Fifty-eighth General Assembly

Fifth Committee

10^th Meeting (AM)

PRESENTING BUDGET PROPOSAL TO FIFTH COMMITTEE, SECRETARY-GENERAL SAYS IT

REPRESENTS BARE MINIMUM OF REQUIRED RESOURCES FOR REQUIRED TASKS

Document Reflects Minimal Real Growth over Previous Biennium;

Delegates Praise Second Effort at Results-Oriented Budget Proposal

Introducing his $2.9 billion budget proposal for 2004-2005 to the Fifth Committee (Administrative and Budgetary) this morning, Secretary-General Kofi Annan said the document represented, first and foremost, the bare minimum for the tasks that Member States had entrusted to the United Nations.

[The proposal reflects minimal real growth over the previous biennium -– just one half of 1 per cent, or $15 million, and envisages a significant reallocation of resources, with some $100 million shifted between subprogrammes, and 810 posts redeployed.  It also calls for the discontinuation of more than 900 outputs in a first-of-a-kind effort to give new issues the attention they deserve by ending activities that are obsolete or of marginal utility.]

Secretary-General Annan said further that the proposed budget embodied both great hopes for the United Nations and carefully considered decisions about what to do in a world of finite and limited resources.  The proposal was especially significant as it pushed forward the process of United Nations reform and reflected a major effort to align the Organization’s activities with the priorities agreed at the Millennium Summit and at major world conferences.  It was being finalized at a time when the world body was wrestling with fundamental issues of principle and practice in the wake of the major events of the past year -– the war in Iraq, the development setback at Cancun, and the bombing of the United Nations headquarters in Baghdad.

He said, “Most of all, I look forward to the adoption of a budget that is neither profligate nor stinting, but rather provides what the Organization needs to fulfil the expectations of the world’s peoples for peace, development and the renewal of the United Nations itself.”  The budget proposal allocated additional resources for financing for development and the special needs of Africa.  There were modest, yet necessary, increases for drug control, crime prevention and human rights.  Also incorporated in the budget were the results of comprehensive reviews of public information and human rights, and efforts to modernize conference servicing and strengthen the Department of Economic and Social Affairs.

The Secretary-General’s second budget prepared on the basis of a results-oriented methodology proposed to implement the information and communications technology strategy, which would include improvements to the United Nations Web site, improved use of technology in servicing meetings, and other initiatives that would affect the entire Organization.  More funds were proposed for training -– a critical investment if staff were to deal with new responsibilities and different work methods.

Most speakers in today’s debate welcomed the changes in the presentation and format of the budget proposal, which had been shortened and streamlined this year.  They also agreed that attention should not be focused merely on inputs, but also on results, with a view to advancing the established priorities of Member States.  There was also agreement that the Secretary-General should be provided with resources commensurate with the Organization’s mandates.

Canada’s representative, also speaking on behalf of Australia and New Zealand, praised the philosophy of the budget, with its clear focus on priority functions, its reallocation of resources, its increased allocation of resources to human rights and humanitarian functions, and its support for African development.  In rising to the challenge of aligning resources with priorities, and deploying them effectively, the most basic priority was to cease incremental budgeting -- merely adding new activities and resources to the larger base -– and instead review the budget base for continued relevance and effectiveness of programmes against the benchmark of key declarations and conference outcomes.

While concurring that the budget document should be as focused as possible, Botswana’s representative, speaking for the African Group, also agreed with the “Group of 77” developing countries and China that any further shortening in the future should not deprive the Member States of the details they needed to make informed decisions.  In addition, the African Group felt that for the New Partnership for Africa’s Development (NEPAD) initiative to succeed, the strength and capacity of the Office of the Special Adviser on Africa must be kept under review and trusted that, in the future, its staffing structure would be addressed.  Furthermore, as the Economic Commission for Africa was expected to facilitate the work of NEPAD at the regional level, expeditious efforts should be made to recruit staff there.  Posts should not be deliberately left vacant in order to achieve savings.

The representative of the United States supported a budget level starting at zero nominal growth.  If results-based management, robust priority-setting and greater efficiency were fully applied, Member States could approve a stable budget that provided the resources necessary for the priority activities of the United Nations.  Ideas that could lead to better priority-setting included the elimination of posts that had been vacant for more than two years.  Also, the closure of the United Nations Information Centre in Washington, D.C., would save about $1 million; a reduction in duplicative administrative practices could save the Organization almost $4 million; and the number of scheduled meetings, a staggering 15,484 over two years, should be reduced by 5 per cent initially, producing more than $4.3 million for higher priorities.

Discussing a related issue -– the financial situation of the United Nations –- delegates expressed concern at the decreasing number of Member States that were paying their regular budget assessments in full.  It was particularly worrying, India’s representative said, that some Security Council members, through whose decisions mandates were set up, had themselves failed to honour their obligations.

A number of speakers pointed out that, as a remedy to the Organization’s precarious financial situation, the Secretary-General was still forced to solve the cash-flow shortage through the practice of cross-borrowing from the peacekeeping budget.  That was not a prudent financial practice and certainly not one that was sustainable over time.

In that connection, Morocco’s representative (speaking on behalf of the Group of 77 and China) expressed concern that cross-borrowing led to late and irregular reimbursement to developing countries that provided troops and equipment to peacekeeping operations.  That doubly penalized countries that, despite their financial difficulties, honoured their assessed contributions to the United Nations.

