Fifty-ninth General Assembly

Fifth Committee

38^th Meeting (AM)

BUDGET COMMITTEE BRIEFED ON LATEST DEVELOPMENTS

 

IN PLAN TO REFURBISH UN HEADQUARTERS

 

Report on Regular Programme of Technical

Cooperation, Development Account Also Discussed

Briefing the Fifth Committee (Administrative and Budgetary) on the latest developments of the Capital Master Plan for refurbishing the United Nations complex in New York, John Clarkson, Officer-in-Charge of the Plan, Department of Management, addressed issues such as a loan offer by the host country, temporary relocation and budgetary implications of the design phase.  The Committee also discussed the Secretary-General’s report on the review of the regular programme of technical cooperation and the Development Account.

Stressing the project’s importance for the health and safety of everyone who entered the historic United Nations complex, Mr. Clarkson said that since the most recent progress report of the Secretary-General (document A/59/441) on the issue, the United States Congress had approved the loan offer of $1.2 billion to finance the costs of the project.  In that report, the Secretary-General had stated that, based on outside advice, the Organization could not obtain a lower fixed rate than the one proposed by the host country (5.54 per cent).  Now that details of the terms had been confirmed by the host country, the Secretariat would compare them against what is currently available in the capital markets.

The construction phase of the Capital Master Plan was predicated upon temporary relocation of staff and delegates into a “swing space”, so that work could be carried out on the current premises, he said.  For that purpose, the City of New York had proposed the construction of a building on First Avenue between 41^st and 42^nd Streets, called UNDC-5.  The lack of legislative approval, to date, by the State of New York had led the United Nations to consider other swing space solutions.

On the project’s budget, he recalled that the Secretary-General was authorized to enter into commitments of up to $26 million for the biennium 2004-2005 to complete the design work.  The Secretary-General intended to seek at the Committee’s second resumed session the Assembly’s approval for the conversion into appropriation of $26 million of the commitment authority for completion of the design work and the resolution of the swing space issue.

The representative of the United States confirmed that the loan to the United Nations to finance the Capital Master Plan had been adopted in the United States budget.  He pointed out that the offer would expire at midnight on 30 September and that the Secretary-General would need to sign for the loan prior to that time.  His signature would not create a financial obligation to the United Nations of any kind, nor would his signature constitute approval of the loan by the Assembly.

He said that, based on recent developments, his delegation had concluded that the Committee would not be able to take decisions on how to move the Capital Master Plan forward until the Committee’s May session, during which important decisions needed to be made.  His country wanted to ensure that there was a safe and secure environment for delegates and staff.  In so doing, it would like to take advantage of the offer from New York City to construct a new building that the United Nations could own after 30 years.

The representative of Belgium, speaking on behalf of the European Union and associated States, said the United Nations Headquarters no longer conformed to current safety, fire and building codes and the complex was deficient in terms of meeting modern-day security requirements.  Recognizing that there was a need to pay architects in the coming months, he said the question that remained was whether Member States would be assessed now to allow final payments to be made.  The question of the $18 million appropriation had thus become a short-term issue.  [In the report presented to the Committee in November, the Secretary-General recommended that the Assembly convert $18.64 million of the commitment authority into an appropriation for the 2004-2005 biennium, and to extend the validity of the remaining balance of $7.36 million into the 2006-2007 period.]

Other speakers stressed that, before the Secretary-General could sign the loan approval, more information on the legal implications was needed and that the Committee could only act on reports submitted by the Secretary-General.  Moreover, more transparency was necessary in the Secretariat’s communications to the Committee concerning changes and delays in the design phase.

Turning to the review of the regular programme of technical cooperation and the Development Account, Sharon Van Buerle, Director ad interim, Programme Planning and Budget Division, introduced the Secretary-General’s report.  She said the report reflected the full range of operations and analysed similarities and differences between the two programmes.  Some of the options proposed by the report included eliminating section 23 of the budget regarding the regular programme and combining it with section 35.  As the regular programme of technical cooperation did not have a focal point, it was proposed that the Department of Economic and Social Affairs would be nominated for that function.

The representative of Jamaica, speaking on behalf of the “Group of 77” developing countries and China, said she saw no justification for merging the related section of the budget with section 35, relating to the Development Account.  She underlined the importance of the programme of technical cooperation and stressed that the Assembly must take decisions during the current session aimed at improving its functioning and strengthening the level and use of the resources appropriated for it.  The Development Account had provided valuable support to technical cooperation programmes and activities and was complementary to such programmes.  The Group appreciated the integrated approach, the multiplier effects sought and the regional and interregional nature of the Account projects.

Noting that no savings had been identified that could be added to the Account, she said that the underlying assumption upon which the funding arrangement for the Account had been based was flawed.  [The initial funding level of the Development Account was established in 1997 on the basis of savings from the reform programme of the Secretary-General, some $13 million.  The Assembly also established the savings identified at that time as the base level of funding for future years, with future verifiable and sustainable savings to be added to the account.]

Belgium’s representative, speaking on behalf of the European Union, however saw a certain rationale in the proposal for possible consolidation of budget sections 23 and 35 in the context of the proposed budget for the next biennium.

