PROPOSED BUDGET FOR UN SHOULD REFLECT PRIORITIES SET OUT IN MID-TERM PLAN, MILLENNIUM GOALS, MAJOR CONFERENCES, FIFTH COMMITTEE DELEGATES STRESS

Fifty-eighth General Assembly

Fifth Committee

12^th Meeting (AM)

PROPOSED BUDGET FOR UN SHOULD REFLECT PRIORITIES SET OUT IN MID-TERM PLAN,

MILLENNIUM GOALS, MAJOR CONFERENCES, FIFTH COMMITTEE DELEGATES STRESS

Concerns Raised about Funding for Development Needs, Extrabudgetary Financing

As the Fifth Committee (Administrative and Budgetary) continued its consideration of the proposed $3.058 billion United Nations budget for 2004-2005, speakers agreed that the proposal should reflect the priorities established in the Medium-Term Plan for 2002-2005, the Millennium Development Goals and major recent conferences.

In that respect, many delegates placed development needs among the top priorities requiring adequate financing, pointing out that resources approved by the General Assembly should be commensurate with all mandated United Nations programmes and activities.

Cuba’s representative cautioned against applying the principle of zero nominal growth to the 2004-2005 biennium, saying it would lead to the approval of a low-level budget that would not meet the Organization’s needs.  As for the proposal to remove obsolete programmes, Cuba was against encouraging that practice, which could generate additional budgetary cutbacks.

Syria’s representative, while noting that the Secretary-General’s budget proposal exceeded $3 billion, agreed that zero growth was not compatible with the Organization’s needs and questioned whether the proposed figure could really enable the United Nations to fulfil all its mandates.  It was a contradiction for Member States to support United Nations reform while insisting at the time on a zero-growth budget.

Regarding the proposed 0.5 per cent real growth of the budget, several speakers pointed out that the nominal increase in resources would amount to 5.8 per cent.  The Advisory Committee on Administrative and Budgetary Questions (ACABQ) had recommended a budget level of $3.017 billion, which would result in 0.4 per cent negative real growth and a 4.4 per cent nominal resource increase.  If the currency and inflation rates were updated, an additional $150 million would be required.  In that connection, most speakers in today’s discussion supported strict budgetary discipline and cost-effective use of resources, as well as transparency and accountability in spending.

Iran’s representative echoed alarm of several other delegations over the trend of using extrabudgetary resources to fund priority areas that should be funded from the regular budget.  Speakers insisted that those resources should be used to fund priority activities of the United Nations and several delegates expressed concern that extrabudgetary funds were often tied to the wishes of the donors.

As the Committee turned to its consideration of the financial situation of the Organization, speaker after speaker stressed the importance of timely, full and unconditional payment of dues to the United Nations.  Noting that the Organization was once again in “rough financial waters”, as a result of late payment or non-payment of assessed contributions, Nepal’s representative also emphasized the need for the Secretariat to undertake further reforms in order to reduce expenditures and seek the payment of arrears.  The United Nations must also seek resources outside the assessed contributions and each Member State must pay according to its capacity.

Also speaking this morning were representatives of Kuwait, Switzerland, United Republic of Tanzania, Jordan, Lao People’s Democratic Republic (on behalf of ASEAN), Nigeria, Brazil, South Africa, China, Indonesia, Bangladesh, Republic of Korea, Singapore, Trinidad and Tobago, Zambia and Pakistan.

Catherine Bertini, Under-Secretary-General for Management, responded to comments and questions from the floor.

At the end of the meeting, representatives of Australia, Cuba, Egypt, United States, Syria, Mexico, Russian Federation and Costa Rica took part in a discussion of the ban on smoking within United Nations premises.

Andrew Toh, Assistant Secretary-General for Central Support, responded to the delegates’ questions on that matter.

The Fifth Committee will continue its debate on the budget and begin its consideration of a series of reports relating to the financing of the United Nations for 2004-2005 at 9:30 a.m. Friday, 31 October.

Background

As it met this morning, the Fifth Committee (Administrative and Budgetary) was expected to continue its consideration of the programme budget for the biennium 2003-2005 and to take up the question of improving the financial situation of the United Nations. 

Statements

MESHAL AL-MANSOUR (Kuwait) said there was a close link between the proposed budget and the payment by Member States of their assessed contributions.  According to the scale of assessment, all Member States must pay their contributions in full, on time and without conditions.  The presentation of the budget proposal was the appropriate occasion to ensure that the United Nations received the necessary resources. 

Kuwait attached great importance to information, he said, adding that it was like a mirror, fully reflecting the Organization’s activities and achievements.  Modern information systems were vital as they broadcast to a growing number of countries around the world as well as updating and maintaining the United Nations Web site. 

Expressing concern over high vacancy rates in professional posts, he cautioned that the use of independent consultants must be a last resort when no such expertise was available within the Organization. 

