Sixty-first General Assembly

Fifth Committee

19^th Meeting (AM)

UNPAID BUDGET ASSESSMENTS, CASH FLOW, DEBT OWED TO TROOP CONTRIBUTORS AMONG ISSUES

AS FIFTH COMMITTEE DEBATES UNITED NATIONS FINANCIAL SITUATION

As the Fifth Committee (Administrative and Budgetary) began its debate on the financial situation of the United Nations, speakers focused on the cash-flow situation of the Organization at the end of the current year, the rate of unpaid assessed contributions to both the regular and peacekeeping budgets, debt owed to States who had donated troops and equipment to peacekeeping operations and the practice of interim “cross-borrowing” among accounts.  The United Nations Controller, Warren Zach, had briefed the Committee on the situation on Thursday, 2 November.

Many delegations emphasized the importance of Member States fulfilling their commitments to enable the Organization to fulfil its mission and mandates.  The representative of New Zealand, also speaking on behalf of Canada and Australia, admitted that there had been encouraging signs in the past year, including the reduction in unpaid assessed contributions and the increase in cash available for the Capital Master Plan.   However, the number of States who had paid their regular budget assessments in full by 31 October had dropped to 122 from 130 at the same time last year.

Finland’s representative, speaking on behalf of the European Union and associated States, added that the 70 States with outstanding dues owed a total of $661 million, with over 95 per cent owed by four countries.  Also, the total amount outstanding for peacekeeping operations at the end of October had been over $2.5 billion.  Such a situation had a negative impact on the effectiveness of peacekeeping operations.  Meanwhile, the Organization’s debt to contributors of troops and equipment were expected to increase up to more than $1 billion, due to that same delay in the receipt of assessed contributions.

Examining that financial picture, South Africa’s representative, speaking on behalf of the Group of 77, warned that the Organization might soon face another financial crisis.  The Group was concerned that, 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.  In that connection, she recalled that the rationale for reducing the ceiling for the main contributor to 22 per cent had been to facilitate payment of arrears and, thereby, improve the financial situation of the United Nations.  There were indications that the rationale had not been met and that the main contributor had not honoured its undertakings.

Guyana’s representative, on behalf of the Rio Group, noted that members of the Group continued to try to fulfil their obligations on time, in spite of the relatively heavy burden on its national budgets.  Any problems in fully achieving the goal were not caused by a lack of interest or understanding, but resulted instead from the need to prioritize revenues in order to address urgent social demands.

Providing another perspective on the payment of dues, Japan’s representative added that demonstration of budgetary discipline and integrity was necessary for positive relations between the Governments of Member States and their taxpayers, and for the continuous payment of assessed contributions.  Tangible results in the areas of management reform and mandate review to make the Organization more efficient, effective and transparent, strengthened confidence in the United Nations at home, she added.

Discussing the peacekeeping budget, the representative of the Lao People’s Democratic Republic, speaking on behalf of the Association of South-East Asian Nations (ASEAN), called the practice of cross-borrowing from closed peacekeeping missions unacceptable, and warned that only $41 million was available for that practice.  He was worried that the Secretariat had no other recourse but to do more cross-borrowing.  He was also concerned about the Organization’s inability to reimburse Member States providing troops and equipment to peacekeeping missions, and he regretted that the amount outstanding at the end of 2006 would significantly increase.

The Republic of Korea’s representative added that obligations in crucial areas of troop deployment in various missions were up, including in Côte d’Ivoire and the Democratic Republic of the Congo and missions in Lebanon and Timor-Leste.  Payments for troops and equipment were current through September, he explained, but the increase of such obligations in the final quarter were due to delays in the receipt of contributions and the inability to pay beyond December 2006, as States waited for the Assembly’s adoption of a new payment scale for 2007.  That was a structural problem that dragged the United Nations into financial uncertainty, he said.

Mr. Sach also updated the Committee on the payment of dues.  He said that, last week, the Czech Republic had been inadvertently omitted from the list of countries that had paid in full all its assessments as of 31 October.  Additionally, he noted that the Federated States of Micronesia had fully paid its regular budget assessments, full payments for peacekeeping had been made by Kuwait, Venezuela and Zambia, and Portugal and Zambia had paid in full all assessments currently assessed and payable.