The representative of Madagascar, speaking on behalf of the African Group, noted that the Development Account was supposed to be funded by savings resulting from reduced non-programme costs and other management efficiencies. It was further envisaged that the programme would grow to at least $200 million for the 2002-2003 biennium.  Member States had agreed to the proposal to create “a dividend for development”, in recognition that resource allocation in the regular budget was skewed, as demonstrated by the small portion allocated to economic and social development activities.  While convinced of the relevance of the Development Account, the Group remained seriously concerned about the limited funding level allocated to it.  The Assembly needed to reconsider the basic assumptions upon which it had based its decisions on the funding arrangements for the Account.

The representatives of Norway, Argentina (on behalf of the Rio Group), Cuba, India, Venezuela, New Zealand, Canada (also on behalf of Australia and New Zealand) and the Russian Federation also spoke.

Vladimir Belov, Chief, Common Services Unit, and Rajat Saha, Vice-Chairman, Advisory Committee on Administrative and Budgetary Questions, also addressed the Committee

The Committee will meet again on Monday, 21 March, at 10 a.m. to discuss special political missions.

Background

The Fifth Committee (Administrative and Budgetary) this morning was expected to be briefed on the implementation of the Capital Master Plan for the refurbishing of the United Nations complex by the Officer-in-Charge of that project, John Clarkson.

The second issue on the Committee’s work programme was the Secretary-General’s report on a review of the regular programme of technical cooperation and the Development Account (document A/59/397).  The document covers a full range of operations of those two programmes and contains a detailed analysis of their similarities and differences.  Specific proposals are made with regard to possible improvements, including measures to improve the programmes’ financing, reporting and oversight.

Among the main issues stemming from the review, the Secretary-General identifies the programmes’ relevance, the use of advisers by the regular programme of technical cooperation, fundamental options for the future of the technical cooperation programme, its reporting and designating programme managers.  One of the conclusions of the report is that, despite the general trend of development assistance towards more strategic programme interventions, both programmes play an important ongoing role in support of broader objectives.

Summarizing the situation with the regular programme of technical cooperation, which was established in 1946 for the provision of technical assistance to developing countries, the Secretary-General states that, overall, its reporting and oversight are inadequate at the central level.  As a result, expectations for the programme have not been regularly updated, with the result that they are now unclear.  What expectations do exist are not effectively monitored.  Such a situation encourages a very liberal interpretation of the guidelines.

Addressing the future of the regular programme, the Secretary-General analyses such options as its elimination or preservation in its current form; transfer of its funds to the regular programmes of implementing entities; and improvement of its efficiency through clarification of the programme’s objective and criteria and a significant improvement of performance monitoring and reporting.

Established in 1997, the Development Account is well managed, and no substantive changes are required in the areas of programming and utilization, the report states.  Its objective is to fund medium-term technical cooperation projects (up to four years for implementation, following approval of the project document) in the priority areas that benefit multiple developing countries by encouraging cooperative efforts between United Nations programmes.  Its projects focus on innovative cross-sectoral, regional or interregional activities, which are based mainly on the technical, human and other resources available in developing countries.

On financing, the Secretary-General reports that the regular programme of cooperation has a funding pattern that has been stable for many years.  The initial funding level of the Development Account was established in 1997 on the basis of savings from reductions in administration and other overhead costs identified in the Secretariat from the reform programme of the Secretary-General.  The Assembly also established the savings identified at that time as the base level of funding for future years, with future verifiable and sustainable savings to be added to the account.  While this provision was well intentioned, its unintentional impact has been that no further savings have been identified.

The Secretary-General states that it was perhaps excessively optimistic to expect managers to identify savings in their own activities that would then automatically be reallocated to another programme.  While removing this provision does not necessarily guarantee that further savings will be identified, its continued existence almost guarantees that they will not.  For this reason, it is considered that the provision overall is counter-productive and should be rescinded by the General Assembly.  Any future increase in funding levels for the Development Account should be considered in the light of competing priorities that exist for the use of the overall United Nations budget.

Responding to one of the proposals regarding the programmes’ future budgeting, the Secretary-General states that given their separate histories and different nature, it is unlikely that combining the two programmes into one budget section with two separate parts would actually lead to any transfers between those parts under the discretional authority delegated to the Secretary-General.

Also according to the report, it appears timely to update and simplify the criteria applied to activities funded by the technical cooperation programme.  Currently, there are two sets of criteria:  those that govern the use of programme funds by all implementing entities (the overall criteria); and those that govern the priorities of each individual implementing entity (the entity criteria).  The overall criteria should not be so specific that they preclude activities that legitimately fall within the approved strategic priorities of the implementing entities.

Another proposal refers to rewriting the objective for the regular programme to better reflect its role within the United Nations.  The Secretary-General submits for consideration proposed wording in that regard, but observes that the Assembly may wish to further clarify it as far as the nature of the project preparation activities is concerned.  Also, since the use of advisers is one of the contentious issues, if the Assembly adopts a new objective statement or new criteria for the programme, it would be useful to audit the implementation of that new guidance, including the use of advisory services, at an appropriate point in the future.

