to genuine financial difficulties.  He welcomed the fact that the financial flexibility of the United Nations was expected to be restored due to the increased payment of dues by the end of the year.  As a result of the projected payments, additional resources could be provided towards the implementation of important mandates.  It was the Group’s understanding that the information provided by Under-Secretary-General for Management Joseph E. Connor was based on projection, and he would appreciate receiving clarification on the sources of such projections.  The payments should be made without any conditionalities. 

The Organization’s financial difficulties were due mainly to late payments by major contributors, he continued.  Since the cash balance was expected to be negative by November, he wanted to know how the Secretariat intended to address the situation without cross-borrowing from the peacekeeping budget.   He was also concerned about the financial situation beyond 2001.  All Member States in arrears should be cleared as soon as possible, without any conditions. 

He went on to express the Group’s concern over late and irregular reimbursements to the troop- and equipment-contributing countries.  That situation could not continue indefinitely, for it placed a strain on those (mostly developing) countries.  Processing of claims on time should become a priority, and sufficient staff should be assigned to the task.  The Group would also appreciate being appraised of efforts to certify the claims for closed missions and to receive information on all pending claims that had not yet been certified.  The Group would continue to participate in collective efforts to improve the financial situation of the Organization.

JEAN DE RUYT (Belgium), speaking on behalf of the European Union and associated States, said the Union cautiously shared Mr. Connor’s satisfaction that, at the end of 2001, after years of crisis, the United Nations had a prospect of improving its financial situation, thanks to the payments expected from Member States, particularly the largest contributor.  He noted the efforts of the United States Government to honour its commitment to pay a part of its arrears following the adoption of resolution 55/5, which had reduced its contribution to 22 per cent.  The additional burden for other States had thus not been assumed in vain.  However, much still remained to be done before the matter of arrears could be settled.

The Organization’s financial situation as at 30 September remained precarious, however, he said.  As the Under-Secretary-General for Management had pointed out, 122 Member States had paid their contributions in full to the regular budget as of that date –- the lowest number in the last three years.  Moreover, unpaid amounts to the budgets of the International Tribunals were 31 per cent higher than the previous year, and the unpaid amounts to the peacekeeping budgets had reached a record high.  All that explained why the Organization was currently operating with a deficit.  Under those circumstances, the Union expected that the situation would change radically by 31 December, as foreseen by the Secretary-General. 

Current indicators in any event showed that the financial situation of the United Nations remained largely dependent on a small number of large contributors who set themselves payment deadlines and carried out forms of financial arbitrage that were detrimental to the Organization.  It remained necessary, therefore, to apply a series of measures to encourage prompt, full and unconditional payment of contributions. 

The favourable financial projections for the end of the year would enable the United Nations to reduce its debt towards troop-contributing countries from $917 million to $422 million.  In addition, the Organization would have the resources to reduce its debt further in 2002.  He welcomed the fact that, based on that scenario, the Organization could be current in terms of paying troop-contributing countries.

DON MACKAY (New Zealand), speaking also on behalf of Australia and Canada (CANZ), said the “good news” that the Organization might finally be approaching a state of financial stability was welcome and essential for implementation of the critical activities mandated by Member States.  He agreed that the financial projections for 31 December signalled a major “sea change” for the United Nations.  Members and contributors faced an unprecedented array of security, peacekeeping, developmental and social challenges.  Achieving a stable financial base to underpin collective responses to those challenges was critical.  CANZ welcomed the projections that, by 31 December, Member States would have paid assessments totalling some $4.7 billion, the largest sum ever paid in a single year in the history of the United Nations.  CANZ also acknowledged the efforts of the United States to address its arrears.  The Committee must remember, however, that the figures were based on projected payments, not on funds actually received.  Some  44 per cent of total assessments from Member States for 2001 had yet to be paid.  So while projections looked positive, they were absolutely dependent on Member States making good on their commitments.

While welcoming the positive note of the Secretariat’s briefing, it should not remove the sense of urgency in doing what was necessary to improve the United Nations financial situation, he continued.  There remained a shared imperative to put the Organization on a more secure financial footing.  CANZ strongly urged all Member States to pay in full, on time and with no conditions.  He was concerned that the total number of countries to pay in full appeared likely to decrease this September.  It was incumbent on all 189 Member States to meet the portion of assessed United Nations costs in accordance with their legally binding obligations under the Charter.  In continuing to improve the effective functioning of the Organization, the Secretariat shared responsibility with Member States. 