ALIREZA TOOTOONCHIAN (Iran), associating himself with the Group of 77 and China, said it was imperative to ensure that Member States continued to receive adequate information in the main part of the budget document, including its impact on the implementation of programmes, so that they could take well-informed decisions.  While Iran supported the further integration of results-based budgeting and management into the work of the United Nations, it should not lead to a departure from legislative mandates or the discontinuation of activities that had not demonstrated results during a certain period of time.  Results-based budgeting was not a cost-cutting measure; it should ensure that the Organization’s resources were spent in a more cost-effective way and enable Member States to better monitor the quality of outputs.  Meanwhile, the budgetary process as approved by the Assembly continued to be valid and required full adherence.

Turning to the question of reallocation of resources, he said it should reflect the priorities established in the Medium-term Plan, leading, therefore, to adequate allocation of resources for economic and social development as envisioned in the Millennium Development Goals and follow-up to major conferences.  Addressing development needs was a top priority.  The resources approved by the Assembly should be commensurate with all mandated programmes and activities.  The effective functioning of the United Nations required Member States to provide the Secretariat with adequate resources to enable the full implementation of all mandates and the provision of essential services.  The continuing alarming trend of using extrabudgetary resources to fund priority areas that should be funded from the regular budget was a source of concern. 

Noting the rate of growth in the proposed budget, he said the proposal reflected a 0.5 per cent real growth and 5.8 nominal increase of resources.  The Advisory Committee on Administrative and Budgetary Questions (ACABQ) recommended a budget level of $3.017 billion, which resulted in 0.4 per cent negative real growth and 4.4. per cent nominal resource increase.  If the currency and inflation rates were updated, an additional $150 million would be required.  Moreover, staff and post-related expenses represented almost 80 per cent of the total regular budget and 115 new posts had been proposed for the coming biennium.  From those, the Advisory Committee had recommended the acceptance of 59.  The scope for redeployment of existing posts had also been explored.

ANJA ZOBRIST RENTENAAR (Switzerland) said her country was committed to strict budget discipline, noting that financial resources must be utilized in a cost-effective, transparent and accountable manner.  At the present stage, however, Switzerland was not insisting on a particular budget level.  Effective and efficient programme delivery was of equal importance and the Swiss delegation would work towards the lowest possible budget level consistent with key mandates and reform priorities. 

Switzerland tried to do its best not to push for narrow national interests for the benefit of the greater good, she said, expressing her wish to mention only one priority –- the strengthening of the Office of the United Nations High Commissioner for Human Rights, the Office of the United Nations High Commissioner for Refugees (UNHCR) and the Office for the Coordination of Humanitarian Affairs (OCHA).  Switzerland was concerned over the considerable share of operational activities financed through extrabudgetary funds in those areas, all of which dealt with core activities of the Organization and which should therefore be provided with adequate funding.  In the first case, it would be particularly important to cover the costs incurred by the various treaty bodies as well as the special procedures of the Human Rights Commission. 

She said her country was not convinced of the usefulness of deferring recosting to the first performance report, as suggested by the ACABQ.  Indeed, there were serious concerns regarding the implications on the Organization’s cash flow and fears that programme delivery in Geneva or Vienna could be put at risk.  The decision to change such a long-standing established procedure should not be taken hastily. 

Switzerland recognized the need for a system-wide, independent external oversight body to improve efficiency and achieve greater coordination between organizations of the United Nations system.  There was a general consensus that the working methods of the Joint Inspection Unit needed review to improve its efficiency and accountability.  Switzerland hoped that substantial results would be achieved in the upcoming discussion under that agenda item. 

NORMA GOICOCHEA ESTENOZ (Cuba), endorsing the Group of 77 statement, said that Member States should exercise full sovereignty over the amount of resources to be granted to the United Nations.  The Secretariat had to serve Member States’ requirements as far as the provision of services was concerned and Cuba cautioned against the approval, in accordance with the principle of zero nominal growth, of a low-level budget that would not meet the Organization’s needs.  As for the decision to remove obsolete programmes, Cuba was against encouraging that practice, which could generate additional cutbacks to the budget.  The Cuban delegation was willing to negotiate in good faith to ensure a budget that fully corresponded to the Organization’s needs.

Agreeing with the need to accord priority to the outcomes of the Millennium Summit and major international conferences, she welcomed the redistribution of resources to priority programmes.  However, the Secretariat should report to the fifty-ninth session on the manner in which priorities were established.  The principle of respect for the link between priorities and the level of appropriations should be fully applied.  Economic and social development should receive the level of resources it required, for it had direct impact on the stability of countries.

Turning to the format of the budget presentation, she noted with concern the deletion of substantial information, including data that would have allowed the Member States to have a fuller picture of how resources would be used.  Such brevity deprived Member States of the prerogative of making informed decisions and overseeing the distribution and use of resources within different spending categories.  All information should be available to Member States.  However, Cuba welcomed the implementation of results-based budgeting and shared the opinion that it needed further refining.