Also, reports were introduced by Amir Dossal, Executive Director of the United Nations Fund for International Partnerships, and Remo Lalli, Inter-Agency Advisor for Budget and Finance of the Untied Nations System Chief Executives Board for Coordination.

Additionally, under other matters, the United States said that the request from the Russian Federation last Monday regarding the waiver of immunity of the former Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) should be reviewed, as it intruded into ongoing criminal proceedings before a United States court.  However, he had no concern with the request for written responses to questions addressing the waiver of immunity of a member of the Joint Inspection Unit, or generally addressing the matter of waiver raised in the Unit’s report before the Committee.  These remarks prompted further interventions on the part of Russia, South Africa and Cuba, who urged the Secretariat to provide the information requested.

Statements were also made today by the representatives of Kuwait, Bangladesh, China, Malaysia, Russian Federation, Venezuela, India, Zambia and Singapore.

The Committee will meet to take up the United Nations Pension System at 10 a.m. Friday, 10 November.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to consider the financial situation of the United Nations.  United Nations Controller, Warren Sach, gave an overview of those finances for 2006 in a statement to the Committee on 2 November (Press Release GA/AB/3767).

Statements

At the opening of the meeting, Mr. SACH provided some additional information on the matter, saying in particular that, last week, the Czech Republic had been inadvertently omitted from the list of countries that had paid in full all its assessments as of 31 October.  Since then, the Federated States of Micronesia and Zambia had paid their assessments to the regular budget in full.  Zambia had also made payments to the International Tribunals.  Kuwait, Portugal, Venezuela and Zambia had made full payments for peacekeeping.  Portugal and Zambia had paid in full all assessments currently assessed and payable.

KIRSTI LINTONEN ( Finland), speaking on behalf of the European Union and associated States, said that, although the financial indicators for this year included some signs of improvements, there were reasons for concern.  The position of the regular budget was uncertain.  As indicated in the financial presentation, 122 Member States had paid their assessments in full by the end of October, but that left 70 States owing a total of $661 million, with over 95 per cent owed by four countries.  Also, the total amount outstanding for peacekeeping operations at the end of October had been over $2.5 billion, and such a situation had a negative impact on their effectiveness.  Meanwhile, the Organization’s debt to the contributors of troops and equipment were expected to increase up to more than $1 billion, due to that same delay in the receipt of assessed contributions.

The United Nations, thus, found itself in a vicious cycle year after year, she said.  It needed full and timely payments in order to plan and execute efficiently the mandated programmes.  Non-payment and payments received so late that the United Nations faced severe cash-flow difficulties affected the Organization’s ability to perform.  Peacekeeping would suffer and troop-contributing countries would continue to face delayed reimbursements, unless the payment pattern of Member States changed.  For that reason, the European Union stressed the need for Member States to pay in full and on time, noting once again that the largest part of the outstanding dues was owed by only a handful of countries.

The European Union noted, however, the Controller’s comment on the unpredictable nature of the demand for peacekeeping activities, which could make it more difficult for Member States to keep current with their payments, she continued.  In that context, the Union reiterated its support for consolidation of peacekeeping accounts.  That would improve the liquidity of individual missions, facilitate the prompt reimbursement of troop contributors and would make assessments fewer and more predictable.  She was aware that countries had voiced concerns about that proposal, but those concerns could be addressed in a way that was beneficial to all.  She also noted that the current scale of assessments only ran through the end of this year, and the Secretariat was, thus, unable to issue peacekeeping assessments beyond 31 December.  Significant assessments, therefore, were expected to be issued early next year.

On the Tribunals, she said that, although their financial position had remained “relatively healthy” this year, their well-being would, nevertheless, depend on the payment of assessments by Member States during the rest of this year.  As for the Capital Master Plan, $66 million of assessments were still outstanding.  To ensure timely implementation of the project, all Member States should pay their assessments in full and on time.