The same rigorous standards of efficiency and timeliness expected of Member States should apply to the Secretariat’s billing systems, he said.  The ability to meet the 30-day payment window for peacekeeping assessments would be greatly enhanced by the Secretariat providing an indicative schedule of assessment dates.  The current practice of issuing assessments without notice imposed additional administrative burdens on delegations and capitals, many of which operated on a different fiscal year to the United Nations.  While he understood that assessments could not be issued until the Security Council had renewed mandates, some informal, indicative system could still be established to assist Member States.  CANZ also hoped that improvements were possible in the time taken to bill Member States for new peacekeeping mandates following their approval. 

While encouraged by the future prospect of a more financially stable Organization, he said the current situation remained very tight.  It was frustrating that existing systems could take up to two months, following a decision, to issue invoices to Member States.  He welcomed the prospect of reimbursement to troop-contributing countries following the pay down of peacekeeping arrears.  The outstanding debts continued to be an irritant, affecting countries of all sizes and from all geographical regions, most of which continued to meet their own assessment obligations.  CANZ did not equate an increase in financial flexibility for the Organization as an opportunity to relax the robust assessment of need against available resources currently employed to ensure that the United Nations could fulfil its mandate. 

PATRICK KENNEDY (United States) said the recent close cooperation among Member States had gained recognition throughout the United Nations community and beyond.  The willingness to complete the difficult negotiations on the scales of assessment marked a shared commitment to ensure that the United Nations could conduct its business on a solid financial base.  The American commitment to the United Nations was firm, and the United States was proud to have been the largest single contributor to the Organization every year since its inception.  Last year, the United States’ total contributions to the United Nations system were approximately $2.8 billion.  This year the total was estimated to be over

$3 billion.  He was pleased to announce that United States voluntary donations to the World Food Programme (WFP) in 2001 were already in excess of $1 billion.  That amounted to the largest contribution made by his Government to any single United Nations agency. 

The United States remained staunchly committed to paying debts to the Organization, he continued, and had recently made significant progress in that area.  Last week, President Bush signed into law legislation that released the $582 million in peacekeeping arrears long promised to the Organization.  It was anticipated that the funds would be in United Nations hands by 9 November.  That would then lead to payments to various peacekeeping missions and their respective troop-contributing States.  The payment of $571 million in current peacekeeping dues had reached the United Nations together with $23 million for the International Tribunals and Ted Turner’s contribution of $31 million.  The United States had already paid $27 million in regular budget assessments and anticipated paying the remainder as soon as the United States Congress completed its work on its regular budget process, which should be a matter of days.  The United States’ current total payments amounted to $621 million. 

He was pleased to hear that the Organization’s financial situation had changed from recent years and now looked positive.  Unpaid assessments were expected to be much less than last year, the overall cash flow was stable, and the amounts owed to Member States would decrease considerably by the end of the year.  The United Nations had moved from a large deficit to a small one.  It did not mean that budget discipline could not be abandoned.  A careful eye must be kept on budget priorities to fund them.  A critical perspective must also be kept on the areas that could be made more efficient and effective, such as conference services, the Department of Public Information and information technology activities. 

AIZAZ AHMAD CHAUDHRY (Pakistan) aligned himself with the position of the Group of 77 and China and noted the improved financial situation of the Organization as presented by the Under-Secretary-General.  In his view, that was a positive development, and he hoped that the positive trend would continue.  He further noted with satisfaction that the reimbursement of amounts owed to troop-contributing countries had been accorded top priority.  His delegation had all along expressed its concern over the practice of cross-borrowing from peacekeeping funds.  That extraordinary financial practice had resulted in inordinate delays in reimbursement to troop contributors, and had the potential to undermine the smooth operation of United Nations peacekeeping.  He hoped that such practice would not be restored in the future.

It was his understanding that, in the wake of the reform of the scale of assessments, achieved so painstakingly by the Committee last year, the Organization would not face any financial uncertainty in the foreseeable future.  Its goals would remain elusive, however, unless all Member States fulfilled their financial obligations in full, on time and without any conditions.  Pakistan supported the ongoing process of budgetary reform with a view to further improving the financial efficacy of the Organization.

ANNE MERCHANT (Norway) said that she was pleased to note that the largest contributor was expected to pay some $1.46 billion by the end of the year, bringing its total contribution in 2001 to some $1.6 billion.  That payment would alleviate the cash deficit situation the Organization had had to put up with for far too long.  It would also allow the United Nations to reimburse a substantial part of the amounts owed for peacekeeping troops and equipment.  She was pleased to note that the ratio of regular budget payments was markedly higher than in previous years, and that financial stability and security were close at hand.