As for the proposed reform of the budgeting process, she said the discussion of the budget was not the right forum to address the issues.  The Fifth Committee’s role in considering and adopting the budget should not be limited, and a flexible mechanism should be applied under which certain budget sections would be considered in open meetings at the request of delegations.  The dynamic of informal consultations would determine the necessity of such a procedure.  Furthermore, while Cuba reiterated its full and total support for the ACABQ, it should limit itself strictly to its mandate and avoid making recommendations on political matters.

AUGUSTINE MAHIGA (United Republic of Tanzania) said that accommodating the budgetary implications of gender balance should be a regular feature in the Organization’s planning and welcomed the ACABQ’s recommendation to give the Secretary-General authority to manage the staffing table as a whole.  That would give him the flexibility to reflect adequately the gender and geographical distribution of staff among and within regions.  Tanzania was concerned with the tendency to use the vacancy rate as an instrument to achieve savings and wished to emphasize the need for the recruitment process to be undertaken expeditiously.

Results-based budgeting was the best way to ensure the efficient administrative and financial functioning of the United Nations, he said.  However, there were several difficulties in applying that approach, especially when it involved dealing with programme budgets whose expected accomplishments and impacts were intangible and could not easily be quantified.  That was especially true when dealing with social programmes requiring social parameters in defining expected achievements.  There was, therefore, a need for the Organization to intensify capacity-building measures to ensure balanced priorities and sound verifiable indicators in determining achievements.

He urged that due consideration be given to the needs of developing countries, which, if subjected to normal scales, could appear marginal, but were actually critically essential.  The regular budgets of some United Nations agencies for financing priority areas in the developing world social, economic and humanitarian sectors had been declining in some countries, especially those hosting large numbers of refugees, as was Tanzania.  The costs were then passed on to host countries.  The Fifth Committee must consider and redress that situation.

NAJIB ELJY (Syria), associating himself with the Group of 77 and China, said that translating the programmes and policies of the United Nations was the cornerstone of making a decision on the budget, which should reflect the priorities of the Medium-term Plan, the goals adopted at the Millennium Summit and the outcomes of recent international conferences.  The use of results-based budgeting did not take into consideration the nature of the Organization, and requests for resources under that approach were often not based on proper justifications.  Syria required additional information in that respect.  Results-based budgeting was an administrative tool to improve accountability and responsibility within the Organization, not an objective in itself, and should take into account the international nature of the United Nations.  It was necessary to guarantee the gradual application of that tool, based on the existing rules and regulations.

Noting that the budget proposal exceeded $3 billion, he questioned whether the figure could efficiently fulfil all the Organization’s mandates.  The so-called zero-growth rate was not compatible with the Organization’s needs.  Moreover, the proposal coincided with reform initiatives in many areas of the United Nations.  When everybody supported reform, how could they also insist on zero growth?

Dependence on extrabudgetary resources was a source of concern, he continued, adding that it would prevent the Organization from enjoying sound and predictable financing.  Most of those resources were tied to the implementation of the desires of the donors.  All of the Organization’s priorities should enjoy equal importance, and making some of them more important than others contradicted the nature of the United Nations.  The reallocation of resources should be explained in view of the priorities agreed upon by Member States.

It appeared that the proposed deletion of 912 outputs was not compatible with the existing rules, he said.  Syria was also concerned about the establishment of a single information hub in Europe to replace several information centres and wished to know what impact that decision would have from the point of view of savings and equality of languages.  Syria also looked forward to the presentation of a progress report that would establish how successful the initiative had been.

MOHAMMAD TAL (Jordan) expressed concern over the trend by some Member States, particularly those with high assessments, to leave their contributions to the United Nations unpaid.  Nevertheless, Jordan understood that it was sometimes impossible to pay in full, especially for developing countries, because of genuine hardships.

While Member States had agreed on more than $3.9 billion to finance the United Nations budget, the total unpaid assessment on 30 September 2003 had exceeded 54 per cent of the resources agreed upon.  How could the United Nations undertake the activities entrusted to it with such an attitude of complacency among Member States?

Emphasizing his country’s attachment to the importance of peacekeeping, especially because Jordan was a major troop-contributing country, he said the practice of cross-borrowing would ultimately lead to a depletion of resources and negatively affect reimbursement to troop-contributing countries.  Jordan stressed the need to expedite reimbursement.

ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the Association of South-East Asian Nations (ASEAN), said the Association supported the position of the Group of 77 and China.  It remained concerned over the overall situation now experienced by the United Nations.  Among other concerns, the Organization would experience great difficulty in implementing fully and effectively the programmes and activities mandated by Member States given the total unpaid assessment of $2.3 billion.  The cash flow was now at the most critical level and compelled the United Nations to resort once again to cross-borrowing from closed peacekeeping missions.  A slight improvement in the troop and equipment debt situation for 2003 had been offset by the slowdown in reimbursements to troop contributors.