Japan’s representative said that a growing number of Japanese taxpayers were dissatisfied with the manner in which their country was being treated at the United Nations and wanted proof that the Organization was managed efficiently and to their benefit.  The responsibility for providing such proof fell primarily on the Secretariat.  What Member States needed was not rhetoric, but a meaningful message to their taxpayers.

Also participating in today’s discussion were the representatives of Italy (on behalf of the European Union), New Zealand (on behalf of Canada and Australia), Ghana, Russian Federation, Venezuela, Peru (on behalf of the Rio Group) and Saudi Arabia.

Documents before the Committee were introduced by Conrad S.M. Mselle, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), and Sayed Morteza Mirmohammad, Chairman of the Committee for Programme and Coordination (CPC).  Catherine Bertini, Under-Secretary-General for Management, provided an update on the payment of dues by Member States.

The Fifth Committee will continue its work at 9:30 a.m. tomorrow, Wednesday, 29 October.

Background

This morning the Fifth Committee (Administrative and Budgetary) continued its consideration of the financial situation of the Organization, which was presented last week by Under-Secretary-General for Management Catherine Bertini (see Press Release GA/AB/3580) and began its consideration of the proposed programme budget for the biennium 2004-2005, to be introduced by the Secretary-General.

Statements

Under-Secretary-General for Management CATHERINE BERTINI updated the financial presentation that had been delivered to the Fifth Committee on

24 October.  A number of payments had been received from Member States since last week, she said.  As of 30 September, 113 had paid their regular budget assessment.  Eight Member States had paid in full during October, some of which had been mentioned last week.  Subsequent then, the Democratic Republic of the Congo and the United Arab Emirates had also paid in full, bringing the total to 121.

Regarding the Tribunals, she said that the list of countries that had made no payment had fallen.  In her presentation, she had said that there were 118 on the list of countries that had made no payment.  That had been an error.  The Russian Federation, the former Yugoslav Republic of Macedonia and Vanuatu had made some payment, and did not deserve to be on that list.

Turning to countries that had paid all their assessments in full, she said that Liechtenstein and Sierra Leone had joined the list, brining the total to 15.

ALDO MANTOVANI (Italy), speaking on behalf of the European Union, shared the concerns expressed by Ms. Bertini on the decreasing number of countries that had paid their regular budget assessment in full.  That could lead to difficulties in cash on hand by year’s end that could force the Secretariat to continue cross-borrowing from closed peacekeeping operations.  In that respect, he expressed his concern that the amount available from cross-borrowing was rapidly decreasing and that shortfalls in the regular budget would no longer be met through closed operations accounts.  It was unfair on those Member States who paid promptly to have to carry the burdens of those that did not in terms of foregone repayments and closed missions, he said.

Turning to the Tribunals, he expressed his concern that for the majority of 2003, the Tribunals cash flow had been, and would remain, negative.  As with the regular budget, that had also led the Tribunals to cross-borrow from closed peacekeeping missions.  Regarding the Capital Master Plan, he noted with concern that, as of 30 September, only 61 States had paid their assessed contributions, while 127 States had made no payment whatsoever.  On a more positive note, the European Union was pleased that the level of unpaid peacekeeping assessment continued to decline and now stood at $1.3 billion.

AICHA AFIFI (Morocco), speaking on behalf of the “Group of 77” developing countries and China, said that the successful implementation of the programmes and activities mandated by the Member States depended to a great extent on the adequateness of resources made available to the Organization.  She noted with concern that the cash-flow situation of the organization remained unstable.  The regular budget cash availability was once again becoming critical and, unless a substantial payment was received, would get worse as the end of the year approached.  As a remedy to that precarious situation, the Secretary-General was still forced to solve the cash-flow shortage through the practice of cross-borrowing from peacekeeping funds, which often resulted in delays in the reimbursement of troops and equipment to contributor countries.

In that regard, the Group was concerned about the late and irregular reimbursement to developing countries that provided troops and equipment to the various United Nations peacekeeping operations, she said.  She also stressed the fact that such a practice doubly penalized developing countries, who, despite their financial difficulties, honoured their assessed contributions to the United Nations.

MARIA ARCE DE GABAY (Peru), speaking on behalf of the Rio Group, said that the Group had noted with concern the financial situation of the Organization, as it showed some deterioration with respect to last year.  It was also concerned over the precarious situation of the cash flow and its expectations in the short term and the decrease in the number of the States that had paid their contributions in full.  The situation of the International Tribunals was a source of great concern, as well.

The Group recognized that full, timely and unconditional payment of contributions was the only way to resolve the present financial crisis of the United Nations and encouraged the Member States to fulfil their obligations, she said.  Nevertheless, it was also important to analyse the cases of those countries that could not fulfill their obligations temporarily, due to difficult economic situations.  At the same time, she recognized the effort of those Member States to make partial payments of their unpaid assessments, despite their difficulties.

The Group regretted the lack of the necessary conditions to end the practice of taking resources from peacekeeping operations budgets to finance activities of regular budget, she said.  That practice had an effect on reimbursement to countries that contributed troops and equipment, generating a double financial obligation for them as, in addition to their assessments, those countries had to undertake the financial cost of the Organization’s debt.  A great number of those countries were developing countries and those resources could be used to tackle essential needs.