Regarding the guidelines for the use of the Development Account, the report states that the Assembly has revisited that issue on a number of occasions.  The following criteria guided the formulation of the last tranche (the fourth) of Development Account projects:  help build national capacities; utilize technical, human and other resources available in developing countries; promote regional and interregional economic and technical cooperation among developing countries; lead to some durable, self-sustained process and have synergies with other development interventions; and be executed within two bienniums.  Project submissions that do not meet the criteria are either rejected or rewritten.

The Secretary-General further notes that new criteria for the fifth tranche of the Development Account that were considered at the time of the preparation of the report, had increased from the five listed above to 10.  While most could be defensible, there is concern that too many criteria may prove distracting in understanding the unique objectives of the programme and may lessen the impact of the criteria overall by trying to “touch all the hot buttons”.  The budget fascicle for section 35 for the biennium 2004-2005 did not contain a simple and precise statement of the programme’s objective.  Such a statement could be developed for the next budget, with the objective of situating the Development Account more precisely within the broader range of United Nations programmes.

Briefing on Capital Master Plan

Briefing the Committee on the latest developments, JOHN CLARKSON, Officer-in-Charge of the Capital Master Plan, Department of Management, stressed the project’s importance for the health and safety of everyone who entered the historic United Nations complex.

Since the publication of the most recent progress report of the Secretary-General (document A/59/441) on the Capital Master Plan, the United States Congress had approved the loan offer of $1.2 billion to finance the costs of the project, he said.  On 25 February 2005, the United States Mission to the United Nations had provided written confirmation of the offer.  In a follow-up letter of 15 March, the United States Mission had provided additional information concerning key terms of the loan, which were essentially the same as those presented to the General Assembly in document A/59/441.

In that report, the Secretary-General had reported that the Secretariat had sought advice of commercial financial institutions concerning the offer from the host country and other options for the financing of the Plan.  It was the opinion of the institutions contacted that, at that time -- in August 2004 -- the United Nations could not obtain a lower fixed rate than the one proposed by the host country.  Thus, the United Nations would likely achieve lower debt-service costs under the host country proposal than by borrowing directly in the capital markets.  Now that details of the terms had been confirmed by the host country, the Secretariat would compare them against what is currently available in the capital markets and report to the Assembly in the second resumed session of the Fifth Committee in May.

The Secretariat had also explored additional options in order to reduce the amount of interest payable over the course of the loan, he said.   Such options, however, were conditional on the United Nations using the offer from the host country as guarantee and, therefore, were entirely dependent on a loan agreement being in place by 30 September of this year.

The construction phase of the Capital Master Plan was predicated upon temporary relocation of staff and delegates into “swing space”, so that work could be carried out on the current premises, he said.  For that purpose, the City of New York had proposed the construction of a building on First Avenue between 41^st and 42^nd Streets, called UNDC-5.  The lack of legislative approval, to date, by the State of New York had led the United Nations to consider other swing space solutions.  A real estate firm had been retained for the purposes of identifying alternate swing space options.  The cost of UNDC-5 was also being analysed for possible ways to limit the overall cost.

Initial market analysis indicated that it could be possible to find suitable swing space premises for the Secretariat in one building, possibly in the vicinity of the Headquarters complex, he continued.  However, in the current market, the time available for a decision to proceed, if suitable premises could be found, could be limited.  That was especially relevant if one location able to meet all the Organization’s needs for offices could be found.  Analysis of swing space alternatives would be reported to the Assembly as soon as possible, ideally in the second resumed session of the Committee.

On the project’s budget, he recalled that in section II of its resolution 57/292 of 20 December 2002, the Assembly had appropriated $25.5 million for the Capital Master Plan for 2002-2003 for design, related project management and management of pre-construction services for the baseline scope and scope options.  The Secretary-General was authorized to enter into commitments of up to $26 million for the biennium 2004-2005 to complete the design work.  By its decision 59/551, the Assembly has deferred its consideration of a further appropriation until the resumed session.

In conclusion, he said that the Secretariat viewed recent developments in securing financing from the host country, as well as progress in the design work and the engagement of a programme management firm, as positive ones.  In order to maintain the momentum, the Secretary-General, therefore, intended to seek at the second resumed session the Assembly’s approval for the conversion into appropriation of $26 million of the commitment authority for completion of the design work and the resolution of the swing space issue.

HOWARD STOFFER (United States) confirmed that the loan to the United Nations to finance the Capital Master Plan had been adopted in the United States budget, and a formal notification had been sent to the Under-Secretary-General for Management on 15 March.  The terms of the loan were the same as what had been presented last year.  The amount to be financed would total $1.2 billion, to be provided in three instalments over a period of three years.  The loan would be repaid to the United States over 30 years, with interest charged at 5.54 per cent annually.  While the overall amount of the loan and repayment period were the maximum ones, the United Nations was free to choose a lower amount or shorter term, as well as a different disbursement schedule.  A shorter repayment period would produce a lower interest rate.