While commending the Organization for meeting the challenges it continued to face, he said the trend did not seem to be promising for the Organization’s ability to implement its mandated programmes and activities.  The financial difficulties faced by the United Nations were principally due to late payments or non-payment of assessed contributions.  Member States had the obligation to pay their dues in full, on time and without conditions.  While ASEAN remained sensitive to the situation of countries experiencing genuine economic difficulties, the only viable way to restore the Organization’s financial health was the early settlement of arrears and the timely payment of assessments.

A.A. SEKUDO (Nigeria), supporting the Group of 77 position, said the Organization’s finances were in a precarious state because many countries had not demonstrated the necessary political will in paying their assessed contributions on time.  Despite Nigeria’s economic challenges, made worse by its debilitating external debt burden, it was up-to-date with its assessed contribution and in the last 10 months alone had spent well over $716 million on debt-servicing.

He noted with concern that the United Nations might end the year with a shortfall of $29 million if anticipated payments of assessed contributions were not received.  Nigeria was apprehensive of a situation in which the attitude of Member States encouraged the continued practice of cross-borrowing from the peacekeeping account to finance regular budget expenditures.  That was detrimental to States that were owed considerable sums of money for troop and equipment costs.  Furthermore, it would obliterate the positive gains made in increased receipts for peacekeeping assessments where outstanding assessments had decreased to $1.559 billion as against $1.777 billion for the same period last year.

While understanding the need for the Organization to have sufficient resources to carry out its mandated activities, he pointed out that delays in reimbursing troop-contributing countries imposed additional burdens on them.  That was particularly true for many developing countries which, despite their commitments and sacrifices to peacekeeping operations, had continued to meet their financial obligations to the Organization but were owed significant sums of money. The United Nations must make a concerted effort to address the problem.

MARIA LUIZA RIBEIRO VIOTTI (Brazil) said her country was making efforts to overcome the obstacles that had impaired its capacity to pay its contributions on time.  Some of those obstacles had to do with the financial impact of political and economic misperceptions by international investors in the course of last year. The ensuing substantial decrease in external finance had led to a steep devaluation of the Brazilian currency, requiring the adoption of a stringent fiscal policy.  Such difficulties added to persistent structural problems relating to the struggle to address social inequalities and fight poverty, which affected more than 40 million Brazilians.

She said Brazil was one of the countries most affected by the revision of the scale of assessments in 2000 and by the artificial ceiling that represented a significant distortion of the principle of capacity to pay.  However, Brazil abided by resolution 55/B and would not dwell on the methodology adopted until 2006.  However, when the capacity to pay was not adequately reflected on the scale, it added to the difficulty faced by developing countries in paying their contributions on time. 

KAREN LOCK (South Africa) said that a mere five months ago, Member States had been told that the combined year-end cash balance for the regular budget was no longer in deficit.  Now the Secretariat projected that the regular budget could, once again, end the year in deficit due to the late or non-payments of assessed contributions by more than a third of the  membership.  The situation became even more precarious, taking into account that as many as 116 States had not made any payments for the Tribunals.  The unpaid amount of $117 million was lamentably the highest level of unpaid assessments in the history of those courts.

For South Africa, 1994 would forever hold special significance, she said.  It was the year in which the international community had joined the country in celebrating its newly-found democracy and the end of apartheid.  It was sadly, however, also the year in which the people of Rwanda had witnessed the most unimaginable horrors.  The International Criminal Tribunal for Rwanda had been established in recognition of the serious violations of humanitarian law committed in Rwanda, and Member States had pledged their support to the ideals of that Tribunal.  The tragedy of Rwanda and the former Yugoslavia was the world’s tragedy, and it was imperative to provide adequate and predictable resources towards the completion of the Tribunals’ mandates.

While joining others in expressing concern over cross-borrowing, she said the Secretary-General was left with little alternative.  Non-payment of assessment was leading to a situation in which the Organization had to borrow as much as $125 million by the end of November to fund the shortfalls in the regular budget.  In addition, the Tribunals had been in a negative cash position for five of the 10 months of the year and would owe $41 million to closed missions by the end of the year.  The United Nations could ill afford to return $84 million to Member States, as it had been tasked to do by the end of March 2004. 

Commending the Secretary-General for the marked improvements in reimbursements to contributors of troops and equipment, she said many of those States were from African and other developing countries.  Their continued support to peacekeeping would be greatly enhanced if the United Nations met its obligation to reimburse them in a timely manner.

ZHANG YISHAN (China), aligning himself with the Group of 77, said that financial reforms would enable the Organization to manage and implement more effectively its increasing number of programmes and activities.  Strong financial backing was the best guarantee of a strong, stable and robust United Nations.  Without a stable, solid and strong financial base, there could be no viable role for the Organization in international affairs.