DON MACKAY (New Zealand), speaking also on behalf of Canada and Australia, said that paying a fair share of the Organization’s costs was an obligation of Member States.  If the membership did not pay, its shared goals within the United Nations could not be translated into action.  He was concerned by the facts presented last week by the Under-Secretary-General for Management, which suggested that Member States believed they could pick and choose what was, and was not, a binding legal obligation.  He was particularly struck by data on the financial situation of the International Tribunals, where unpaid assessments were at their highest level ever.  The list of non-payers as of 30 September was very long and included 10 countries either currently on the Council or due to take their seat on 1 January.  That was a real concern.  The fact that the Tribunals had been operating in a negative cash position since June required further explanation.  If the membership continued not to pay, what were the long-term implications for the Tribunals?

The outlook for the United Nations peacekeeping looked better, he continued, but the Committee should not delude itself that it was satisfactory.  He welcomed the efforts to speed up repayments to troop contributors.  The briefing had shown that good progress had been made in that respect.  It was necessary to remember, however, that there was a direct link between all Member States paying their assessments and the ability of the United Nations to repay those who bore the heaviest burden of peacekeeping by contributing troops and equipment.  The “cash shortage” described in missions in Kosovo, Cyprus and Western Sahara meant that Member States were making only partial payments, or not paying their assessments to those active missions.  Did that mean that troop and equipment contributors to those missions were unlikely to receive reimbursement?

Both the level and timing of contributions had a direct impact on what could be accomplished, he said.  Cross-borrowing was not a prudent financial practice, and certainly not one which was sustainable over time.  Even if Member States paid their full amounts by 31 December, he could not see how an unreliable cash flow could have anything other than a detrimental effect of programmes.  He wanted to know what impact the late payment, even in full, had on the activities of the United Nations.  If there was a reliable pattern of contributions in the last quarter of each calendar year, to what extent did that drive the timing of programme implementation?

HAROLD ADLAI AGYEMAN (Ghana) said the financial situation of the Organization had not dramatically changed from previous years.  Outstanding contributions from Member States for the regular budget and the Tribunals had increased, and that for peacekeeping had only marginally improved.  The perennial cash-flow problems persisted and resort to “cross-borrowing” from closed peacekeeping missions was an ever-present feature.  It was, therefore, imperative that Member States step up to their Charter obligation to bear the expenses of the Organization.  He urged Member States which were in arrears, especially contributors with huge outstanding balances, to make concerted efforts to clear such arrears.

He said that, as a troop-contributing country, Ghana was concerned about the level of reimbursement debt owed to Member States for troops and contingent-owned equipment.  Most troop-contributing countries were developing nations.  Delays in reimbursement impacted on their capacity to assist in peacekeeping operations and could affect that necessary activity for maintaining international peace and security.

He noted the connecting problems relating to conclusion of Memoranda of Understanding (with host countries), which were prevalent in the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC), United Nations Mission in Sierra Leone (UNAMSIL), and the United Nations Mission in Ethiopia and Eritrea (UNMEE).  He urged the Secretariat to work closely with concerned Member States to ensure speedy resolution of such problems.

Following the strengthening of the claims unit, he said, improvements had been made in the turnaround period for the processing of reimbursement claims, but urged the Secretariat to make further improvements.  Noting the possible increase in total peacekeeping assessments for this year by an amount of $200 million for appropriations for the United Nations Mission in Liberia (UNMIL), he said his delegation looked forward to a favourable consideration of the Mission’s budget with the urgency it deserved.

I.L. PAVLOVSKAYA (Russian Federation) said that the financial situation of the United Nations had been sufficiently stable, and for the second year in a row it was not as acute as it had been in the late 1990s.  However, in characterizing the situation as stable, her delegation could not fail to notice the arrears and non-payment to various budgets of the Organization.  Particularly alarming was the fact that the debt of Member States to the regular budget actually amounted to half its size.

Her delegation had noted an improvement in payments to peacekeeping operations, which was particularly relevant now that there were so many crisis situations in the world.  The only way to ensure normal functioning of the Organization was for all Member States to pay in full and on time.  Despite economic setbacks experienced by Russia over the past year, it had managed to make its payments, and had contributed $47 million to the United Nations budget.

Finally, she asked that the Secretariat check all statistics before issuing its documents.  The Russian Federation had been included in a list that said had made no contributions to the Tribunals.  In fact, on 6 February 2003, Russia had made a payment of $1.3 million to the Rwanda Tribunal.

SHINICHI IIDA (Japan) said that, year after year, his country had been faithful in paying its assessed contributions to the United Nations.  This year, Japan had already paid some $244 million for the regular budget and $502 million for peacekeeping.  In her presentation on 21 October, Ms. Bertini had described the Members that had and had not paid their assessments as “good guys and girls” and “bad guys and girls”, respectively.  While it was Japan’s understanding that Ms. Bertini had meant simply to present her argument in a clear and forceful manner, such simplification tended to minimize the serious nature of problems and sometimes adversely affected efforts to resolve them.

It was with taxpayers’ understanding that the governments of Member States paid their assessed contributions, he continued.  A growing number of Japanese taxpayers were expressing their dissatisfaction with the way that their country was being treated at the United Nations.  As a result, the process of obtaining their understanding with respect to the payment of assessments to the Organization had become highly politicised, and it was increasingly difficult for Japan to continue paying its dues at the present rates.  Taxpayers of Member States were asking for proof that the United Nations was being managed efficiently and that its work was truly to their benefit.  The responsibility for providing such proof fell primarily on the Secretariat.  What Member States needed was not rhetoric, but a meaningful message to their taxpayers.