Norway was less pleased, however, with the fact that, even after the projected payments by 31 December, Member States would still owe the United Nations some $1.8 billion, of which some $1.53 billion represented unpaid assessments to peacekeeping missions.  Last year, 131 Member States had fully paid their contributions to the regular budget, but, this year, only 122 States had paid in full.  She noted that full payment was needed from at least 18 more Member States in order to continue the improvement of recent years.  That was not encouraging.  Recurring cash deficits had become chronic and would only be set right when all Member States paid their full contributions when those were due.

Important steps had been taken to make the United Nations more streamlined, efficient and effective, she continued.  The Organization had recently adopted a broad-based human resources reform, and it now had a budget based on a results-based format.  The level of the regular budget assessments had remained constant over the entire period from 1994 to 2001.  Her delegation was aware of the steep rise in the amount of assessments for peacekeeping, however.

She said that maintenance of peace and security was a core task of the United Nations and a major reason why the Organization had been founded.  At the time of rising commitment to peacekeeping, it was of utmost importance to live up to Member States’ collective responsibility by securing adequate financing.  She was somewhat encouraged by the information that the number of unpaid peacekeeping assessments was expected to fall significantly by the end of the year.  Nevertheless, she reiterated the call on all Member States in a position to do so to meet their Charter obligations and pay their contributions in full, on time and without conditions.

CHEONG MING FOONG (Singapore) welcomed recent developments which he said he hoped would lead the United States to pay $582 million, not an insignificant portion of its arrears.  He trusted that projections of the United Nations and expectations of Member States would not be disappointed.  The question must be asked, however, whether the expected payment of arrears and assessed contributions by the United States and other countries had truly solved the negative cash-flow situation, or whether it was just "a new coast of paint that has covered up the cracks".

Beneath the veneer of payments exceeding assessed contributions, fundamental problems remained, he said.  While the overall annual cash balance for the year might well take a turn for the better, a closer inspection of the monthly cash balance situation of the regular budget revealed a familiar picture.  The cash balance of the regular budget usually went into deficit in the second half of the year, pointing to a fundamental problem which remained unsolved.  Without the timely payment of assessed contributions to the regular budget, the Organization would still have to resort to the unhealthy practice of "cross-borrowing" from the peacekeeping budget, affecting the overall liquidity of the Organization.

He said that while the actual payments by the end of the year might well exceed the assessed amount, there might by then be a substantial amount of some $1.8 billion in unpaid assessments.  Half of that amount was owed by one major contributor, which considered a substantial chunk of that sum as “contested” arrears.  Unfortunately, there did not seem to be any indication from the major contributor as to when, if ever, that amount would be settled.  It was thus premature to speak of the restoration of the long-term financial health of the Organization.

In the wake of 11 September, he said, the United Nations would be called upon to do more, rather than less.  Two weeks ago, 167 delegations spoke on the need for international action against terrorism and there were earnest calls for a United Nations presence in a post-conflict Afghanistan.  Peace and security did not come cheaply and it was not in the interests of Member States to short-change the Organization.  Given the current financial climate, the case for a financially sound United Nations was more compelling than ever.

MARIA ROSARIO AGUINALDO (Philippines), speaking on behalf of the Association of South-East Asian Nations (ASEAN), welcomed the recent announcement that the United Nations should receive by early November some $582 million from the United States as partial payment of its arrears.  She said this development had changed the profile of the charts reviewed in previous years, but with the projected unpaid assessments remaining at $1.8 billion the Organization's financial situation remained critical.  The ASEAN members were concerned that the continuing financial crisis was undermining the Organization’s ability to implement fully the programmes mandated by Member States.

She said she was also concerned with the continued cash flow difficulties of the Organization that resulted in cross-borrowing from peacekeeping accounts to finance regular expenses.  The only solution to the problem was for Member States to pay assessed contributions in full, on time and without conditions.

DEWI SAVITRI WAHAB (Indonesia) associated herself with the statements by the representatives of Iran, on behalf of the Group of 77 and China, and the Philippines, on behalf of the Association of South-East Asian Nations (ASEAN).  She noted that more States would make their assessed payments by the end of the year, and that the United States would pay the second tranche of its peacekeeping payments in the near future.  That would allow the Organization to make payments to troop-contributing countries.  She also welcomed the statement that the United States would further strive to fulfil its financial obligations before the United Nations.  Despite those welcome developments, however, the situation remained critical, particularly regarding the cash-flow situation.  In that connection, she underlined the importance of making payments in full, on time and without conditions.  Addressing the late payment or non-payment of assessed contributions, she said there was a need to give sympathetic consideration to those who were willing to pay but unable to do so because of genuine economic difficulties.