Continuing, he pointed out that the offer would expire at midnight on 30 September, 2005.  The Secretary-General would need to sign for the loan prior to that time.  His signature would not create a financial obligation to the United Nations of any kind, nor would his signature constitute approval of the loan by the Assembly.  It would simply keep the United States loan offer on the table as an option to be considered when the Fifth Committee took up the issue of financing the Capital Master Plan.  Repayments would need to be made only if funds were actually disbursed to the United Nations.  Based on recent developments and ongoing discussions, his delegation had concluded that the Committee would not be able to take decisions on how to move the Plan forward until the May session.

During that session, it would be necessary to discuss whether to authorize the Secretary-General to sign for the loan, he said.  It would also be necessary to provide financing for the Capital Master Plan Office for phase II of design and engineering work for the project.  That Office had received funding in 2002, when the Assembly, in resolution 57/292, had decided to go forward with the Capital Master Plan.  Some $25.5 million had been appropriated for phase I of the Plan, which would be completed in the near future, and commitment authority had been given to the Secretary-General for the remaining amount that would be needed for phase II.  It was critical to provide funding for phase II work in May, since funds for phase I would run out soon thereafter.

The Committee would also have to discuss swing space options, including commercial spaces identified and recommended by the Secretariat, he continued.  That decision would require comparing the cost of renting DC-5 space, and delaying the Plan until DC-5 was ready for occupancy in late 2009, with the higher cost of renting out commercial space in New York at prevailing market rates.  In other words, the cost of DC-5 should be less than housing the Secretariat and Assembly in commercial space.  However, the cost of delaying the Capital Master Plan would also need to be factored into the Committee’s thinking.  DC-5 also needed to provide space in one building for the Secretariat, the Assembly and other United Nations bodies needing a place to meet.  Available space on the commercial market could result in the separation of the Secretariat from the Assembly and meeting halls.  While any postponement of the Plan would accrue additional costs, the advantages of waiting for DC-5 could prove to be the best approach.

Even if the Committee decided to use commercial space as swing space during the construction phase, a separate decision would still need to be made on whether to use DC-5 as a consolidation building, he added.  Using DC-5 to bring together many of the Organization’s offices currently located in rented commercial space could offer savings on future rent.  Moreover, DC-5 would be a safe location for United Nations staff to work in a modern, highly secure building designed solely for use by the United Nations.  The Organization could own DC-5 after 30 years of paying off bonds to finance construction of the building, or it could decide to pay a subsidized rent indefinitely.  As noted before, the United Nations would use the land on which DC-5 would stand completely free and in perpetuity.

Important decisions would need to be made in May, he said.  The United States as a host country wanted to ensure that there was a safe and secure environment for delegates and staff working at United Nations Headquarters.  In so doing, it would like to take advantage of the offer from New York City to construct a new building that the United Nations could own after 30 years.  The United States Government would work diligently to secure the New YorkState legislative approvals to give the Committee a firm basis on which to make informed decisions about the future of the United Nations.

KARL VAN DEN BOSSCHE (Belgium), speaking on behalf of the European Union and associated States, said that while the United Nations reform exercise was accelerating, renovation of the UnitedNationsBuilding was still dramatically lagging behind.  He stressed the importance of renovating the United Nations Headquarters, in particular for security and safety reasons.  Furthermore, the Capital Master Plan had the same impact on the morale of staff as other issues like administration of justice or safety and security.  The Union had serious concerns about the sustained viability of a rapid implementation.  There was a need for timely and transparent communication from the Secretariat.  The concerns had been reinforced by recent media reporting and comments by host country political figures about the project.

Recognizing that there was a need to pay architects in the coming months, he said the question remained whether Member States were assessed now to allow final payments to be made.  The question of the $18 million appropriation had thus become a short-term issue.  The amount had already been committed.  The Union requested official written and detailed information, at the latest by May, on the overall state of the project in order to be able to respect timelines for the badly needed renovation.  The structures of United Nations Headquarters no longer conformed to current safety, fire and building codes and the complex was deficient in terms of meeting modern-day security requirements.  A renewed United Nations deserved better than the current building.

NORMA TAYLOR ROBERTS (Jamaica), speaking on behalf of the “Group of 77” developing countries and China, said at the main part of the fifty-ninth session of the Assembly, the Committee had been presented with a budget appropriation of $18 million, even though the funds were not immediately needed.  There seemed, therefore, to be some issue of transparency, as well as inaccurate information about the Capital Master Plan.

Noting the information that the United States loan had been approved and that there was a request for the Secretary-General to sign, she said the Committee should be presented with a formal document with the details of the offer.  She also asked the Secretariat what the signature of the Secretary-General would mean, as the representative of the United States had said that such a signature would have no financial obligations.  She stressed that the Committee could only respond to written reports presented by the Secretary-General.

MARI SKARE (Norway) reiterated concerns regarding the hazards, risks and deficiencies of the current condition of the Headquarters complex.  As delays and impediments were faced, she stressed the need to carry out the renovation plans expeditiously.  Norway stood ready to approve a conversion of $18.6 million of the original commitment authority into an appropriation when that was needed to continue the design phase without delays. 

