SCALE OF ASSESSMENTS SHOULD MORE FAITHFULLY REFLECT MEMBER STATES’ CAPACITY TO PAY, SAY SPEAKERS IN FIFTH COMMITTEE

Fifty-seventh General Assembly

Fifth Committee

8^th Meeting (AM)

SCALE OF ASSESSMENTS SHOULD MORE FAITHFULLY REFLECT MEMBER STATES’ CAPACITY

TO PAY, SAY SPEAKERS IN FIFTH COMMITTEE

As the Fifth Committee (Administrative and Budgetary) continued its consideration of issues related to the scale of assessments this morning, several countries expressed concern that the new scale of assessment of Member States’ dues, adopted for 2001-2003, had led to an unjustified increase in many countries’ payments, and that the methodology for such calculations should be further improved.

The representative of Poland said that his country’s scale for 2001-2003 had gone up as much as 80 per cent against 2001, 63 per cent against 2002, and 93 per cent against 2003, compared with the previous scale.  The scale of assessment for 2004-2006 would be fixed on the basis of statistical data ending at the year 2001, he continued.  Based on past experience, he was concerned that national income data alone would not adequately reflect the costs and impact of socio-economic transformations, the real state of the economy and the country’s capacity to pay.

Ukraine’s representative said it was important that between the scale review periods the Committee on Contributions should continue to work on refining its methodology for the apportionment of expenses.  For instance, one of the fundamental elements in building the scale was the calculation of gross national product (GNP) or, according to the new concept, gross national income (GNI), based on relevant exchange rates for conversion of national data into United States dollars.  He believed that market exchange rates should continue to serve as the basis for calculations, while other exchange rates should be applied only in individual cases, subject to thorough and well reasoned analysis.

The representative of Myanmar was among a number of speakers who emphasized Member States’ legal obligation to bear the expenses of the Organization, as apportioned by the General Assembly in accordance with the basic principle of “capacity to pay”.  In that regard, he said that the developing countries, especially the least developed countries, should not be assessed at a rate inconsistent with that basic principle -- even if there should be any adjustments in the scale of assessment or in the current methodology of calculating arrears under Article 19 of the Charter.

Summarizing the discussion in his concluding remarks today, Ugo Sessi (Italy), Chairman of the Committee on Contributions –- the body charged with advising the Assembly on such issues as the application of rules for the collection of dues, calculating the assessments and encouraging timely payment -– said that, generally, there had been a positive response to the proposal to

introduce multi-year payment plans aimed at liquidating Member States’ arrears. There was consensus that the process should be made more formal than it was at present.  Member States held a variety of views with regard to the $16.2 million arrears of the former Yugoslavia.  On that issue, the Committee on Contributions believed that the question of how to treat the arrears raised legal and political issues that went beyond the Committee’s technical role.  With regard to comments on scale methodology, he said that the Secretariat should organize a seminar on that matter so that delegates could see its application step by step.

On the issue of procurement reform, the representative of Canada said that much remained to be done regarding the registration process for vendors.  There was a need to simplify and harmonize the registration process for vendors already registered with a United Nations organization.  The concept of a single lead agency for specific services and commodities would be particularly useful in harmonizing and simplifying the system.

Syria’s representative said that procurement did not yet respond to the interests of Member States as far as efficiency and cost-effectiveness were concerned, and not enough opportunities had been created for vendors from developing countries and countries with economies in transition.  Other delegates voiced concerns that procurement opportunities for such countries were not developing quickly enough, and stressed the importance of disseminating information through seminars and briefings to inform people in those countries about the procurement process.

Also speaking in the Fifth Committee this morning were the representatives of Cuba, Morocco, Kuwait, Qatar, Libya, United States, Democratic Republic of the Congo, Indonesia and Nigeria.

Andrew Toh, Director of the Facilities and Commercial Services Division, Office of Central Support Services, also addressed the Committee.

The Committee will meet at 10 a.m. tomorrow, 16 October, to take up the item on financial reports and reports of the Board of Auditors.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to continue its discussion on the scale of assessments, the programme budget for 2002-2003, and procurement reform.  For further details, see Press Release GA/AB/3520.