Regarding the peacekeeping budget, Japan had stated on numerous occasions that it was important to establish some mechanism for dialogue between the Security Council and major financial contributors to ensure transparency.  Without that, it would be an open question whether Japan would be able to obtain the continued understanding of its taxpayers.  The Government of Japan would make its utmost efforts to pay its assessed contributions for the budgets of the two Tribunals, but it was imperative that the Tribunals preserve their present budget levels as ceilings and strictly rationalize their budgets in order to dispel strong scepticism in Japan towards those budgets.  The Rwanda Tribunal had not compiled its completion strategy for quite some time, submitting it only recently, and that must be looked into.  As of 30 September, 116 Member States had not paid any of their assessments for the Tribunals, and it was necessary to ask why.

RAM NATH KOVIND (India) said that, despite the critical importance of the financial situation of the United Nations, attention to the problem had been “episodic and ritualistic”.  For too long, many Member States had repeatedly underscored their commitment to the Organization and yet not lived up to their obligations.  The level of unpaid assessments was unconscionably high, and several worrying trends had been revealed in the figures presented this year.  These must be addressed sooner, rather than later.

He said the regular budget was facing three consecutive months of negative cash balance, in October, November and December this year.  There was a real prospect of negative cash flow even at the end of the year.  As much as

$125 million would have to be borrowed from the peacekeeping account to finance regular budget activities.  Only 113 Member States had paid their regular assessed contributions in full so far.  There was also concern about the situation of the International Tribunals.  Another worrying feature was that Security Council members, through whose decisions mandates were set up, had themselves failed to honour their obligations.

The only bright spot in that rather dismal picture, he went on, was that unpaid assessments for peacekeeping were significantly lower than last year, despite the assessment level being higher this year.  That was mostly on account of welcome higher payments by one major contributor whose outstanding contribution had come down from $866 million last year to about $480 million this year.  However, the outstanding assessed contributions from other Member States were as much as $827 million.

He welcomed the reduction of average time of debt for contingent-owned equipment from one year in 2002 to nine months this year, and also the reduction in troop-reimbursement debt in some missions.  However, that position was not uniform and cash shortages existed in several missions.  Cash in closed peacekeeping accounts amounted to $240 million, but liabilities from those accounts were $114 million.  As much as $187 million had been borrowed from those accounts during the year, leading to the inescapable conclusion that cross-borrowing was affecting the payment of dues to Member States.  Cash available in closed missions would be reduced to $42 million next year.  Delegations were left wondering how the Organization would be able to carry on its work, given that there would be hardly any cash left to cross-borrow from the closed peacekeeping accounts.

He said some Member States were temporarily unable to meet their obligations to the United Nations on account of genuine economic difficulties.  They deserved sympathy and accommodation through the established procedures.  The Organization faced problems not on account of such a situation, but as a result of the fact that a very large number of Member States did not take seriously their obligations to meet the financial needs of the United Nations.

It was unfortunate that most of the amount owed by the United Nations was owed to developing countries, many of which paid their dues on time.  However, they were penalized when it came to receiving payment for troops and contingent-owned equipment contributed to peacekeeping missions, because of non-payment of assessed contributions by other States, thus, imposing an unfair economic burden on them.  The irony or injustice of that situation was obvious.

ADRIANA PULIDO SANTANA (Venezuela) said that more than 80 per cent of the unpaid assessments corresponded to the five main contributors.  That deficit led to cross-borrowing from the peacekeeping budget, which was detrimental to the Organization’s health.  The overall financial situation of the United Nations was disturbing, but it was not a result of a lack of commitment to the United Nations by Member States.  The financial crisis was a reflection of the difficult global economic situation.

She said the total balance of external debt owed by developing countries and countries with economies in transition had increased by 2.2 per cent.  Many factors had weakened Venezuela’s payment capacity, such as the shrinking of the world economy, the devaluation of the national currency, and the rampant growth of inflation.  The situation was so bad that Venezuela had not been able to meet all of its internal and external commitments.  A partial payment had been made to the regular United Nations budget, however, and Venezuela would honour its commitments to the Organization.

Introduction of Budget

KOFI ANNAN, Secretary-General of the United Nations, introduced the budget proposal, saying it embodied both great hopes for the Organization and carefully considered decisions of what to do in a world of finite and limited resources.  Each number, each item, each activity, each post must deliver value to the world’s people and to the Member States.

The budget for the biennium 2004-2005 was especially significant, he continued, as it pushed forward the process of reform of the United Nations and reflected a major effort to align the Organization’s activities with the priorities agreed at the Millennium Summit and at major world conferences.  Its finalization came at a time when the United Nations was wrestling with a number of fundamental issues of both principle and practice in the wake of the major events of the past year –- the war in Iraq, the development setback at Cancun, and the bombing of the Organization’s headquarters in Baghdad.

He recalled that in presenting his agenda for further change to the General Assembly last year, he had promised a budget that would better align activities and priorities.  Following the guidance provided by the Assembly in its resolution 57/300, the budget proposal before the Committee delivered on that promise, allocating additional resources for financing for development and the special needs of Africa.  There were also modest yet necessary increases for drug control, crime prevention and human rights.