As the New York State Legislature had not passed the necessary legislation to pave the way for DC-5 as swing space, it might be necessary to make adjustments in the plans for the construction phase, she said.  Noting the status of possible funding arrangement for the Capital Master Plan, Norway was ready to discuss the alternatives -- those being accepting an interest-bearing loan, or financing through assessed contributions.

ALEJANDRO TORRES LEPORI (Argentina), speaking on behalf of the Rio Group, took note of the information provided to the Committee and supported the position of the Group of 77 and China.  More precise information was needed on the status of negotiations up to the present, the options for financing and possible location of the swing space.  Another report by the Secretariat should probably be provided.  It would also be important to have a legal opinion on the implications of a note signed by the Secretary-General, as referred to in the statements today.

Mr. BERTI OLIVA (Cuba) said he was grateful for the information provided by the Officer-in Charge on the Capital Master Plan.  However, he wanted to make some additional points, in particular on the issue of transparency.  It was necessary to further clarify the dates of appropriation for the next phase of the project, for initially the Committee had been told that it would be needed in November, then in December and then in March.  [In the report presented to the Committee in November, the Secretary-General recommended that the Assembly convert $18.64 million of the commitment authority into an appropriation for the 2004-2005 biennium, and to extend the validity of the remaining balance of $7.36 million into the 2006-2007 period.]

Now it seemed that the appropriation was not needed in March, either, he continued.  Another aspect he wanted to highlight was the need to set up an advisory board on the Capital Master Plan.  Whereas it was initially planned to have the advisory board in place by the end of 2004, such a body was still not in place.  Under current conditions, it would be a priority to explore the options available to the Organization through the advisory board.  In the current market, it was important to obtain the lowest rate or a better loan to finance the plan.

JAIDEEP MAZUMDAR (India), aligning himself with the statement made on behalf of the Group of 77 and China, said he appreciated the Secretariat’s candour in saying that now there were enough funds.  However, he was concerned about inconsistencies on the issue of the funds requirements and the issue of the phase-by-phase refurbishment.  That option had not been mentioned in the briefing.  He had heard in “the corridors” that, because of security considerations and asbestos, it was not a feasible option, but he would have liked that issue to be addressed in the briefing.

The Secretariat had also said that reports to be received would be issued during the second resumed session of the Committee, he continued, and stressed that all information should be available before any authorization could be given.  It would be imperative to have a Secretary-General report on the status of the Capital Master Plan, including interim options, before any decision could be taken.  He asked the Secretariat whether plans for the design phase and the money necessary for it would change regardless what happened to swing space.

Responding, Mr. CLARKSON said the Capital Master Plan design phase required, among other things, payment of 10 per cent of the contract value every month.  As there was continuous change, cash flow would endlessly move forward and continue to slide.  The Secretariat had been as transparent as possible.  The question on the signature of the Secretary-General would be answered by the Legal Office.  The phase by phase refurbishment of the Headquarters was still a viable option, but the Assembly had decided to endorse the first approach of renovating the complex all at one.  As for the Advisory Board, he said the Secretariat had approached a number of eminent persons.  The feedback received from that was that there were time concerns, as well as legal concerns regarding liability.  They had advised that the most appropriate approach to take was to hire expertise from the marketplace.

ASDRUBAL PULIDO LEON (Venezuela) associated himself with the position of the Group of 77 and the Rio Group and said that all responses to the questions asked in an open session should be provided in an open meeting to avoid confusion.  The Committee had been told that the differences in the information provided to the Committee were the result of transparency.  He did not exactly share that view.  In November, the Secretariat had provided additional information to the Committee at the request of his delegation.  Delegates had been informed about the way the initial appropriation of $25.5 million had been distributed and told that the remainder of that amount would be used at the beginning of 2005.  At that time, there was a request for approval of an $18 million appropriation for the implementation of phase II of the project.  He had no objection to such an appropriation, as long as it was properly justified.

Today, he had been surprised to see that no additional appropriation was being sought at this point, although in November the Secretariat had emphasized that those resources would have to be appropriated.  He asked for further information in that regard.  He also asked about the reason for the delay in the implementation of the project and the status of various designs and projects of the Capital Master Plan.  It was of utmost importance to resolve the problems besetting the Organization to have the required security for staff and Member States.  He was prepared to work constructively to assure that was achieved.  More information from the Secretariat was needed on the overall Capital Master Plan concept.  Since the Plan’s initiation, many changes had taken place and there was great confusion as to the future of the Plan.

Ms. MAZUMDAR (India) agreed with the representative of Venezuela.  As far as he knew, no informal consultations were scheduled on the Capital Master Plan.  He also asked Mr. Clarkson to clarify if a phase-by-phase approach was still an option.  Would the design be different if another option was chosen? 

DON MACKAY (New Zealand), Chairman of the Committee, agreed that no informal consultations on the matter were included in the work programme at the current moment, because no decision was required from the Committee at the current session.  If delegates so wished, that could be changed.  What was very clear was that questions raised in a formal meeting should be answered in a formal meeting, as well.

Ms. TAYLOR ROBERTS (Jamaica) said that, in her statement, she had referred to informals at some point -- not necessarily during the current session.

