PRESS BRIEFING BY UNDER-SECRETARY-GENERAL FOR MANAGEMENT ON UN FINANCIAL SITUATION

PRESS BRIEFING BY UNDER-SECRETARY-GENERAL FOR MANAGEMENT ON UN FINANCIAL SITUATION

Although elements of concern remained, “we have a better news situation”, Under-Secretary-General for Management Catherine Bertini told correspondents as she described the United Nations financial situation at a Headquarters press briefing today.

Presenting her twice yearly briefing on the Organization’s financial health, she said that while the situation of the regular budget remained precarious, the news had been generally positive.  More Member States were paying their debts in the year in which they were owed.  Peacekeeping cash should remain at a comfortable level, although shortages in some missions existed, and debt to Member States was expected to increase.  From past experience, assessments for new missions were not forthcoming for up to 120 days, and the Peacekeeping Reserve Fund, as a source of liquidity, was likely to be fully used.  The effective functioning of the International Tribunals for Rwanda and the Former Yugoslavia, however, was endangered by substantial cash deficits, she cautioned.

Joining Ms. Bertini was the Assistant Secretary-General for Programme Planning, Budget and Accounts and United Nations Controller, Jean-Pierre Halbwachs.

While last year was the first that the Organization had not had to borrow for the regular budget, the projection for the current year was that the Organization might have to borrow, she said.  Last year had turned the trend around for the number of Member States paying dues.  That trend needed to continue.  A strong financial base was a prerequisite for the United Nations’ ability to carry out the many important tasks entrusted to it by Member States.  Improving the Organization’s financial situation remained a high priority for the Secretary-General.

Taken together, three financial indicators, namely, cash on hand, the level of assessments and amounts paid, and debt to Member States, indicated the degree of success the Organization had had in improving its financial situation, she said.  On the balance, the outcomes for 2003 were moderately positive.  Cash balances had fallen from some $1.397 billion at the end of 2002 to about $1.352 billion at 31 December 2003.  However, the outcome for some accounts had differed sharply from that relatively healthy overall result.

The second indicator, assessments and payments, was modestly encouraging with total unpaid assessed contributions falling by some $81 million to a still large $1.603 billion, she added.  That was the lowest total since 1993.  That encouraging outcome, however, did not reflect the problems faced with some accounts.  Debt to Member States also showed an improvement.  The total owed at 31 December 2003 was some $439 million, a reduction of about $264 million.

Providing comparisons between 2002 and 2003, she said total assessments in 2003 had increased to some $3.9 billion from $3.6 billion in 2002.  There was also a small decrease of some $24 million for peacekeeping from $2.284 billion to $2.260 billion.  That was offset by increases of $260 million for the regular budget, $18 million for the Tribunals and $26 million for the Capital Master Plan.

Ms. Bertini noted that last October she had indicated that there was some uncertainty about the financial cash position of the regular budget.  Complete information about major payments expected by the end of the year had not been available.  However, 2003 had ended with net cash available for the regular budget of some $23 million.  That was the net result of lower than anticipated receipts and disbursements.  2003 had also ended with net cash available for the Capital Master Plan of some $16 million.

On peacekeeping financing, she said total net cash balances for peacekeeping at the end of 2003 had totalled some $1.386 billion -– an increase of $23 million compared with 31 December 2002 -- and $188 million higher than projected last October.  That reflected higher than anticipated receipts in the final quarter of 2003 and final disbursements that were some 5 per cent lower than anticipated.

The cash situation for the two International Tribunals, however, had deteriorated, she said.  Contributions continued to fall short of assessments.  The Tribunals had had a cash deficit at the end of 2002.  At the end of 2003, it had grown to about $73 million.  A continuation of that alarming trend would threaten the future work of the Tribunals.

Overall, while regular budget cash had been lower at year-end, no cross borrowing had been necessary in 2003 for the first time in the last several years, she said.  A “bad and worsening” financial deficit had occurred, however, for the International Tribunals.  While the aggregate cash balances of peacekeeping missions was somewhat higher, there were cash shortages in some missions.