The United Nations could only perform its ever increasing and challenging tasks when Member States accepted their responsibility to pay their contributions in full, on time and without conditions, she stressed.  The final outcome of the year depended on action to be taken by a fairly small group of countries.

KAREN LOCK (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said that Member States had dedicated the past two years to reflecting on measures to strengthen the ability of the United Nations to meet the ambitious agenda set at the Millennium Summit.  Great emphasis had been placed on the functioning of the Secretariat and measures to enhance the accountability of staff to the Organization.  However, it was equally necessary to acknowledge that Member States had a shared responsibility to ensure that the United Nations received the resources it required to implement the reform measures and the wide range of tasks entrusted to it.  The momentum of the World Summit would only be maintained if Member States made a more concerted effort to act on their Charter obligation and pay their contributions in full, on time and without conditions.  That was especially applicable to those Member States that had the capacity to pay their arrears and ensure the financial stability of the United Nations.

The Member States had managed to avoid a financial crisis for the Organization when they had lifted the spending cap by consensus in June, she continued.  However, based on the assessment provided by the Controller, the Organization might soon face another crisis, unless Member States, in particular the main contributor -- accounting for nearly 80 per cent of the outstanding dues to the regular budget -- paid their dues to all accounts in full.  The Group was concerned that, 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.  In that connection, she recalled that the rationale for reducing the ceiling for the main contributor to 22 per cent had been to facilitate payment of arrears and thereby improve the financial situation of the United Nations.  There were indications that the rationale had not been met and that the main contributor had not honoured its undertaking.

The overall assessment was alarming, she continued.  It was regrettable that the Organization, as a result of late and non-payment of peacekeeping dues, would not be able to maintain its envisaged payment patterns to Member States that were providing troops and equipment to peacekeeping operations.  In fact, the projected debt of the Organization to Member States for 2006 had nearly doubled from the projections made last May.  The overwhelming majority of Member States providing troops and equipment to peacekeeping operations were developing countries, and an additional financial burden was being placed upon them by the Organization’s inability to pay its debt to them.  She trusted that the United Nations would make every effort to meet its responsibility and reimburse Member States in a timely manner.

In conclusion, she said that the Group of 77 remained committed to efforts to strengthen the United Nations and enable it to implement its mandate more effectively and use the resources more efficiently.  It was also committed to providing the Organization with sufficient resources to meet the mandates bestowed upon it, as well as its share of the additional resources that might be needed to finance reform proposals.  The Group also remained committed to meeting its financial obligations on time, in full and without conditions.  While extending its sympathetic understanding to Member States that were unable to meet their obligations due to social and economic conditions beyond their control, the Group urged all Member States, in particular the main contributor, to recommit themselves to meeting their Charter obligations.

ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the Association of South-East Asian Nations (ASEAN), appreciated the optimistic statement of the Controller that assessments and payments were down by $73 million and $39 million respectively, and unpaid assessed contributions had declined by $58 million.  But, ASEAN was concerned that the cash flow of the regular and peacekeeping budgets were at a critical level, and that the financial well-being of the Organization depended on a small number of States, whose outstanding contributions accounted for 95 per cent of the total.  He called cross-borrowing from closed peacekeeping missions unacceptable and warned that only $41 million was available for that practice.  He was worried that the Secretariat had no other recourse but to do more cross-borrowing.

He was also concerned about the Organization’s inability to reimburse Member States providing troops and equipment to peacekeeping missions, and he regretted that the amount outstanding at the end of 2006 would significantly increase.  He emphasized that the financial health of the Organization depended on the timely payment of assessed contributions, although he remained sensitive to countries experiencing genuine economic difficulties.

PHILIP TAULA (New Zealand), also speaking on behalf of Australia and Canada (CANZ), was concerned about the mixed financial indicators, the uncertain positions of the regular and peacekeeping budgets, and the high degree of reliance on a small group of countries to meet their obligations over the coming weeks to ensure that the cash flow outcome for 2006 was manageable.  He admitted that there had been encouraging aspects in the past year, including the reduction in unpaid assessed contributions and the increase in cash available for the Capital Master Plan.  However, the number of States who had paid their regular budget assessments in full by 31 October had dropped to 122 from 130 at the same time last year.