VLADIMIR BELOV, Chief, Common Services Unit, said projections of expenditures for implementation of the design phase had been provided in 2004 and an $18 million appropriation had been required for 2005.  During informal consultations, additional information had been submitted regarding monthly requirements for June.  Estimates at that time were based on assumptions on progress of the design work.  The progress of design work had been different than what had been expected, and some delays had occurred, which had had an effect on expenditures.  There was now a lower level of expenditures than had been projected.  There was still $5.4 million available, which would be sufficient to operate through May to implement the programme.

Mr. CLARKSON said the design process required a series of activities between now and 2006.  A project management firm had been hired to resolve design issues early in the process, so that the long-term schedule for the design process would not be affected.  Delays would have no impact on the overall design phase.  Regarding a question about the swing space option and phase by phase approach, he said that, if the latter option was chosen, it would impact the overall design phase.

Mr. PULIDO LEON (Venezuela) said that the report to be presented to the Committee in May should include information regarding the Organization’s ability to use the envisioned swing space and the impact of options available on the project.  Information should also be provided on the reasons for the delay in the design process and what had been done by the firms retained for the design phase.  The delegations should have an opportunity to make up their own mind regarding all elements of the plan.

Mr. MAZUMDAR (India) reminded the Secretariat that he had asked several times whether there would be any changes in the design phase.  He also wanted to know about the options in swing space.  Would the design phase be affected by the decision on the options for swing space?

Mr. CLARKSON said that there were two options.  The Secretariat was still following the first one: empty the complex and renovate it in a single process.  However, now a real estate firm had been retained to identify alternate swing space for offices and conference use.  If another option was adopted, there would be an impact on both the first and second phase.  That would be identified in the May report.

Introduction of Reports

SHARON VAN BUERLE, Director ad interim, Programme Panning and Budget Division, introducing the Secretary-General’s report on the review of the regular programme of technical cooperation and the Development Account (document A/59/397), said that, given similarities between the technical cooperation programme and the Development Account, and in line with proposals of the Secretary-General to streamline as many reports as possible, a single report had been prepared.  The report gave the full range of operations and analysed similarities and differences between the two programmes.  Some of the options proposed by the report included eliminating section 23 of the budget regarding the regular programme.  The regular programme did not have a focal point.  It was, therefore, proposed that the Department of Economic and Social Affairs would be nominated as focal point.  The report further contained a number of proposals for which the guidance of the Committee was sought.

RAJAT SAHA, Vice-Chairman, Advisory Committee on Administrative and Budgetary Questions (ABABQ), said the report of the Secretary-General contained a great deal of information on the legislative history and operating modalities of the regular programme of technical cooperation and the Development Account.  The ACABQ had been heavily involved in the establishment of the Development Account where it concentrated on technical budgetary considerations.  As far as the regular programme was concerned, the Advisory Committee had traditionally taken up the matter in the context of its consideration of proposed programme budgets, but had always treaded lightly in that area.

As for the possible consolidation of budget sections 23 and 35, a proposal which had arisen from an ACABQ recommendation, he said the Advisory Committee would revert to the matter during its consideration of the proposed programme budget for 2006-2007.  The implementation date of any such consolidation would be 1 January 2006 whether the decision was made now, or as part of the consideration of the proposed programme budget.

Ms. TAYLOR ROBERTS (Jamaica), speaking on behalf of the Group of 77 and China, said both programmes had their own mandates, functions and identity and should be presented independently in future reports.  The Group reiterated the importance of the programme of technical cooperation and stressed that the Assembly must take decisions during the current session aimed at improving its functioning and strengthening the level and use of resources appropriated for it.

She said the proposal of designating the Under-Secretary-General for Economic and Social Affairs as Programme Coordinator would enhance accountability, transparency and coherence in the criteria for the use of approved resources.  The Group also favoured the creation of a separate report on the programme, its outputs and impact.  She asked the Secretariat to clarify the role that other main committees, as well as the Committee for Programme and Coordination (CPC), should perform in the programme’s evaluation.  The Group saw no justification for merging the related section of the budget with section 35, relating to the Development Account.

The Development Account had provided valuable support to technical cooperation programmes and activities and was complementary to such programmes, she said.  The Group appreciated the integrated approach, the multiplier effects sought and the regional and interregional nature of the Account projects.  It also supported the use of technical, human and other resources available in developing countries and the promotion of regional and interregional cooperation among developing countries.  As for the proposal to approve a statement of objective, the Group was of the view that the Assembly would benefit from getting the inputs of the CPC on its appropriateness.  The Group also believed that the related section of the budget should continue to be subject to the recosting procedure.

She said it was understood that the list of project proposals submitted by the respective entities was substantially more than the actual number that could be approved, based on the limitation of funding.  Noting that no savings had been identified that could be added to the Account, she said it could be deduced that the underlying assumption upon which the funding arrangement for the Account had been based was flawed.

Mr. VAN DEN BOSSCHE (Belgium), speaking on behalf of the European Union and associated States, said that the Union would like to approach the issue in a comprehensive way.  Both programmes were the main instruments for the Secretariat to contribute to the capacity-building of developing countries.  He welcomed programmes that clearly assisted developing countries in their real needs.  He noted with satisfaction that the Development Account was well managed and no substantial changes were required in the way it operated.  However, more problems were being encountered in the case of the regular programme, which deserved Member States’ attention.