The proposal envisioned a significant reallocation of resources:  some   $100 million shifted between subprogrammes, and a redeployment of 810 posts, he said.  The budget also called for more than 900 outputs to be discontinued –- the first real effort of that kind.  The Organization’s ability to give new issues the attention they deserved depended to an important extent on ending activities that were obsolete or of marginal utility.

He said the budget incorporated the results of comprehensive reviews of public information and human rights that had been carried out at the Assembly’s request, and reflected efforts to modernize conference servicing and to strengthen the Department of Economic and Social Affairs.  It set out what was needed to implement the information and communications technology strategy, which would include improvements to the Web site, improved use of technology in servicing meetings, and other initiatives that would affect the entire Organization.  More funds had been proposed for training -– a critical investment if staff were to deal with new responsibilities and different methods of work.

Regarding results-based budgeting, he said that, based on the experience the Secretariat had gained, the new framework had been refined to provide quantitative performance measures.  For each programme, the document provided a clear statement of objective, the expected results and how they would be measured, and the relevant resource requirements.  That approach emphasized the achievement of results rather than simply the delivery of products and services.

First and foremost, he said, the budget represented the bare minimum for the tasks that Member States had entrusted to the United Nations.  The proposal amounted to $2.9 billion before recosting.  That was in accordance with the outline figure unanimously endorsed by the Assembly last year.  It reflected minimal real growth over the previous biennium -– just half of 1 per cent, or   $15 million.  The budget projected a net increase of 117 posts, predominantly at the P-2 and P-3 level, so that the Organization could undertake the revitalization and rejuvenation of the Secretariat at the junior Professional level.

In connection with comments by the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the budget proposal, he expressed concern that some of its recommendations put the Organization under undue constraints, especially in terms of the reform effort.  In particular, it was hoped that the Committee would not reduce the overall level of the budget.  There was no getting around the need for a certain minimum level of resources.  Moreover, the Assembly itself had said that the reform effort must not become a pretext for further budget cuts.  It was worth recalling that the United Nations had been in a zero-growth or no-growth environment for most of the last decade.  It was also hoped that the Committee would not reject the two Assistant Secretary-General positions for the Department of Economic and Social Affairs and the Office for the Coordination of Humanitarian Affairs, which were intended to provide vital new strength and vision in those key areas.

Recalling that last year he had put forward several proposals to improve the budgetary process, which had long been unacceptably complex and unnecessarily labour-intensive, he said that one of those proposals was for a simpler, more strategic, less duplicative way to prepare and review the budget.  The budget documents before the Committee were a real step in that direction and should allow it to focus on the decisions it needed to make, while leaving the detailed review to the ACABQ.  That was the proper division of labour between the two Committees.  Other proposals involved changes to the medium-term plan, the budget outline, the role of the Committee for Programme and Coordination (CPC), and the system of monitoring and evaluation.  Hopefully, decisions on those changes would be taken by the end of this year so they could be introduced into the budgetary cycle for 2006/2007.

The issue of staff security would demand further attention, beyond even the new budget allocations for the current biennium, he said.  The recommendations made by the Independent Panel on the Safety and Security of United Nations Personnel in Iraq was still being analysed, but even an initial review indicated that significant increases in resources would be needed if the Organization were to fulfil its paramount responsibility to protect its staff.

In conclusion, he said that he looked forward to a budget discussion that was held in a spirit of collegiality and common purpose.  “Most of all, I look forward to the adoption of a budget that is neither profligate nor stinting, but rather provides what the Organization needs to fulfil the expectations of the world’s peoples for peace, development and the renewal of the United Nations itself”, he added.

Introduction of Reports

CONRAD S.M. MSELLE, Chairman of the ACABQ, introduced that body’s report on the proposed programme budget for the biennium 2004-2005.  In view of the policy of budgetary restraint followed by the Secretary-General in preparing initial budget estimates in recent years, the Committee had refrained from recommending specific reductions to his proposals.  However, the ACABQ had become increasingly concerned about the protracted debate on the level of the budget, often leading to reductions across the board without the benefit of the Committee’s advice.

It was, therefore, the view of the ACABQ, he said, that, should the General Assembly wish to approve a budget that was lower than that proposed by the Secretary-General, such reductions should be based on an analysis of specific terms.  To that end, the Committee had put forward proposals for specific reductions that could facilitate debate on the level of the budget that the Assembly may wish to adopt.  For example, compared with the revised appropriations for 2002-2003, the estimate of $3.058 billion proposed by the Secretary-General reflected a 0.5 per cent resource growth (before recosting) and a 5.8 per cent nominal increase of resources at 2004-2005 prices.  The ACABQ recommended a budget of $3.017 billion or an approximate 4.4 per cent nominal resources increase compared with the revised appropriations for 2002-2003.  The Advisory Committee’s recommendations resulted in a negative resource growth of 0.4 per cent.  That excluded a further reduction of $12.5 million related to the adjustment of the vacancy rate recommended by the Advisory Committee.

He said the debate on budget proposals was being held at a defining moment in the development of the Organization’s planning and budgetary process.  The General Assembly had, in 2000, approved the use of results-based budgeting techniques in the United Nations.  That, and the current debate on what type of planning instrument and budget outline was appropriate for the United Nations, could produce results that would govern the Organization’s budgetary process for future decades.  Critical to that debate was the question of resource allocation and priority setting.  A proper understanding of the current strengths and weaknesses of the process was essential in the efforts to introduce improvements, he said.