He said that as long as all Members States were paying all their assessments in full, on time and without conditions, the United Nations would have adequate resources.  However, as of the beginning of October, unpaid regular budget assessments amounted to $693 million; unpaid amounts for the tribunals had reached $117 million and outstanding peacekeeping assessments totalled $1,370 million.  That showed that some Member States had failed to honour their financial obligations under the United Nations Charter, seriously hampering the normal functioning of the Organization.  China, despite being a developing country with a limited capacity to pay, had again managed to pay all its assessments on time.

Ms. RENTENAAR (Switzerland) expressed dissatisfaction with the financial situation and regret that despite a financially promising year in 2002 -– which could have marked the dawn of a new era for the Organization’s budget -– the status of accounts for 2003 had degraded.  The aggregate assessment level would again come to some $4 billion, which would put the Organization back to the same level as 2001.  Even though that situation was to a great extent due to increased expenses in peacekeeping operations, it was nonetheless worrisome.

Expressing alarm over the financial situation of the international Tribunals, she said that 116 countries had yet to make a contribution, indicating how low the Tribunals must figure on the list of Member States’ priorities.  Obligations to the Tribunals’ budget were as stringent as those pertaining to the regular budget or that of peacekeeping.  Similarly, it was important to contribute to the Capital Master Plan, which was also suffering.

DEWI SAVITRI WAHAB (Indonesia), associating herself with the Group of 77 and ASEAN, stressed the importance of timely, full and unconditional payment of dues.  However, it was also necessary to show understanding for those countries -– particularly developing ones -- which were temporarily unable to pay their assessments due to their specific financial situation.

Expressing concern that the United Nations had yet to achieve sound financial health, she noted that total unpaid assessments as of 30 September amounted to $2.38 billion.  That apparently had resulted in the persistence of the Organization’s financial problem.  The cash flow for the regular budget was under pressure, which meant that the unhealthy practice of cross-borrowing from peacekeeping accounts continued.  Considering that the Assembly would be adopting the budget for 2004-2005, during the current session, it was important that the Organization receive adequate resources to carry out programme activities mandated by Member States.  Moreover, financial uncertainty would have a seriously adverse impact on the Organization’s ability to deliver services to Member States in the midst of a situation in which the Organization’s rating was down in the eyes of the international community due to recent events.

Cross-borrowing could delay reimbursement to countries providing troops and contingent-owned equipment, she noted.  That situation was of concern to troop contributors, many of whom were developing countries.  Coupled with that, the slowdown in reimbursement payments was due to problems in obtaining signatures for memoranda of understanding and cash shortages in several missions.  It was necessary to take measures to eliminate those problems.  To be able to face its challenging tasks, the United Nations required a secure financial footing that would only be achieved through the political will of Member States to fulfil their obligations.

Mr. AL-MANSOUR (Kuwait) said the Organization’s financial crisis was the result of the failure of some Member States, notably major contributors, to pay their assessed contributions on time, in full and without conditions.  That left the United Nations under the pressure of uncertainty.  Kuwait had paid its contributions in full and had been mentioned in the honour roll, among the few countries that had done so.

Expressing concern at the shortfalls in the regular, peacekeeping and Tribunals’ budgets, he noted that the Organization still had to resort to cross-borrowing from peacekeeping budgets.  That financial situation could not improve unless Member States shouldered their responsibilities under the Charter.  Kuwait urged all countries in arrears to pay their contributions in full and without conditions, so the Organization could avoid a financial crisis in the future.

IFTEKHAR AHMED CHOWDHURY (Bangladesh) said that although the Under-Secretary-General had described the last two years as good years financially for the United Nations, it was regrettable that the Organization was once again showing signs of reflecting the all too familiar picture of the recent past -– insufficient cash balance, mounting unpaid assessments and increased debt owed to Member States.  The Organization’s financial well-being depended largely on the prompt payment of assessed dues and the primary reason for the sad state of affairs was the failure of a few Member States to pay their contributions in full, on time and without conditions.

However, the level of outstanding peacekeeping assessments had fallen during 2003, he noted.  That was a positive trend, but the amount outstanding was still unacceptably high, at more than $1.3 billion.  The steady cash flow levels for peacekeeping operations were encouraging, but the situation could take a turn for the worse, with the need to cross-borrow from the peacekeeping budget to fund regular expenditure.  That unhealthy practice had, in the past, led to inordinate delays in reimbursements to troop-contributing countries.

Pointing out that countries that responded to calls to maintain international peace and security were mostly developing countries, he said they mobilized their men and women, material and resources at the behest of the international community, often under difficult domestic circumstances.  Delays in reimbursements compounded their burden.  As the largest troop contributor, Bangladesh could not emphasize more the need for timely payment of dues and was particularly distressed that the debt owed to Bangladesh remained the highest, at around $69 million.