The report before the Committee presented a number of proposals that intended to clarify the objectives, criteria and operating modalities of the regular programme, as well as the funding modalities of the Development Account, he continued.  More needed to be done to assess and monitor the real impact of the Development Account.  A system with clear criteria must be developed to monitor the conduct of programmes and their real impact on the development of a country.  It was necessary to ensure that funds were used to achieve tangible development goals.

Many aspects of the regular programme and the Development Account were elements of overall policy of the Secretariat and its support to developing countries, he continued.  Therefore, to take sound decisions on the issue, Member States should be aware of their implications and impact on the activities of the Secretariat in the field of development.  Useful input could come from the Second Committee (Economic and Financial) and the CPC.  More generally, the report of the Secretary-General that would be issued in the coming days -– and possible decisions and actions in September –- could contain elements regarding the organization of the Secretariat vis-à-vis the issue of development.  That could oblige the Committee to reconsider the matter at the sixtieth session and in the context of the 2006-2007 budget.  In the meantime, he was ready to consider the proposals contained in sections VI, VII and VIII of the report, and he saw a certain rationale in the proposal by the ACABQ to discuss possible consolidation of budget sections 23 and 35 in the context of the proposed budget for the next biennium.

LILA ANDRIANANTOANDRO (Madagascar), speaking on behalf of the African Group, supported the position of the Group of 77 and China and said that the Millennium Declaration and the outcomes of major international conferences and summits had recognized the special needs of Africa and the important contribution that the United Nations could make towards addressing them.  African countries, in a collective effort, had designed and adopted an integrated programme for their own advancement in all areas.  The implementation of the New Partnership for Africa’s Development (NEPAD) was proceeding steadily, with every government striving to meet its obligations.  However, the challenges faced by the continent could not be addressed through the efforts of African countries alone.

At its inception in 1997, the Development Account was supposed to be funded by savings resulting from reduced non-programme costs and other management efficiencies, she continued.  It was further envisaged that the programme would grow to at least $200 million for the 2002-2003 biennium.  Member States had agreed to the proposal to create “a dividend for development”, in recognition that resource allocation in the regular budget was skewed, as demonstrated by the small portion allocated to economic and social development activities.  The first two tranches of the Development Account had not realized the full potential of the programme, but the Group was encouraged that the programme had been used more effectively during the third and fourth tranches.

The technical cooperation programmes and projects financed from the Development Account were crucial and complemented the development efforts undertaken by African countries within the framework of NEPAD.  She concurred with the assessment of the Secretary-General that the two programmes had to be maintained as separate programmes.  She, therefore, was not convinced that any cosmetic changes to the budget document, such as combining sections 23 and 35 into one budget section, would present any significant savings or efficiencies.

Continuing, she said that technical programmes were mainly in response to requests received from individual countries and funded by extrabudgetary resources or where the donors were willing to intervene.  The Development Account, on the other hand, being a regular budget programme, allowed the Secretariat and other entities in the United Nations system to design projects that promoted regional and interregional economic and technical cooperation among developing countries.  The African group welcomed such a regional approach, given the similarity of concerns and needs on the continent.

She furthermore noted that 13 out of a total of 66 projects were aimed at addressing the needs of Africa and matched the aspirations of NEPAD, such as the areas of gender equality, environment and waste management, information and communication technologies and capacity-building.  She welcomed the assurances that the programme had been well managed and was operating in a manner that was fully consistent with the Assembly-approved directions.  The inter-agency nature of the Development Account was an effective way to mobilize technical and financial synergies that were imperative for a harmonious integrated approach to development.

The projects financed from the Development Account were cost-effective, because, among other reasons, they relied on the developing countries’ technical and human resources.  That focus made an efficient contribution to national capacity-building efforts and ensured that resources were used more economically.  The African Group appreciated and encouraged such triangular cooperation between developing countries and the United Nations.  While convinced of the relevance of the Development Account, the Group remained seriously concerned about the limited funding level allocated to it.  The Assembly needed to reconsider the basic assumptions, upon which it had based its decisions on the funding arrangements for the Account.  That assumption had not provided a predictable or reliable source of funding.  In reality, the initial funding level had not changed since the creation of the Account almost four bienniums ago.  The actual level was lower than it had been in 1997, taking into account the inflation factor and the weakened dollar.

The United Nations system could use technical cooperation programmes and projects financed from the Development Account to increase its support to NEPAD, she added, in accordance with resolutions 57/7 and 57/300.

SHANNON-MAIRE SONI (Canada), also speaking on behalf of Australia and New Zealand, said there was no denying that in recent decades the Assembly had found it difficult to come to grips with the regular programme of technical cooperation.  The Assembly now had a good opportunity to put aside past perceptions of motives and group interests and to consider substantive issues at hand.  The only relevant focus should be development effectiveness.  The Secretary-General’s report put forward helpful ideas on how to improve transparency and accountability.  It did, however, not provide the fundamental review that had been requested.  There were profound doubts about the basic model underpinning the programme.  The report confirmed that there was a transfer of funds to departments, primarily to support high-level posts for advisory purposes.  Some 85 per cent of the over $450 million involved went to experts with the equivalent of D-1 or D-2 positions.