Addressing outstanding amounts at the end of 2003 for the regular budget, she said 131 Member States had paid their regular budget assessments in full by the end of 2003, breaking the negative trend since the number had peaked at 141 in 2000.  On behalf of the Secretary-General, she thanked all Member States who had paid their assessments on time in the year in which they were due.

She said unpaid assessed contributions for the regular budget had increased to $442 million at the end of 2003.  At the end of 2003, the amount owed by the United States had increased by some $78 million, and the amount owed by other Member States had increased by about $59 million.  Unpaid assessments for 2003 and prior years had since decreased with payments by the United States and a number of other Member States.  As of 17 May 2004, amounts for 2003 and prior years had decreased to $311 million.  In other words, if the statistics were taken one step forward, putting 2004 as of 17 May, the United States would still owe $194 million.  The total owed by all Member States was $311 million for 2003 and prior years.

Outstanding peacekeeping assessments at the end of 2003 of some $1.06 billion had been about $269 million lower than at the end of 2002, she said.  At the end of 2003, the United States had owed some $54 million less than at the end of 2002.  All other Member States had owed about $215 million less than at the end of 2003.  That was another positive trend. 

The International Tribunals, however, were considerably more problematic with a very negative trend, she said.  Unpaid assessments for the Tribunals had more than doubled to $88 million in 2003, with a much higher cash deficit at the end of 2003.

In summary, regarding the indicators on unpaid assessments as of 2003, the regular budget position had slipped somewhat with unpaid assessed contributions increasing, however, with more nations paying.  The overall position of peacekeeping accounts had improved during 2003 with payments and credits exceeding new assessments.  The already precarious situation of the International Tribunals had gotten much worse.  A handful of Member States accounted for over 86 per cent of the shortfall.

Regarding debt to Member States, she said the total debt to Member States for troop and equipment costs at 31 December 2003 had fallen from $703 million at the beginning of the year to $439 million.  Actual new obligations for contingent-owned equipment had been significantly lower than had been expected earlier due to the delayed deployment of the Task Force and troops in the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC) and the faster than originally planned drawdown of the United Nations Mission in Sierra Leone (UNAMSIL).  In addition, payments for troop costs had also been better than expected.  As a result, debt to Member States would be at $439 million, $122 million for troops, and $317 million for contingent-owed equipment.

The Secretary-General remained fully committed to reducing the level of debt to Member States to the maximum extent possible, given the operational requirements for each mission, she added.  The extent to which he was able to repay Member States was directly related to the extent that Member States met their financial obligations, however.

Turning to prospects for 2004, she said 82 Member States had paid their regular budget assessments in full as of 17 May.  Regrettably, current cash projections indicated the need for some cross-borrowing later in the year.  She hoped that would not be the case.  If that happened, however, the year might end with a cash deficit.  Member States could make that untrue if they paid arrears and their budget assessments.

It was estimated that peacekeeping cash would end the year at around $931 million, she said, reflecting the return of $84 million to Member States from cash balances in closed accounts by June 2004.  In addition, the Assembly would be requested to take action during the current session on some $94 million.  The composition of the total cash balance was of critical importance since the Organization was not permitted to borrow from active peacekeeping missions, and the peacekeeping reserve fund could only be used for new and expanded missions. 

She said the return of cash balances of some $84 million and $94 million from closed missions to Member States would result in total liabilities for closed missions exceeding total cash in those missions.  That would create serious problems if borrowing were needed to tide over other activities, including active missions, the regular budget and the Tribunals.

It was regrettable that the financial prospects for the two Tribunals remained very bleak, she said.  The assessments in 2004 had totalled $273 million.  Payments to date amounted to $194 million.  The Tribunal accounts had had to borrow in January and February and would have to do so again from July, ending 2004 with a cash deficit of $100 million.  The Organization had taken steps to freeze recruitment for the Tribunals.  Unless Member States made significant new payments for the Tribunals in the very near future, further steps would be necessary.  She could not overemphasize the magnitude of the financial crisis facing the Tribunals or the importance of Member States meeting their financial obligations.