SAYED MORTEZA MIRMOHAMMAD, Chairman of the CPC, introducing the report of that body, said it was supposed to give guidance to the Secretariat on programme design by interpreting legislative intent, so as to assist in translating legislation into programmes.  So far, that had been the Committee’s main preoccupation.  As an intergovernmental oversight body, the Committee endeavoured to prevent departure from the mandates adopted by the legislative bodies.  With the adoption of results-based budgeting, however, the CPC’s task could not be confined to that exercise alone.  It should be able to submit the substantive recommendations necessary to improve such elements of the programmes as strategy, expected accomplishments and indicators of achievement to reinforce the new system.

The recommendations contained in the report included numerous deletions, additions and replacements, based on the traditional approach to the Committee’s work, he continued.  The CPC had been unable to recommend approval of a proposed budget section, because the fascicle had not been drafted according to the outcome of a relevant governing body.  Approval of a number of sections was conditioned on the reformulation of certain phrases to align them with the agreed language.

In the area of programming, it was not productive to pinpoint to the Secretary-General, “in every micro-occasion”, the specific mandate he should follow, he said.  Yet the CPC had worked under the legitimacy of the practice of intergovernmental oversight of the reflection of the mandates, and in occasions where it recommended modifications, the time and energy of the Fifth Committee would be saved, should it recommend their adoption to the Assembly without another debate.  Therefore, that was not duplication in the work of the two Committees.

The CPC was attentive to regaining the focus of its mandate, he said.  To add value in its mandated areas of work, it should also focus on strategic issues, policy direction of the medium-term plan or the budget proposal, as well as on achieved results.  During its forty-third session, the Committee had attempted seriously to examine the programmatic aspect of the budget only, and to refrain from addressing figures and resources.  An intensified effort was needed to further avoid duplication with the work of the ACABQ and the Fifth Committee in that area.  The CPC welcomed the shorter format of the budget, particularly the improved quality of the foreword and introduction.  It also recognized the need for care in how the results-based budget format was reconcilable with the medium-term plan, where specific activity for the forthcoming biennium was not addressed directly in that plan.

As an important step in the evolution of the new format, he said, the Secretariat had made important efforts to establish baselines and targets against which performance would be measured.  In some sections, however, the targets were still undetermined, leaving Member States and programme managers with a limited ability to measure the real impact.  The CPC had pointed out the need to strengthen the links between the findings of evaluations and programme performance on the one hand, and the budget process on the other.  It had, thus, recommended that the Assembly request the Secretary-General to make a proposal on how best to do so.  As there was currently no tool to conduct evaluation for the purpose of the budget, the Committee had recommended exploring the option of incorporating the quantitative data of the Progress and Impact Assessment System into future budget submissions to provide Member States with such a tool.

Statements

MARCELLO SPATAFORA (Italy), speaking on behalf of the European Union, said that bodies current membership would collectively pay about 37 per cent of the United Nations budget in 2004-2005, a percentage that would increase in the early part of the next biennium when the Union’s enlargement continued its historic mission.  The European Union continued to be attached to budgetary discipline, especially considering the rising level of the budget, he said.

The overall approach to the budget was set out clearly and the key concepts were presented in a readable and succinct way, he said.  However, the European Union had endorsed proposals contained in last year’s report concerning the need for a short, strategic and genuinely informative budget, and hoped that that objective could be reached.  Better documentation, in which resource requirements were fully justified and linked to the Organization’s strategic, medium- and short-term objectives, was crucial in enabling the General Assembly to conduct a well-formed and constructive negotiation.  Some of the elements of the 2004-2005 budget were less than clear and the European Union would have preferred to see a better distinction between recurrent and one-off expenditures.

Information and communication technology was central to both improving the capacity of the Organization’s workflow and to generating real advantages and economies in other management areas, he said.  Endeavours to rationalize the public information sector were to be commended and further steps could now be taken, particularly with reference to the reform of United Nations information centres.  In that regard, the closure of nine centres in Europe must be followed without delay by similar measures in other regions.  Concerning publications, the European Union hoped for the development of a coherent policy consolidating their number and enhancing their quality.

Emphasizing the need to address the issue of staff, he said the United Nations was a labour-oriented organization, which already accounted for
9,000 posts financed through budgetary resources, plus another 7,000 through extra-budgetary funds.  Staff costs represented almost 80 per cent of the Organization’s total regular budget.  The European Union was willing to examine the creation of new posts that were indispensable to carrying out mandates in priority areas, but it was also necessary to stand back and take a proper look at requirements during the next biennium before establishing new posts.  Areas that should be examined included the scope for redeployment of existing posts and the opportunity offered by retirements during 2004-2005 to assess post structure and level.

Regarding recosting, the European Union would need to consider very carefully the proposal to postpone it to the First Performance Report.  There were serious doubts about the justification for deferral.  In the future, the Board of Auditors must examine the whole recosting exercise and report to the Fifth Committee.

MOHAMED BENNOUNA (Morocco), speaking on behalf of the Group of 77 and China, said the results-based budgeting system should contribute to ensuring the effective and efficient implementation of all mandated programmes and activities.  However, it was not an end in itself and should be implemented in a gradual and incremental manner.  Furthermore, it was a new management tool and, although some progress had been achieved in its implementation, further improvements were needed.