Ms. GOICOCHEA ESTENOZ (Cuba) said that the financial picture of the United Nations was disturbing  During the fifty-fifth session of the General Assembly there had been radical changes in the scale of assessment of the regular budget and peacekeeping operations.  That had led to a substantive increase in the contributions of many, mostly developing, countries and had strayed away from the capacity-to-pay as a fundamental principle of assessment.  That action meant that many developing countries had been unable to pay their dues in full despite their fervent efforts.  As a result of the cash flow deficit of the regular budget a number of developing countries were being denied their reimbursements, making them unable to settle their debts to the Organization.

Cuba, as a result of the embargo placed on it that had continued for more than four decades, could not use the United States dollar in its financial transactions including payments to international bodies.  It was, therefore, subject to currency fluctuations, which had a negative impact on its capacity-

to-pay.  That along with the economic difficulties that Cuba was facing, would adversely affect its payment pattern for this year.  Nevertheless, she reiterated her country’s willingness to strive to pay all of its contributions in full.

MURARI RAJ SHARMA (Nepal) supported the position of the Group of 77 and China and said that much like human health, the financial health of the Organization sustained the United Nations and allowed it to achieve its goals. From last week’s presentation, it was obvious that the United Nations was in “rough financial waters” once again.  The financial crunch had persisted in the Organization even after the new scale of assessments was adopted three years ago.  It defied logic that even those countries whose contributions were significantly reduced continued to be in debt to the United Nations. 

The Organization was again forced to resort to cross-borrowing from peacekeeping, he continued.  That was a matter of serious concern, particularly for those countries –- many of them in a dire financial state -- that were awaiting repayment for their troop and equipment contributions.  Delays in reimbursement were detrimental to peacekeeping and further weakened the fragile economies of developing countries that contributed to those operations.  Reimbursement should become a priority for the Organization. 

He urged all countries to pay their share in full, on time and without conditions.  Only where Member States experienced conditions beyond their control should they be allowed to reschedule their payments.  A world body that was not sound financially would not be able to stand up to the challenges of the modern world. 

While stressing the need for Member States to make their payments to the United Nations, it was also necessary to emphasize the need for the Secretariat to undertake further reforms in order to reduce expenditures and seek payment of arrears from Member States.  A number of efficiency measures had been undertaken, but further steps were needed.  The Secretariat should not let the train of reform stop.  The United Nations must also seek resources outside of assessed contributions.  He had heard that a number of countries were unhappy about the present scale of assessments, and it was necessary to address their genuine grievances, but each must pay according to capacity.  That was only fair to the Organization that stood to promote the shared goals of the international community. 

LEE BYONG-HYUN (Republic of Korea) noted with concern the number of Member States that had paid their regular budget assessments in full.  His delegation expressed its further dismay that the delayed payments and non-payment of assessments had plunged the cash balance of the Organization into deficit once again and had forced cross-borrowing from the peacekeeping accounts, the cash balances of which were also limited.  In that regard, his delegation reiterated the importance of all Member States paying their assessment in full, on time and without conditions.  Moreover, he hoped that the impending payment from a major contributor would be realized, so that the balance of the regular budget would be brought into the black by the end of this year.

The current situation of the two international tribunals was alarming, he said, and his delegation regretted that the cash flow of the tribunals had dried up as early as July of this year.  At the same time, his delegation noted with concern the newly emerging pattern of Member States opting not to contribute to the tribunals, coupled with the expected increases in the budget for the tribunals in the coming years.  In that context, his delegation believed that there was more room for the Secretariat to exercise further fiscal discipline in the management of the tribunals, in order to maximize the efficiency and effectiveness of their operations.

While the position of the peacekeeping budget seemed better than that of the regular budget and the tribunals, he expressed his concern that the level left for borrowing from the closed peacekeeping missions would be left at only $42 million by year’s end.  As $187 million was expected to be cross-borrowed from the closed missions this year, in order to supplement the regular budget, the tribunals and the active peacekeeping missions, his delegation was alarmed that this level of cushion was clearly insufficient.

RAZZIF ALJUNIED (Singapore) emphasized his delegation’s deep concern that, as of 23 October 2003, only 121 Member States had paid their regular assessments in full.  Although the year-end figure would be higher than in 2002, the figure of 121 was still currently lower than the higher figures achieved in 2000 and 2001.  His delegation had also noted that more than 70 countries were in arrears, with their combined debt amounting to $693 million to the United Nations regular budget.  Moreover, in the peacekeeping budget, a total of $1.3 billion remained in arrears.

The prevailing situation in which one group of Member States was financing the obligations of the others had gone on for far too long, he said, and was crippling the United Nations’ ability to implement its mandated programmes and activities effectively.  Without the timely payment of assessed contributions, the United Nations had had to resort to ever-ingenious methods to keep its cash balance solvent; for example, by cross-borrowing from the peacekeeping account.  Such stopgap measures could not solve the financial woes of the United Nations and had also deprived countries from receiving their share of reimbursements from the closed peacekeeping missions. 