Statements

MARKIYAN KULYK (Ukraine) said it was important that between the scale review periods the Committee on Contributions should continue to work on refining its methodology for the apportionment of expenses.  One of the fundamental elements in building the scale was the calculation of gross national product (GNP) or, according to the new concept, gross national income (GNI), based on relevant exchange rates for conversion of national data into US dollars.  He believed that market exchange rates should continue to serve as the basis for calculations while other exchange rates should only be applied in individual cases subject to thorough and well-reasoned analysis.  Furthermore, the price adjusted rates of exchange methodology for the calculation of conversion rates needed further consideration.

His delegation questioned the proposals to make a shift to net-net calculation under Article 19 and its semi-annual application.  In practice, such an approach could only run counter to its purpose, as a growing number of Member States would fall under Article 19 and experience even greater difficulties in paying their contributions.  Those measures would, first and foremost, strike economically less developed countries, thus limiting their participation in the activities of the Organization.  Similar reservations could be brought against introducing interest rates on arrears or withholding the shares in budget surpluses.  That would only aggravate the situation with arrears to the Organization.

It was his delegation’s view that those and other incentive/disincentive measures, which had been exhaustively dealt with by the Committee on Contributions and had not been recommended by the General Assembly, should not be considered by the Fifth Committee.  With regard to payment plans, he said they should continue to be a voluntary tool for governments, which sought rescheduling and should not be automatically linked to other measures.

U KYI TUN (Myanmar) said that the success of the United Nations would depend in a large measure on prompt and unconditional payment of assessed contributions.  Member States had the legal obligation to bear the expenses of the Organization, as apportioned by the General Assembly in accordance with the basic principle of “capacity to pay”.  In that regard, the developing countries, especially the least developed countries, should not be assessed at a rate inconsistent with that basic principle -- even if there should be any adjustments in the scale of assessment or in the current methodology of calculating arrears under Article 19 of the Charter.

He felt that the multi-year payment plan was the best tool to be adopted by Member States with arrears.  However, the plan should be voluntary and should not be linked to other measures.  His delegation shared the recommendation of the Committee on Contributions regarding the requests made by two member countries for ad hoc reductions of their rates of assessment for the year 2003.  However, such ad hoc reductions under extraordinary circumstances should not create a precedent, which could lead to similar requests by other countries in the future.

JANUSZ STANCZYK (Poland) addressed his country’s contribution to the United Nations budget.  He said that its scale for 2001-2003 had gone up as much as

80 per cent against 2001, 63 per cent against 2002, and 93 per cent against 2003, compared with the previous scale.  Such a hike was methodologically possible due to the final elimination of the scheme of limits in the present scale, which lacked any compensating mechanism to avoid excessive variations in successive scales.  The requirement, however, had been recognized by the Committee on Contributions and the Assembly as one of the principles to be observed in establishing the United Nations scale of assessments.  Among the proposals designed to mitigate large variations in successive scales was an innovative concept of annual updating with fresher economic data.  He looked forward to the advice from the Contributions Committee in that respect.  Poland was concerned that the huge increase in its contribution had resulted not from the proportional increase in its economy and real capacity to pay.

The scale of assessment for 2004-2006 would be fixed on the basis of statistical data ending at the year 2001, he continued.  Based on past experience, he was concerned that national income data alone would not adequately reflect the costs and impact of socio-economic transformations, the real state of the economy and the country’s capacity to pay.  In the last four years, Poland had experienced a severe economic downturn, with economic growth below 1 per cent in 2001.  To reverse that trend, the Government had recently embarked on the path of liquidation or restructuring of obsolete and inefficient enterprises, privatization and market deregulation.  The Committee on Contributions had decided to consider the information provided by Poland at its next session, and he hoped that it would take the country’s real situation into consideration.

EVA SILOT BRAVO (Cuba) associated herself with the position of the “Group  of 77” developing countries and China, saying that it was an obligation of all members of the Organization to observe their financial obligations to the United Nations.  Exceptions, however, needed to be made for those countries that were experiencing difficulties beyond their control.  The timely and well founded presentation of requests for exemption this year had allowed for a speedy consideration of the question by the Assembly during the current session.  The Assembly should be cautions, however, about proliferation of new and not always founded measures in that respect.