OMAR KADIRI (Morocco) joined the position of the Group of 77 and China and said his delegation welcomed the statement by Mr. Connor (Under-Secretary-General, Department of Management) that this year the Organization would receive a greater payment by Member States of their assessed contributions.  That would improve the financial situation of the United Nations and allow it to fulfil many of its mandates.  He also hoped that the amount of arrears noted as of 30 September would be reduced by the end of the year.  It was gratifying that the Organization’s confidence in the future might be regained, but even with the projected changes, the situation remained a source of concern.

He said all Member States had an obligation to pay in full, on time and without conditions, yet it was also necessary to take into consideration the financial situations of those countries which experienced genuine economic difficulties.  He said he welcomed the fact that some of the amounts received in payment this year would be used towards making payments to troop-  and equipment-contributing countries, but added that the situation regarding the processing of claims for reimbursement remained a source of concern.

SERGEY LAVROV (Russian Federation) said the data provided in the report demonstrated that the financial situation of the United Nations might significantly improve by the end of the year.  In 2001, payments by Member States were expected to exceed the total amount of assessments, due to the payment of arrears.  The Organization might, in fact, be facing the long-awaited turning point.  The United Nations now had a chance to step back from the financial abyss, on the brink of which it had been balancing in recent years.  Still, the current situation remained a cause of concern.  The total debt of Member States was more than $3.8 billion, including $3.2 billion for peacekeeping operations at a time when the developments in a number of crisis-ridden regions called for the expansion of United Nations peacekeeping activities and, consequently, for adequate resources.  The debt owed by the Organization to the Member States that contributed troops and equipment was still rather large, more than $1 billion.

The remaining months of the year and expected payments of Member States were of critical importance, he continued.  He welcomed the intention of the major contributor to the United Nations to pay over $1.4 billion in arrears and current contributions, including the long-awaited amount of $582 million by the end of the year.  He also noted the information provided by the Secretariat that approximately $645 million would be paid by 31 December by other Member States.  All funds should be transferred to United Nations accounts within a limited timeframe.  That would make it possible to proceed with the practical solution of the United Nations “chronic” financial problems, including “cross-borrowing” from peacekeeping operations accounts to finance regular-budget activities. 

Russia undertook significant efforts to support the Organization with real deeds, he continued.  In 2001 alone, Russia had transferred more than $62 million to the United Nations in payment of its current assessments and arrears.  Despite existing difficulties, Russia paid in full its assessed contributions to the United Nations regular budget and, for seven years in a row, had been making payments to the peacekeeping budgets which exceeded current assessments.  Russia was consistently paying off its debt to the United Nations since 1994, reducing that debt by tenfold.  Russia intended to reduce it even further by the end of the year. 

He reiterated that strict compliance by all Member States, without exception, with their obligations under the United Nations Charter regarding the payment of assessed contributions was the main prerequisite for the Organization’s financial stability.  Besides the financial side, the scale of assessments had a political dimension, since its fairness contributed to Member States’ trust in the United Nations.  He stressed the crucial importance of last year’s consensus decisions with regard to the reform of the scales of assessments for the regular budget and peacekeeping activities, which significantly strengthened such trust.  The financial results this year should provide yet another proof of that. 

SHEN GUOFANG (China) said the complex international situation the Organization faced today required that its role be strengthened.  That was a situation that no Member States would dispute.  The question of improving the Organization’s financial situation had become a perennial item on the Committee’s agenda.  Every year, most Member States repeated the same exhortation:  that all Member States should pay their financial obligations towards the United Nations, in good faith, and that the country with the largest arrears should pay its dues to the United Nations immediately, in full and without condition.  China welcomed the good news brought last week by Under-Secretary-General for Management Joseph Connor and hoped that his optimism would be justified.  The new scales of assessments for both the regular and peacekeeping budgets, however, must be implemented comprehensively.  The country with the largest arrears should emulate the majority of Member States by paying its assessments in full, on time and without conditions, and pay its arrears as requested by the General Assembly. 

