Sixty-first General Assembly

Fifth Committee

15^th Meeting (AM)

CONTROLLER TELLS BUDGET COMMITTEE 2006 FINANCIAL INDICATORS ‘MIXED’, OVERVIEW

INCLUDES REGULAR BUDGET, PEACEKEEPING, DEBT, TRIBUNALS, CAPITAL MASTER PLAN

Also, Under-Secretary-General for Internal

Oversight Responds to Questions Raised on Procurement

The United Nations financial indicators for 2006 were mixed, Controller Warren Sach told the Fifth Committee (Administrative and Budgetary) this morning, as it began its twice-yearly consideration of the financial health of the Organization.

On the positive side, he expected cash available for the Capital Master Plan to be up and unpaid assessments to be down at the end of the year.  On the other hand, the position of the regular budget was uncertain, and the outcome for 2006 would depend on action to be taken in the next few weeks by a fairly small group of countries.  Also on the negative side was the unwelcome likely increase in the Organization’s outstanding obligations to Member States that contribute troops and equipment to peacekeeping operations.  The only way to resolve those issues was for Member States to meet their financial obligations to the United Nations in a fuller and timelier fashion.

As of 31 October 2006, assessments and payments for the regular budget were lower than a year before, he said, by $73 million and $39 million, respectively.  He was pleased to report that, due to payments in the last quarter of 2005, unpaid contributions were down by $58 million and stood at $661 million.  On a less positive note, the number of countries that had paid their assessments in full was also down.  On 31 October, that number had stood at 122, compared to 130 on the same date last year.  On 31 December last year, 140 Member States had paid.  Almost 95 per cent of the outstanding amount was owed by just four Member States -– the United States, Japan, Brazil and Argentina, with almost 80 per cent owed by the United States alone.

Clearly, he added, the final picture for 2006, as well as the final cash position for the year, would largely depend on the action taken by those countries in the coming weeks.  In particular, depending on action yet to be taken on the national budget of the United States, the United Nations might have to borrow over $200 million from the reserve account by the end of December.  Alternatively, should the United States pay its 2006 assessment in full, the Organization could have a cash balance at approximately the same level as at the end of 2005.

On peacekeeping financing, he drew the Committee’s attention to the fact that peacekeeping rates of assessment were based on adjustments to the regular budget scale.  Since the current scale only ran through 2006, the Secretariat had been unable to issue peacekeeping assessments beyond 31 December this year -– even though the budget for individual missions had been approved by the Assembly beyond the end of 2006.  He estimated that assessments totalling over $1.5 billion would be issued early next year.

The total amount outstanding for peacekeeping at 31 October had been over $2.5 billion, he continued.  As with the regular budget, over half of the total was owed by United States and Japan.  Due to the unpredictable nature of peacekeeping assessments throughout the year, it could be more difficult for Member States to keep current with their payments.  Therefore, he paid special tribute to the 24 countries that had paid all their peacekeeping dues as of 31 October -– Australia, Azerbaijan, Botswana, Bulgaria, Canada, Congo, Democratic People’s Republic of Korea, Democratic Republic of the Congo, Denmark, Fiji, Finland, Germany, Ireland, Liechtenstein, New Zealand, Norway, Poland, Russian Federation, Singapore, Slovakia, South Africa, Sweden, Switzerland and the United Kingdom.  Austria had subsequently also paid its assessments that were currently due.

Divided between a number of ongoing and closed operations, cash available in peacekeeping accounts at 31 October had been just over $1.6 billion.  However, there were currently restrictions on the use of those resources, as the Assembly routinely specified that no peacekeeping mission shall be financed by borrowing from other active missions.  Only cash available in the accounts of closed operations was currently available for cross-borrowing.  In that connection, the Secretary-General had proposed to consolidate peacekeeping accounts.  The Assembly was expected to take up that question at the resumed session in 2007.

He added that, of the $300 million expected to be available in closed missions’ accounts at the end of the year, $259 million related to outstanding troop and equipment payments, and credits to be returned to Member States.  That left only $41 million freely available for possible cross-borrowing for other accounts, including the regular budget, the Tribunals and active missions.

Regarding the Organization’s debt to Member States, he said that, based on revised estimates, it now appeared that the amount outstanding at the end of 2006 was likely to increase by over $300 million.  New obligations in 2006 were up, due mainly to full deployment of troops in Côte d’Ivoire and the Democratic Republic of the Congo, expansion of the mission in Lebanon and the establishment of the United Nations Integrated Mission in Timor-Leste (UNMIT).  However, payments of troop and equipment obligations had been broadly current up to September this year, except for the United Nations Mission for the Referendum in Western Sahara (MINURSO), the United Nations Interim Administration Mission in Kosovo (UNMIK) and the United Nations Observer Mission in Georgia (UNOMIG).  The increase in the United Nations debt to troop and equipment providers in the final quarter of the year was due to delays in the receipt of contributions, exacerbated by the unavailability of rates of assessment for 2007.

Turning to the International Tribunals, he said that their financial position had remained “relatively healthy” this year.  Although payments received so far had remained somewhat lower than a year ago, the amount outstanding was about $18 million lower.  The final situation of the Tribunals would depend on the payment of assessed contributions by Member States during the rest of this year.

As for the Capital Master Plan, the Assembly had authorized assessments for 2002-2003, 2005 and 2006, totalling $152 million, he continued.  Payments of over $86 million had been received by 31 October, with $66 million still outstanding.  In order to ensure timely execution of the project, he urged all Member States to pay their assessments in full and on time.

At the conclusion of the meeting, Under-Secretary-General for Internal Oversight Services, Inga-Britt Ahlenius, provided responses to questions on procurement that had been raised during the Committee’s meeting on 23 October and replied to several follow-up questions by the representative of Singapore.  (See Press Release GA/AB/3760)

Responding to an inquiry about when the Procurement Task Force reports were to be made available, she said they had gone to the respective programme managers, and had been copied to the Deputy Secretary-General and the Legal Counsel in some cases.  The Office of Internal Oversight Services (OIOS) would decide whether to make the reports available in accordance with relevant Assembly resolutions.  Next, she believed that the investigations of two remaining staff members on administrative leave were to be concluded by 15 November in one case, and noted that she could not project a date for the other, as the Procurement Task Force had no authority to compel the information that it needed.  OIOS would, however, issue an interim report on 15 November if no information was provided by the person being investigated and other relevant parties.  Finally, referring to disagreements between OIOS and the Deloitte and Touche report, she explained that her Office did not manage risks, but only identified and evaluated significant exposure to risks.  OIOS also differed with the notion that it was its responsibility to prevent the breakdown of internal controls.  That responsibility fell to the Department of Management.

In his follow-up questions, Singapore’s representative asked if a decision would be made to release the Procurement Task Force reports.  He also wanted to understand how those reports would be affected by the resignation of the Under-Secretary-General for Management, to whom they were supposed to be submitted, and asked for assurance that there would be no delay in terms of the 30-day response during the transitional period.  Ms. Ahlenius responded that she had not yet taken a decision, but her Office had started redacting the reports for release.  She was in favour of releasing them, but had to follow a particular process.  She added that the reports would be handed over to someone responsible to act upon them in the absence of the Under-Secretary-General, and within the required 30-day limit.

The Committee will continue its consideration of human resources management reform at 3 p.m. today.

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For information media • not an official record