She queried whether a standing pool of advisor expertise made sense.  Technical cooperation programmes had shifted from the provision of individual expertise towards more strategic interventions.  Maintaining an expensive pool of expertise would make more sense if the experts were linked to the possibility of follow-up, such as in financing a project which they had helped prepare.  That was currently not the case.  The Governing Council of the United Nations Development Programme (UNDP) had recognized some 25 years ago that the programme should add something special.  It had said at the time that those resources should support trailblazing, pilot projects or experimental work.  The Secretary-General had acknowledged that the use of the regular programme of technical cooperation generally did not meet that standard.

The present technical cooperation programme did not reflect a purposeful and contemporary judgement by the Assembly on how to spend well for development.  There should be a priority attached to national capacity-building, to the use of local and regional talent, and to enabling that local talent to benefit from global knowledge networks.  Rather than perpetuate the present expensive and supply-driven approach of the programme, she would prefer to first explore alternate approaches that were more field-based and more responsive to country needs, rather than to the institutional needs of United Nations departments.

Regarding the Development Account, she said that, although it appeared to be well run, she did not agree with its premise.  From the governance point of view, the Development Account was a disincentive for programme managers to seek efficiencies.  That link should be dropped.  The phenomenon of technical cooperation projects being screened at the level of the Assembly was troubling.  She agreed that the Development Account and the regular programme should be presented in a single budget section.

NORMA GOICOCHEA (Cuba), aligning herself with the statements made on behalf of the Group of 77 and China and on behalf of the African Group, said it was important that the ACABQ had given its view on the Secretary-General’s proposal to combine sections 23 and 35 of the budget.  She hoped it would be taken into account that there was no agreement among Member States on the issue.  She expressed her surprise that such an important report had been introduced by a representative of the Programme Planning and Budget Division.  The report should have been coordinated, drafted and introduced by the Department of Economic and Social Affairs.  Noting that an adviser had been used to draft the report, she asked how much had been paid, where the funds had been obtained and why a statement of programme budget implications had not been presented.

Noting that, according to paragraph 8 of the report funding for the Development Account had been adjusted for inflation, she asked what level of funding could be accounted for by such adjustment.  She also noted that paragraph 14 gave a reinterpretation of paragraph 48 of Assembly resolution 58/270 and asked the Secretariat to elaborate on that.  She also asked the Secretariat why it had not included any proposal to increase the level of resources for the Development Account.  Regarding a possible linkage of the report with the “Millennium Declaration+5” report, she said the latter report had not been issued yet.  The current report had its own validity and the negotiations on the maintenance of the programmes discussed therein should not be subordinated to the more complex process of negotiations regarding the Millennium Development Goals.  The technical cooperation programmes were designed to enhance capacity.  It was, therefore, difficult to assess what impact they had on achieving the Millennium Development Goals.

Responding, Ms. VAN BUERLE said that consultants had been used to conduct a comprehensive review of the two programmes for the report before the Committee, because the Secretariat did not have the internal capacity for it.  Payment for those consultants had come from the Department of Economic and Social Affair’s apportionment and amounted to some $60,000.  There was an error in paragraph 8 of the report, which stated that since the initial funding level had been established, it had been adjusted for inflation, but no further savings had been identified.  That section of the budget had not been adjusted.  By the terms of budget resolution 58/270, the regular technical cooperation section of the budget was excluded from recosting.  Thus, the programme had not been recosted in 2004/2005.  Proposals would be made in the next biennium in that regard.

Ms. GOICOCHEA (Cuba) thanked the representative of the Budget Office for her response and asked that formal consideration of the matter remain open, for a series of elements still needed to be addressed.  All answers should be presented in writing.  On consultants, she believed that all budgetary implications should have been presented to the Committee when the budget was discussed.  Had the resources come from a line of funds for consultants or diverted from other parts of the budget?  Also, the Secretariat had not said that it had no internal capacity at that point.  Concerning paragraph 8 of the report, she said that her question on the recosting only pertained to the Development Account.  It did not apply to the regular programme.  If paragraph 8 was a mistake, there should be a corrigendum to clearly state what the situation really was.  If there was a mistake, it was a fundamental one.

The CHAIRMAN agreed that the Committee’s consideration of the item should not be concluded today.  He then reminded the delegates that the Committee was halfway through its resumed session and was starting to feel the pressure of time.  In that connection, he encouraged his colleagues to proceed as swiftly as possible on the issues that could be resolved “relatively easily”.  It was important to move to the drafting of resolutions and the negotiation phase.  Obviously, the Committee did not want to carry issues over into the May session.

VLADIMIR A. IOSIFOV (Russian Federation) noted the fact that a survey had been issued to Committee members regarding the quality of Conference Services.  He objected to the fact that that survey was issued only in English and French, and not in the six official languages of the United Nations.

Ms. COICOCHEA (Cuba) supported the statement of the representative of the Russian Federation.

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