It was clearly not in the interest of Member States to short-change the United Nations.  The case for a financially sound organization was more compelling than ever, given the current international climate and the increased responsibilities and challenges that the United Nations was shouldering.  It was his delegation’s hope that all Member States would heed the call to pay their dues in full, on time and without conditions. 

RAJIV RAMLAL (Trinidad and Tobago) said that the payment of all outstanding arrears and the honouring of assessed contributions in full, on time and without conditions was the sine qua non for ensuring a sound, viable basis for the United Nations, and for the full and effective implementation of its mandates.  The Organization’s financial health depended largely upon the willingness of Member States to demonstrate the requisite political will to honour their legally binding financial obligations.  The Government of Trinidad and Tobago had recently taken a decision to pay in full its outstanding arrears in respect of the United Nations budget for peacekeeping operations.  Pursuant to approval on 15 October 2003 by Parliament, the sum of $336,000 would be paid in November 2003.

MWELWA C. MUSAMBACHIME (Zambia) noted that the Secretary-General’s report indicated clearly that the Organization was facing financial difficulties due to non-payment of contributions by some Member States, resulting in cross-borrowing from the peacekeeping budget.  Zambia was one of the developing countries that contributed troops to peacekeeping mission and did so out of a conviction that it should contribute towards the maintenance of international peace and security.  The country had contributed troops and civilian police to a number of peacekeeping missions in the past and would continue to do so in the future.  However, Zambia’s participation was being hampered by financial constraint resulting from non-reimbursement by the United Nations for troops and equipment.

Although Zambia was currently facing economic difficulties due to a number of factors, including the deteriorating terms of trade, he said, the country was current in its assessed contribution to the regular budget and was in the process of paying the rest of the assessed contributions.  Unless the United Nations was financially sound, it would not be able to implement and achieve its mandates contained in the Charter.  The maintenance of international peace and security, as outlined in the Charter, required both political will and financial resources.

SHOZAB ABBAS (Pakistan) noted that the main indicators of the Organization’s financial health were not promising:  unpaid assessment and cash on hand were depicting a dismal picture; total unpaid assessments were higher than last year’s figures; the amounts owed to Member States were rising; and the number of Member States paying their regular budget assessment in full was frozen at 117 from the year 2002.  That situation could seriously undermine the capacity of the United Nations to carry out its mandated activities and programmes.

The high levels of debt owed to Member States had a particularly heavy cost for countries like Pakistan, which provided troops for peacekeeping operations, he said.  The amounts owed to those countries stood at a high level of $62.5 million.  While the Organization had reduced its debt burden, reimbursement plans for the current year might not reach their targeted level.

Pakistan had expressed time and again its concern at the extraordinary practice of borrowing from peacekeeping funds, he said.  The Secretariat should explore other, more practical and innovative ways to finance its cash-flow deficits rather than continuing the practice of cross-borrowing.

Mr. ELJY (Syria) said that while 2002 had been considered a good year from the financial point of view, the level of paid assessments had plummeted during that year.  This year, unpaid assessments to the regular budget amounted to $693 million.  He said he was concerned over that trend, which adversely affected the functioning of the Organization.  Adequacy of financial resources available from Member States was of great importance.  Another source of concern was cross-borrowing.  While he understood the reason for that practice, it was necessary to put an end to it, using any surpluses from closed missions to pay off the Organization’s debt to Member States.  He called on all countries to make their payments to the United Nations in full, on time and without conditions, particularly the major contributors.  His delegation had paid its obligations in full, except those for the United Nations Disengagement Observer Force (UNDOF) and the United Nations Interim Force in Lebanon (UNIFIL).  In connection with UNIF, he stressed the principle of international responsibility, which required the aggressor to pay for the damage incurred. 

Response by Under-Secretary-General

CATHERINE BERTINI, Under-Secretary-General for Management, said the funds available to carry out the Organization’s mandates were critical and the existing cash-flow problem was a problem for all within the United Nations.  It was certainly the responsibility of the Secretariat to follow up, and it had sent out letters to Member States to encourage timely payments.  However, it was ultimately the responsibility of Member States to pay their dues in a timely fashion.

Turning to the many points raised by delegates regarding cross-borrowing, she said the Secretariat would prefer not to resort to that practice, and if assessments were paid in full and on time, it would not have to.  However, it was the only mechanism that the Secretariat had to keep its operations moving, and there were no alternatives.  The Secretariat did not borrow from active missions, so the reimbursement of troops and equipment from active missions was not affected.

Late reimbursement to Member States was due to a number of factors, such as late payment of assessments, and was being addressed by the Secretariat, she said.  With regard to missions in Western Sahara, Kosovo and Cyprus, troop contributors could not be reimbursed until more assessments were paid.  In the face of late payments, the United Nations continued to carry out its mandates, but the Secretariat was forced to borrow.  It was the Member States that could change the situation, not the Secretariat.  If the Secretariat were to restrict budget implementation to the level of assessments paid, the United Nations would be totally paralysed.