Noting that the programme budget proposal had been significantly shortened and presented in a more strategic format, he recalled that the General Assembly had been receptive to proposals for a shorter format, provided that the budget proposal continued to justify resource requirements and better reflected priorities.  It was imperative that Member States continue to receive adequate information that fully justified resource requirements in the main part of the budget document.

He emphasized that resource allocation among the various programmes should reflect the priorities established in the medium-term plan and that there should be adequate allocation of resources for economic and social development activities.  It was also crucial that the Secretary-General continue to ensure that the Organization’s resources were utilized for the approved purposes and in a cost-effective, transparent and accountable way.

Noting with concern that the level of resources allocated to the Development Account had not changed, he stressed that part of the efficiency savings should be redirected to the Development Account.  The Group of 77 was also concerned about the trend of using extrabudgetary resources to find priority areas of the Organization that should be funded from the regular budget.  Furthermore, while not discouraging the provision of voluntary funding to the United Nations, there should not be too heavy a reliance on such extrabudgetary resources to finance mandated programmes and activities.

GILBERT LAURIN (Canada) said that his country’s objective for the budget process was to enable the implementation of the vision laid out by the Secretary-General before the General Assembly and thereby improve the Organization’s capacity to respond flexibly to changing demands -– such as new threats to international security -- while effectively pursuing ongoing responsibilities.  That approach reinforced his overarching expectation of budget rigour and discipline, which would stimulate reform and improve quality.

He said he liked the philosophy of the budget, with its clear focus on priority functions, its use of reallocation to fund new needs, its direction of a larger share to human rights and humanitarian functions, and its support for African development.  The next logical step, as suggested by the ACABQ, was to define more specific and measurable indicators of achievement.  It was hoped that the reference to gender dimensions reflected growing understanding of the need for gender analysis in programmatic work.

In rising to the challenge of aligning resources with priorities and deploying them effectively, he said, the most basic priority was to cease incremental budgeting, that is, merely adding new activities and resources to the larger base.  Instead, the budget base should be reviewed for continued relevance and effectiveness of programmes, set against the benchmark of key declarations and conference outcomes.  Outdated or ineffective activities should be dropped.  Considering a base of about 36,000 activities, the total of 912 identified to be dropped was better than the past total, but still low.  Funds should then be redeployed to new demands.

Among further areas in need of reform, he noted the excessive number of General Service posts, the share of overhead, and the effective use of major investment in information technology.  It was important to make the transition from a culture of central control to one of enablement linked to accountability.  In general, Canada was concerned about the growth rate in the budget.  The goal was to ensure that the United Nations remained able to meet the high expectations of all peoples.

ALFRED DUBE (Botswana), speaking on behalf of the African Group, associated himself with the Group of 77 and China and welcomed the Secretary-General’s assurance that the proposed budget fully reflected the Organization’s priorities, as identified in the medium-term plan for 2002-2005, in the Millennium Declaration and in the outcomes of recent major conferences.  While agreeing that the budget should be as focused as possible, however, the African Group agreed with the Group of 77 that any further shortening of the document in the future should not deprive Member States of the pertinent details they may require to make informed decisions.

He reiterated the position of the Group of 77 and China that, in order to ensure effective and full implementation of approved mandates, the Secretary-General should be provided with resources commensurate with those mandates.  Such resources provided by Member States should not only be utilized in accordance with legislative intent, but also in an accountable manner.  Allocation of resources among the budget sections must continue to reflect fully the Organization’s, priorities as identified by Member States.  In that connection, the African Group underlined the particular importance of the Organization’s development and peacekeeping activities, which were among its core mandates. 

Recalling the negative effects encountered in the provision of certain essential services to Member States as a result of certain decisions taken by the Assembly in resolution 56/253, he said savings should be identified where feasible, but not in a way that would result in the dysfunction of the intergovernmental machinery.  The African Group, therefore, expected that the final resources to be approved would be adequate to enable the full realization of many of the priorities identified in the proposed budget.

Concerning results-based budgeting, he agreed that greater initiative was required on the part of programme managers to expedite the process of refining its concepts and techniques.  The reference to “external factors” should be correctly used to avoid any excuses to justify avoidable failures. Furthermore, the proposed budget emphasized the need for programme managers to constantly review recurrent outputs under their spheres of competence, with a view to identifying obsolete outputs or those of marginal utility.  Noting that 912 outputs had been deemed obsolete and proposed for termination, he said the relevant intergovernmental bodies should be involved in the process leading to the termination of outputs.

He agreed with the Group of 77 and China that the budget to be adopted in December should provide adequate funding for issues relating to international and regional cooperation for development, human rights and humanitarian assistance, in addition to the imperative of peacekeeping, given its proven linkages to sustainable development.  In that context, the Organization must be provided with an enhanced capacity to follow up and monitor implementation of the outcomes of relevant major conferences on social and economic issues.  Moreover, the African Group appreciated that, for the New Partnership for Africa’s Development (NEPAD) to succeed, the strength and capacity of the new Office of the Special Adviser on Africa had to be kept under review.

Regarding the high vacancy rates at some duty stations, especially those in Africa, he said that in view of the expected role of the Economic Commission for Africa (ECA) in facilitating the work of NEPAD at the regional level, expeditious efforts must be made to recruit staff there.  Posts should not be deliberately left vacant in order to achieve savings.  The African Group further stressed the need to ensure equity among duty stations and trusted that further steps would be taken in that direction.  However, the budget document did not contain the Secretary-General’s proposals to modernize and improve the conference facilities at the United Nations Office in Nairobi.  The African Group looked forward to receiving the proposals once the ACABQ had completed its consideration of that issue.