Having looked at multi-year payment plans introduced so far, she felt that it was an additional instrument to encourage countries to meet their financial obligations.  She agreed that they should continue on a voluntary basis and should not be automatically linked to other measures.  She hoped the Assembly would consider the measure as a flexible step, which would allow countries to reduce their outstanding assessments.  Perhaps the Organization should explore the possibility of introducing, in general, multi-year payment plans, which would allow for greater predictability of resources.

Turning to the incentive to encourage timely payment of dues, she said that efforts aimed at improving the application of Article 19 should not put technical elements above practical considerations of importance to the membership.  Such measures as indexation, the use of budgetary surpluses and so on should be further considered by the Committee on Contributions and the Assembly.

Regarding new members’ contributions and reductions for Afghanistan and Argentina, she said that it would be useful for the Secretariat to provide more detailed information and tables, which would illustrate the impact of the adoption of the Contributions Committee recommendations under the current scale of assessments.  More information should also be provided on the new method of the use of conversion rates for calculation of the scale and the use of other than market rates.

AICHA AFIFI (Morocco) said that capacity to pay was the major criterion for setting a scale of assessments, and that every State should meet its requirements in a timely manner.  The principle of multi-year payment plans had been considered several times.  It would help to reduce the number of States that came under Article 19, if it was regulated in a way that did not harm the rights of the State concerned.

She welcomed the proposal to establish a multi-year payment plan; such a mechanism could be a positive element with regard to exemption under Article 19 and should not be considered as a negative element.  Those payment plans should be voluntary in nature, non-binding and should not be linked to other measures. Furthermore, her delegation supported the requests by Afghanistan and Argentina concerning their scale of assessment.

MESHAL A.M.A AL-MANSOUR (Kuwait) said that his delegation had looked carefully at the report of the Committee on Contributions and welcomed its work regarding the scale of assessments.  He endorsed the Committee’s recommendations regarding requests by Afghanistan and Argentina.  The reason the United Nations had experienced financial difficulties on occasion was related to the current methodology and the fact that some States had not complied with their obligations. Any amendments to methodology would be limited as long as there continued to be Member States in arrears.

Member States needed the political will to make their payments, he continued.  In order to ensure the capacity to pay, the methodology used must take into account elements that influenced that capacity, and those must become more just and more transparent.

JERRY KRAMER (Canada), also speaking on behalf of Australia and New Zealand, said that as multi-year payment plans and the tightening of the application of Article 19 were part of the broader issue of reducing arrears, the Fifth Committee might choose to defer consideration of that whole cluster until its resumed session.  During the current session, the Assembly should agree to implement the decision taken two years ago to calculate arrears on the basis of payments made against actual assessments issued, rather than the gross number.  The present arrangements, in many cases, created the fiction of credit where no payment was made.  He would also favour semi-annual calculation of arrears as a further step to bolster discipline consistent with the Charter, but considered that implementing what had already been agreed would represent concrete progress.

Regarding multi-year payment plans, he said that on the whole he shared the Committee on Contributions’ sensible approach to the matter, especially the idea that they should be voluntary.  They should also be taken into account when considering application of Article 19 of the Charter.  He welcomed the fact that four applicants for exemption this year had submitted multi-year payment plans.

He supported the Contributions Committee’s recommendation to reduce the rate of assessment for Afghanistan, and said that one of the most important matters before the Fifth Committee was Argentina’s appeal for an ad hoc reduction for 2003.  The recommendations of the Committee on Contributions reflected the view that the United Nations had its part to play in responding to the unique circumstances confronting Argentina, and it was a view shared by the delegations he represented.

The Committee on Contributions had not been paralysed by a reluctance to set precedent, he said.  Indeed, what was being recommended had never been done before.  He had no difficulty with the proposition that Member States and the Organization should share a collective responsibility to recognize and respond to the unique circumstances Argentina faced.  In charting a path forward, however, it was important to get the reasoning right, in order to ensure that the decision rested on clear and transparent criteria, and that the method of implementing decisions was well understood and compatible with the principles governing the scale.