Responding to a question raised during the debate, she said that in April 2004 the Secretariat was supposed to pay back $84 million to Member States from closed peacekeeping missions.  However, the Organization had to have payments for the International Tribunals, and Member States, therefore, needed to pay their Tribunal assessments for 2003, as well as pay their 2004 assessments early if the $84 million was to be paid back.  That issue was in the hands of Member States.

She said that, since Tuesday, San Marino had paid its assessment to the regular budget in full, bringing the total to 122 Member States.  Croatia and Finland had just joined the list of Member States that had paid all their assessments in full for this year.

Other Matters

ANDREW TOH, Assistant Secretary-General for Central Support, said in response to questions raised by the delegation of Costa Rica at the Committee’s first meeting on 30 September that when the smoking ban was instituted on 1 September, instructions to security officers for the first month were to remind all smokers that the United Nations had been declared a non-smoking facility.  From 1 October, they had been asked to note the name and department/mission of individuals smoking in the Building.  The list would be submitted to the respective heads of department/mission concerned.  It would be up to them to take whatever actions were required.

Regarding a question on who would ensure the safety and security of United Nations personnel while security officers had become “policemen of smokers”, he said there were no dedicated policemen for that purpose and security officers were at their usual stations.  They had all been instructed to avoid any confrontation with individuals on the issue of smoking, unless they presented a clear and present danger to property and personnel.

DAVID DUTTON (Australia) said the Secretary-General had acted appropriately and within his authority.  Some delegations had raised questions about the legal basis of the smoking ban, and he would be happy to look into that matter.  There were important questions concerning the implications of continued smoking for the health of delegates and staff, fire risks and insurance consequences.  There was strong scientific evidence of the dangers of second-hand smoke, and at the United Nations the dangers were exacerbated by poor ventilation.  Increasingly, governments were moving to ban smoking in public places in the interests of public health.  The World Health Organization (WHO) had recently adopted a convention on the dangers of smoking for public health.  The time had come to ban smoking on United Nations premises around the world, and the Australian delegation would present language on the issue at an appropriate time.

Ms. GOICOCHEA ESTENOZ (Cuba) said her country had participated in the deliberations on the WHO convention, although it was a tobacco-producing country.  However, the issue concerned the decisions of the Assembly regarding smoking.  The resolution adopted by the Assembly did not prohibit smoking, and Cuba had questions about the administrative decision in that regard.  The Cuban delegation wished to know the cost of taking away ashtrays and painting walls.  Had additional security staff been mobilized to ensure compliance with the administrative order?  Were they working overtime?  Had a study been made in the Building to determine the health repercussions of smoking?  What were the costs associated with all that?

YASSER ELNAGGAR (Egypt) said the time had come for the General Assembly to pronounce itself on the matter and prohibit smoking.  That was the main point of departure.  However, yesterday’s questions by the Russian Federation on the legal aspects of the matter had not been addressed.  Egypt found interesting the language of the instructions to security officers on avoiding confrontation with smokers.  It sought a definition of “clear and present danger”.

THOMAS A. REPASCH (United States) expressed support for the Secretary-General in carrying out his responsibilities as chief administrative officer of the United Nations, which the General Assembly had given him, and in providing a healthy environment for staff and delegates.  There were questions, however, about the financial and legal implications of the matter.  Another aspect of the issue was the willingness of local fire authorities to protect buildings that did not comply with local fire codes.  It was essential for the Secretary-General to respond to that concern.  Regarding the language of the instructions, he said that anyone smoking around him presented a clear and present danger to his health.

Mr. ELJY (Syria) said his delegation was against smoking in workplaces.  However, the Secretary-General was the chief administrative officer and his instructions related only to employees.  When those instructions were imposed on delegates it was not acceptable.  Syrian national laws also banned smoking in meeting and public places, in order to lessen the threat of passive smoking.  However, the legislative jurisprudence in this regard was the General Assembly’s. 

LUIS ALFONSO DE ALBA (Mexico) said that the matter was not whether people should or should not smoke.  The question was who decided the matter and whether or not a resolution on it could be ignored.  Those concerned were mature adults and diplomats, not minors.  With regard to parking, his delegation had been unable to have access to the building with its mission vehicles.  The Secretariat had a responsibility and a duty to address this problem. 

VASILY GRUZDEV (Russian Federation) said that the issue could be discussed only when complete answers were received from the Secretariat.  In this situation, the legal aspect was paramount.  Certain departments of the Secretariat were encroaching on the work of the administrative and budgetary aspects of the Organization. 

ANTONIO ALARCÓN (Costa Rica) said that at no time did his delegation question decisions that were being taken for the health of human beings.  However, it was important to keep within the procedures and legal framework of the United Nations.

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