Regarding debt to Member States, she expected a significant increase in new obligations for troop and equipment costs in 2004 to some $949 million, as compared with $607 million in 2003.  That was due to the phasing in of the United Nations Mission in Liberia (UNMIL) and the United Nations Operation in Côte d’Ivoire (UNOCI), and full deployment of MONUC, which more than offset the downsizing of the United Nations Mission of Support in East Timor (UNMISET) and UNAMSIL.  At the same time, payments to Member States for troop costs were expected to increase from $454 million in 2003 to $567 million in 2004.  While the Secretary-General was committed to doing everything possible to meet obligations to troop and equipment providers, his ability to do so depended on all Member States meeting their obligations in full and on time.

Responding to a question about the United States debt to the Organization, Ms. Bertini said that for the regular budget, prior to 2004, the United States had some $194 million in arrears.  The 2004 assessment, which had not been paid at all, was some $363 million.  The regular budget number of what the United States owed was $557 million.  That was added to $480 million owed to peacekeeping and $49 million owed to the Tribunals for 2004.  No arrears were owed for the Tribunals.  The peacekeeping figure was mostly for 2004.  The total amount owed was some $1.86 billion. 

Was there any particular reason for the increase and was the Organization discussing the matter with the United States Administration? a correspondent asked.

Ms. Bertini noted that the Secretariat had ongoing discussion about its dues.  Several issues were involved.  One for which there was a fair amount of support was for the United States to “re-synchronize” its payment process.  In the 1980s, the United States had decided to pay its dues starting in the following fiscal year for the United States, which started in October of the United Nations calendar year.  For that reason, the $363 million owed for 2004 regular budget assessments would not be received until October.  United Nations dues were owed in January in the year in which they were assessed.

While there was a fair amount of interest in Congress and the Administration to change the situation so that dues would be paid at the beginning of the calendar year, no action had been taken yet to accomplish that, she said.  Looking at what the United States owed from its 2003 assessments for the regular budget, some $27 million was still outstanding.  She hoped to receive that at any time.  The Tribunals were up to date.  Peacekeeping payments came periodically.  It was a different kind of situation than the regular dues which were due in full at the beginning of the calendar year.  Peacekeeping payments were generally more up to date. 

Asked for a list of what the other “big” Member States owed, she said she would have to get back to the correspondent on the matter.  Japan was paid up through 2003, she noted.

Asked to comment on the issue of sexual harassment, she said the Secretariat had just put out an institutional direction about the need for staff to appreciate the importance of the problems caused by harassment.  The Secretariat had taken a proactive position on the matter.  Harassment had no place in the workplace or in communities.  It was a serious issue in communities, households and workplaces.  The Secretariat wanted to ensure that it was not an issue for United Nations.

What means were available to the Secretary-General to improve the Organization’s financial situation? a correspondent asked.

Responding, she said the Secretary-General had written to all Member States about the situation facing the Tribunals, raising with them the need to pay their Tribunal assessments.  While he could encourage States to do so, it was their responsibility to pay assessments.  The other tool available to him was to not spend money, which was what they were moving towards in the freeze on recruitment.  The Member States had decided that the Tribunals were important, but many had not decided they were important enough to pay.  Fifth Committee members had expressed much concern on the need for a recruitment freeze.  She hoped that would generate more action on the part of Member States to pay.

Asked if the United Nations had an assessment of how much it would be willing to spend on a possible future tribunal in Iraq, she said the matter had not been discussed

Had the negative approach taken by the Bush Administration to the United Nations before they were in Iraq and the spectre of United States unilateralism encouraged or discouraged contributions? a correspondent asked.  Responding, Ms. Bertini said that if one looked at the trends, she did not think the activities of 2003 had impacted one way or the other on who had or had not paid or why.

In response to a question on cross-borrowing, Mr. Halbwachs noted that the Organization was only allowed to borrow from closed missions.  That was what had been used to keep the Tribunals going.  The General Assembly had decided to take back some $84 million from closed peacekeeping missions and another $94 million was going to be returned.  The pool from which to borrow was shrinking.

* *** *