NASSIR ABDULAZIZ AL-NASSER (Qatar) supported the position of the Group of 77 and China and said that his delegation attached particular importance to the item under consideration today, which was the backbone of the United Nations budget.  The United Nations required the necessary human and financial resources to carry out its functions, and he urged all Member States to pay their contributions on time, in full and without conditions.  In certain cases, however, some States underwent serious economic difficulties which made them unable to pay their assessed contributions for reasons beyond their control.  He believed the international community must look sympathetically into their circumstances in accordance with the principle of capacity to pay.  He expressed satisfaction with the Committee on Contributions recommendation to lower Afghanistan’s and Argentina’s dues on an ad hoc basis.

He also supported the multi-year payment plans proposed in the Committee’s report.  Nevertheless, such measures must be voluntary, and due consideration should be given to the economic position of particular Member States.  Regarding the former Yugoslavia, he said that the Committee, as a technical committee responsible for considering the problem in all its aspects, should seek the necessary opinion of other relevant bodies to present an opinion on the matter.

KHALIFA EL-ATRASH (Libya) stressed the need for all Member States to pay their assessed contributions on time and unconditionally.  At the same time, however, the principle of capacity to pay must be respected, particularly regarding States suffering exceptional circumstances.  His delegation attached great importance to the consultative role played by the Committee on Contributions, and believed that its recommendations did assist Member States in taking appropriate decisions.  However, he wished to draw attention to the need for all Member States experiencing exceptional circumstances to submit their requests on time, together with all the financial and economic data supporting their appeals.

Concerning multi-year payment plans, his delegation supported the proposals in the report and believed that those plans must be voluntary and should not be linked with any other measures.  He also hoped that the Committee on Contributions would put forward practical proposals and incentives for those fulfilling their obligations, for example, crediting budgetary surpluses to their accounts and giving them priority in filling United Nations posts.

CHRISTOPHER WITTMANN (United States) said he shared concerns about the financial situation of the United Nations.  He also recognized that some States faced circumstances beyond their control.  Member States that took concrete steps and presented payment plans for their arrears should be supported.  However, multi-year payment plans could lead to greater financial difficulty for countries if not properly managed.  With regard to Afghanistan and Argentina, he supported the conclusions of the Committee on Contributions, but was concerned that the application of Rule 160 remained subject to differing interpretation.

FABIEN EMERY ZULU KILO-ABI (Democratic Republic of the Congo) said that while, on the whole, he endorsed the statement by Venezuela on behalf of the Group of 77 and China, he believed that the question of the dues of the former Yugoslavia should be considered on the basis of relevant decisions contained in resolutions 47/1 and 47/229.  He recalled that at the time of the dissolution of the former Yugoslavia, political factors were given primary consideration.  He believed that a political solution should prevail in that case.

Regarding Argentina’s dues, he said that he could appreciate the situation experienced by that country.  Its serious financial and economic crisis deserved a favourable response.  The same applied to Afghanistan.

DEWI SAVITRI WAHAB (Indonesia) said her Government condemned the atrocities of the terrorist bombing in Bali last Saturday and expressed deepest sympathy to the victims of the attack.  With regard to the item under consideration, she associated herself with the position of the Group of 77 and China. 

Continuing, she underlined the legal obligations incumbent on Member States to bear their financial obligations as assessed.  However, as a country itself endeavouring to recover from an economic crisis, Indonesia sympathized with those countries which had difficulty paying their dues due to circumstances beyond their control.  She supported an ad hoc reduction of dues for Afghanistan and Argentina and urged all Member States, including the major contributor, to pay their dues on time, in full and without conditions.  She added that multi-year plans should remain voluntary and should not be automatically linked to other measures.

Remarks by Chairman of Committee on Contributions

UGO SESSI (Italy), Chairman of the Committee on Contributions, said that Committee members had been generally positive about multi-year payment plans, and there was consensus that the process should be made more formal than it was at present.  Member States held a variety of views with regard to the former Yugoslavia, he noted.  The Committee’s legal opinion on the former Yugoslavia was expressed in the annex of document A/56/767.  It believed that the question of how to treat the arrears raised issues that went beyond the Committee’s role.  There were no technical grounds for writing off the arrears, and if the General Assembly decided to seek payment of past arrears, the matter would need to be pursued with the Federal Republic of Yugoslavia.