He said that as a responsible Member State, China, a developing country with relatively low capacity to pay, agreed to a large increase in its assessments for both scales during the negotiations last year.  Like most Member States, it supported the Secretary-General’s reform measures.  Progress in financial reform of the United Nations, including adjustments to the scale of assessments and the adoption of a new budgeting format, had been made.  It was high time to resolve the United Nations financial difficulties once and for all.  A strong and stable financial basis was the precondition for the Organization’s fulfilment of its mission and Charter responsibilities.  He called upon all Member States to faithfully honour their financial obligations under the Charter.

SUN JOUN-YUNG (Republic of Korea) said that at a time when the United Nations was to play a greater role and take on more responsibilities, a sound and stable financial structure was more important for the Organization than ever before.  Last December, by setting a new scale of assessments for the regular budget, Member States had made great strides towards putting the Organization on a sound financial footing.  That might not have been possible if many countries, including the Republic of Korea, had not been willing to shoulder a heavier burden.

Over the past years, Member States had heard over and over again about the Organization’s gloomy financial situation, he continued.  Today, they finally seemed to see a glimmer of light at the end of the tunnel.  He was heartened by the financial overview presented by the Under-Secretary-General.  Many of the improvements were due to the expected payment by the United States of its long-overdue contributions.  In that regard, he commended the efforts that the United States had made to pay off its substantial arrears.  Anticipating the payment of a significant portion of that country’s debt by the end of the year, his delegation supported the Secretariat’s plan to use the use its peacekeeping portion, first and foremost, to pay the Organization’s debt to troop contributors.

The optimistic picture was not without its downside, he said, noting with regret that the number of Member States paying the regular budget assessment in full had decreased from 131 in 2000 to 121 as of the end of September.  That trend should be checked.  In order to forestall the recurring cash deficit at the end of the year, his delegation added its voice to the appeal to Member States to pay their contributions on time.  Another issue of concern was the projection that the peacekeeping assessment level was expected to reach over $3 billion by the end of the year. 

The budget for the international Tribunals was forecast to be $169 million for 2002, he said.  His country had been a strong supporter of peacekeeping operations and the activities of the Tribunals, but it believed that further measures should be taken to achieve savings and economy, especially in the areas of procurement, asset and inventory management and human resources.  Furthermore, continuous evaluation and assessment of the adequacy of current methods and procedures should become the norm.  He also stressed the importance of strengthening oversight, following financial discipline and making the Organization more streamlined and efficient.  It was incumbent on Member States to ensure the financial solvency of the Organization.

SHAMEEM AHSAN (Bangladesh) aligned himself with the statement made today by the representative of Iran on behalf of the Group of 77 and said that his

delegation was pleased to find out about the projected improvement of the financial situation of the Organization.  Financial discipline should go hand in hand with the payment of Member States’ assessed contributions in full, on time and without conditions.

He said everyone remembered the painstaking negotiations on the scale of assessment in order to put the Organization on a sound financial footing.  Bangladesh was happy to note that during the next three months the infusion of funds would be used to reduce the amount owned to Member States for troops and equipment.  That was a positive development. As a major troop-contributing country, Bangladesh wanted to emphasize the importance of such payments.  The troop contributors, who were mostly developing countries, often mobilized the troops under difficult financial conditions.  Delays in processing of claims were a source of concern to his delegation, and he wanted to know how the Secretariat intended to address that problem. 

BOB F. JALANG’O (Kenya) said Member States had a collective responsibility to provide the Organization with financial resources to facilitate the execution of its mandate.  Unpaid peacekeeping assessed contributions, which had escalated to $3.2 billion, were of concern to the troop contributors.  Kenya noted with appreciation that on receipt of the payment of arrears owed by the major contributor, the Secretary-General intended to reimburse troop contributors.  While he appreciated efforts to reimburse troops costs, he lamented the serious delays still encountered in reimbursement for contingent-owned equipment.  Many troop-contributing countries, including his own, were owed a great deal of money by the Organization.

He said that, while encouraging the Secretariat to expedite the processing of all claims, it was his wish that troop costs and contingent-owned equipment reimbursement be tied to a timeframe.  Kenya was still owed some $4.5 million for contingent-owned equipment for participation in a mission that closed about five years ago.  Kenya continued to view the situation seriously and would appreciate greater attention to the matter.  He reiterated the call that all Member States meet their Charter obligations and pay assessed contributions promptly, in full and without conditions.