MARCO BALAREZO (Peru), speaking on behalf of the Rio Group, associated himself with the Group of 77 and China.  He welcomed the changes in the presentation and format of the budget proposal and agreed that attention should not merely be focused on inputs, but on the results obtained, with a view to advancing the established priorities of Member States.  The results-based budget was utilized by the Organization to determine, among other things, whether its programmes had relevance in countries, regions, populations, communities, organizations and individuals.  It was important to perfect its implementation on the basis of experience and to monitor the programmes in all their aspects in order to obtain the envisaged results.

The Rio Group was committed to work constructively in the forthcoming consultations to obtain a balanced budget that would meet the expectations of Member States for the coming biennium, he said.  The Group supported the Secretary-General’s efforts to achieve a more efficient, streamlined and modern organization.  For that reason, it was imperative to keep up with advances in matters of information technology, training, accountability, delegation of authority, and administrative simplification.

He said the Rio Group attached great importance to the identification of  the following main priorities in the proposed budget for 2004-2005:  disarmament; International Court of Justice; political matters, particularly electoral assistance and special political missions; juridical matters, particularly the functioning of the United Nations Commission on International Trade Law (UNCITRAL); such economic and social matters as strengthening of the Permanent Forum on Indigenous Issues and support for the follow-up to the International Conference on Financing for Development; environment; human settlements; trade  and development; public information; conference services; peacekeeping; and humanitarian assistance.  The Group hoped for the approval of a budget in accordance with the mandates stipulated by Member States.

FAWZI SHOBOKSHI (Saudi Arabia) said his delegation supported the proposed budget for 2004-2005, which was more succinct and directed.  He commended all the efforts and initiatives made by the Secretary-General in order to help the United Nations face its current challenges.  In this connection, he said his delegation supported the draft on results-based budgeting.  However, he agreed with the ACABQ to the effect that some objectives were ambiguous and could not be measured effectively.

Continuing, he highlighted the importance of using the Integrated Management Information System (IMIS) in order to improve work and to increase productivity.  That would enable the United Nations to follow performance, measure any deviation from the established objectives, and allow for more effective planning.  Development programmes for the training of staff in all categories should be established, he continued.  That should include programmes for the movement of staff between United Nations organizations.  Workshops for career development should also be initiated.

His delegation also supported the recommendation that the replacement rate of computer machinery should be four years rather than three.  Furthermore, the Office of Human Resources Management (OHRM) should make further efforts in order to use officials from Member States which were under-represented or non–represented; under-representation as a general issue should be addressed.  It was important to make sure that the use of procurement in the Organization was of the highest quality.

JOHN NEGROPONTE (United States) said that, with new priorities pulling the Organization in many directions, it was clear that the Secretariat was in need of sound and transparent management practices, combined with a more flexible mechanism for redeploying resources.  The current system was both time- and resource-intensive, yet left many Member States and Secretariat staff feeling frustrated and disappointed.  During much of the 1990s, it had often been possible for managers to accommodate new mandates within, or even below, the existing budget levels.  However, the recent combination of a weakened dollar and new emergency priorities had forced the United Nations to alter that approach and agree to selected budget increases for those high priority activities.

His delegation had been pleased to note that there had been a substantial attitudinal change among Member States in support of better management practices, including results-based budgeting and priority-setting.  This year, in approving a budget for 2004-2005, the Fifth Committee had the opportunity and the responsibility to approve a budget that fully reflected those concepts.  It was, thus, critical that Member States and the Secretariat make a concerted effort to loosen their grip on parochial interests and concentrate on what was best for all.

For its part, the United States would continue to make sure that programme managers complied with rules and regulations requiring them to identify obsolete to ineffective activities.  That concept was a cornerstone of sound management and, if applied systematically, would give the United Nations the financial flexibility it needed to fulfil priority mandates.  While the proposed programme budget reflected an improvement of this key tool, it still fell short of the mark.  The CPC had affirmed that judgement earlier this year.  The 912 outputs proposed for termination represented just a small fraction of the more than 40,000 outputs contained in the current budget.

He spoke of several ideas aimed at better priority-setting.  He said posts that had been vacant for more than two years should be eliminated, yielding at least a few million dollars for higher priority usage.  Furthermore, the closure of the United Nations Information Centre (UNIC) in Washington, D.C., would save about $1 million. Reduction in duplicative administrative practices, as identified by United Nations auditors, could save the Organization almost $4 million, and the number of scheduled meetings, which stood at a staggering 15,484 over two years, could and should be reduced by 5 per cent initially, producing more than

$4.3 million to use on higher priorities.

His delegation had also noted that the proposed programme budget contained a request of nearly $30 million in additional investment for information technology, which would bring the total allocation for information technology to over

$192 million in 2004-2005.  While the United States had generally supported such investment, the level of support staff, particularly in the regional economic commission, remained noticeably high, despite the increasing level of information technology investment.  In those offices, the time had come to take a hard look at this.

Finally, he stated the support of the United States for a budget level starting at zero nominal growth.  His delegation firmly believed that, if results-based managements, robust priority-setting and greater efficiency were fully applied, Member States could approve a stable budget that provided the resources necessary for the United Nations priority activities.

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