With regard to comments on methodology, he said that the Committee had already expressed the view that the Secretariat should organize a seminar on scale methodology.  That would be done next year prior to the General Assembly or at the outset of the Assembly session, so that delegates could see the step-by-step methodology used.

Canada had made reference to possible criteria for the application of

Rule 160.  Such criteria did not exist, he said, as in the past the Committee on Contributions had considered requests on a case-by-case basis.

JENNIFER ARMSTRONG (Canada), speaking on behalf of Canada, Australia and New Zealand, said that a key issue in procurement reform was the harmonization and simplification of the procurement process across the United Nations.  With regard to progress made in the funds and programmes, the report before the Fifth Committee detailed procurement reform improvements under way at the United Nations Development Programme (UNDP), United Nations Children's Fund (UNICEF) and the United Nations Population Fund (UNFPA).  However, a significant portion of all United Nations procurement was undertaken by other agencies, and her delegation would be interested in hearing about the progress made in those agencies, as well as in areas that still required improvement.

The registration process for vendors was one where additional work remained to be done, she continued.  There was a need to simplify and harmonize the registration process for vendors who had already registered with a United Nations organization.  The concept of a single lead agency for specific services and commodities would be particularly useful in harmonizing and simplifying the system, particularly if it were accessible via the single Internet portal and if all funds and programmes participated.

NAJIB ELJY (Syria) said that in the context of the Secretary-General’s report, his delegation noted improvements in the administration of procurement and training.  However, procurement did not yet respond to the interests of Member States as far as efficiency and cost-effectiveness were concerned.  Not enough opportunities had been created for vendors from developing countries and countries with economies in transition.  He supported the comments of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the matter.

In conclusion, he expressed Syria’s grave concern at the information contained in the second annex to the report regarding the value of procurement of the United Nations Disengagement Observer Force (UNDOF).  He requested clarification in that respect, and would follow up on the matter after informal consultations.

NONYE UDO (Nigeria) commended the report before the Committee and congratulated the Procurement Division for its efforts to train vendors from developing countries and countries with economy in transition.  She believed that the present focus should be maintained in the implementation of a harmonized training programme for the United Nations as a whole.  She also noted progress in the development of the Procurement Division’s Web site, organization of seminars and briefings for the vendors, and said that those efforts should be sustained. 

However, she shared the concern of the Advisory Committee that the statistics demonstrated no significant increase in the number of vendors from developing countries.  The cooperation between the Department of Peacekeeping Operations and the Procurement Division should be commended, as it was only through concerted joint efforts that the situation could be advanced.

Mrs. WAHAB (Indonesia) said she welcomed initiatives taken in the area of procurement and wished to touch upon efforts to increase opportunities for vendors from developing countries.  She shared the concern that procurement opportunities for those countries were declining, and believed that disseminating information through seminars and briefings to inform people in developing countries and countries with economies in transition about the procurement process was extremely important.  With regard to professional vendor registration, she was concerned that it could lead to inequitable treatment and believed that any vendor from any country should have the chance to register.

Response from Office of Central Support Services

ANDREW TOH, Director of Facilities and Commercial Services Division, Office of Central Support Services, replied to several questions raised by Member States. For example, many delegates talked about the developing countries’ share of United Nations procurement.  He said procurement decisions were based on international competition, regardless of where vendors came from.  The only thing that could be done was to assist vendors from developing countries.  They could be made aware of opportunities, but they could not be helped to win contracts.

On the use of system contracts, he agreed that those should be used as much as possible.  The Procurement Division had over 90 system contracts in place at this moment. With regard to the provisional registration of vendors, he emphasized that it merely allowed a vendor not already in the roster to participate in a bid. Regarding payment delays, the average time taken to process invoices was down to 20 days, he said.

Many delegations saw brokers as unnecessary middlemen, he continued.  However, brokers were useful to developing countries and countries with economies in transition.  Without brokers, many countries would not have been as successful in the United Nations as they were today.  He agreed with Canada that the registration of vendors in the United Nations system still had a long way to go.  But a conclusion had not yet been reached, because different United Nations organizations had different requirements and methods for meeting those requirements.

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