ORLANDO REQUEIJO GUAL (Cuba) said there was a sense of optimism for the end of 2001 compared with previous periods, because of payments made or pledged.  Such indications were a good sign provided that the pledged amounts were actually received, without conditions of any kind.  The payment of contributions by Member States to the Organization was a financial obligation under the Charter.  They should be paid in full, on time and without condition.  That did not mean, however, that the special situation of some countries should not be recognized.  Balance was needed, however, when describing the current scenario.  While an increase in the total level of assessments by the end of the year was expected, higher inflation and volatile exchange rates could actually raise level of real expenditure.  If the expected payments were made, outstanding debt would still be high, approximately $2 billion.  Of that amount, United States arrears represented a burden on the Organization’s financial situation.  Even if the pledged payments were made, a considerable amount of arrears subject to a series of conditions would remain.  The availability of combined resources, while it might be more encouraging than in previous years, did not create a sound financial basis.

Regarding the $582 million, he asked for additional explanations on how that money would be used once it was received.  He suggested delaying discussion on the application of Article 19 and focusing instead on how to ensure the secure financial footing of the Organization.

KULKUMUT SINGHARA NA AYUDHAYA (Thailand) associated himself with the position of the Group of 77 and ASEAN, and welcomed the fact that the financial situation of the United Nations would improve by the end of the year, due to the positive developments in reducing the arrears.  That would make possible payments to troop-contributing countries, including Thailand. 

Continuing, he reiterated the importance of a solid financial foundation for the United Nations and confirmed the Member States’ obligation to pay their assessed contributions in full, on time and without conditions.  For its part, Thailand had always fulfilled its financial obligations under the Charter, despite financial difficulties at home.  He said he welcomed the decision to use the payments to partially settle debts to troop-contributing countries.  Like many developing countries contributing troops to United Nations peacekeeping missions, Thailand wished to urge the United Nations to provide such reimbursement without delay in order to lessen their financial burden.

Responses by Under-Secretary-General

Responding to comments from the floor, the Under-Secretary-General for Management, JOSEPH E. CONNOR, said that he could update the delegates on several issues.  As of today, of the amounts that the United States was projected to pay in the last quarter of this year, the United States had paid $637 million to the United Nations.  The number of Member States which had paid their regular budget assessments had increased by four; now the Organization was only five behind the pace of last year.

He went on to say that the representative of New Zealand had asked to speed up the issuance of assessment letters.  New Zealand had habitually paid all its assessments by the end of the year, and the slow pace encumbered its financial process.  He said he would look into the matter to see how the situation could be resolved.

Responding to questions about the distribution of payments, Mr. Connor said that the Organization’s guiding principle was equal treatment of all Member States.  To do otherwise, especially with regard to reimbursement of States for amounts owed to them for peacekeeping, would be a recipe for disaster.  When paying troop costs, the United Nations paid all troop-contributing countries for all missions at the same time, equally for the same number of months.  When making progress payments for contingent-owed equipment, certified claims placed in accounts payable, the Organization prorated the total payment amount being made equally among the troop-contributing countries for the missions for which payment was being made.

To do that, it was necessary to ensure that there was sufficient cash in the individual missions’ accounts to first meet their operating cost requirements for at least three to four months.  Then there was an order of priority to settle death and disability claims, letter-to-assist claims, and to accumulate remaining

cash until there was a sufficient amount to pay troop costs or to make progress payments for contingent-owned equipment to all troop-contributing countries.

Regarding the United States, he explained that, during the last six or  seven years, that Member State was notified when the Secretariat made troop or contingent-owned equipment payments to troop contributors.  However, the United States had instructed the Secretariat not to make payments to its accounts, pending resolution of domestic legislation on the payment of its assessments.  Thus, the Secretariat had retained those amounts due to the United States in "accounts payable" for a number of years.

It was projected that payments to troop and equipment contributors could be made as soon as payment was received (indicated as 9 November), he said.  In his last week’s statement, he had illustrated how the total $582 million would be

used to reduce the debt to troop contributors -- $505 million immediately and

$77 million to be paid as soon as possible thereafter.  The first settlement

of $505 million would comprise an immediate payment of $381 million to

47 contributors (excluding the United States) in respect of 15 peacekeeping missions. 

Another $17 million would be paid shortly thereafter for claims that were being processed and involved a number of missions and troop-contributing countries, he said.  The redistribution of $107 million owed to the United States would be applied to that country’s peacekeeping arrears.  Settlements in several tranches would be subsequently made for another $77 million as more claims were processed and certified.  At this stage, it was not possible to make a detailed breakdown in that respect.

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