He said that the amount contributed by some States did not lessen their obligation to pay their assessments on time, as the delay injected significant uncertainty and risk into the United Nations’ financial planning.  He thanked States that were named on the “honour roll”.  He believed that retention of funds in closed mission accounts penalized Member States that had paid their assessments in order to manage the consequences of those who did not fully meet their obligations.  He looked forward to considering reform of peacekeeping finances next year.  Also, he remained hopeful that the Organization could find a more sound financial footing, with little debt owed to Member States.

TROY TORRINGTON (Guyana), speaking on behalf of the Rio Group, was heartened to know that unpaid assessments for the regular budget were down, but remained concerned about the fragility of the overall situation and the possibility of borrowing from reserve accounts by the end of the year.  He was aware of the delicate balance on financing peacekeeping operations, and hoped the last period of this year could be faced without major problems.  He noted that the lack of a new scale of assessments could result in delays in reimbursements owed to some Member States, and hoped it would be reversed rapidly by the beginning of next year, upon receipt of the first contributions.  He was also pleased about the relatively healthy financial positions of the International Tribunals for Rwanda and the Former Yugoslavia.  He pledged comments from the Group on the Capital Master Plan at a future date.

He said that the financial health of the Organization was crucial to accomplishing its mandates, and noted that the Rio Group continued to try to fulfil its obligations on time, in spite of the relatively heavy burden on its national budgets.  Problems in fully achieving the goal were not caused by a lack of interest or understanding, but resulted instead from the need to prioritize revenues in order to address urgent social demands.  He expressed appreciation for countries that had paid all assessments due, and added that some countries of the region had paid, and would pay during the upcoming days, considerable amounts of money to the Organization’s budgets.

MISAKO KAJI ( Japan) said that demonstration of budgetary discipline and integrity was necessary for positive relations between the Governments of Member States and their taxpayers, and for the continuous payment of assessed contributions.  Tangible results in the areas of management reform and mandate review to make the Organization more efficient, effective and transparent strengthened confidence in the United Nations at home.  She noted that the peacekeeping operations budget for 2006-2007 exceeded $5 billion and was three times the regular budget size for one year.  Japan’s budgetary system required separate assessments and detailed explanations based on the mandate of each mission; thus, changes in the peacekeeping budgetary system that did not contribute to strengthening the financial base should not be pursued.

She said that Japan had faithfully fulfilled the obligation to pay its assessed contributions, in spite of its difficult domestic fiscal situation and in spite of the increase in assessed contributions that had adversely affected its voluntary contributions to many United Nations activities in the areas of development, humanitarian affairs and the environment.  She emphasized that neither the Member States nor the Secretary-General should be complacent about the status quo, but rather must continue to pursue greater accountability within the United Nations.

NASER ABDULLAH AL-HAYEN ( Kuwait) supported the position of the Group of 77 and said that his delegation shared all the concerns that had been expressed concerning the financial situation of the United Nations.  The report before the Committee showed the difficulties that arose from the fact that some Member States did not meet their obligations to pay their assessments in full.  That was the principal cause for the crisis.  The United Nations was the most appropriate forum to resolve conflicts by peaceful means.  In particular, he recalled with gratitude the Organization’s position to defend his country against aggression and injustice in the 1990s.  Therefore, his country believed that the need to finance the United Nations activities was a sine qua non for Member States.

Aware that some Member States faced situations of poverty and economic difficulties, he continued, his country tried to provide assistance to all friendly States and peoples.  In particular, it had put forward an initiative to write off all debt owed to Kuwait by least developed countries.  The country had also called for a concerted international effort to deal with external debt of poor countries.  That would ultimately alleviate those countries’ situation and allow them to make timely payment of their dues to the United Nations.  Kuwait intended to pursue the same policy in the future.  He also spoke about the activities of the Kuwaiti Fund for Economic Development, which provided assistance to numerous countries.

A planning approach could provide a strategic vision for reform, he continued.  Mutual support among Member States would ensure the financial stability of the Organization.  His country would continue to make payments to the United Nations on time and in full, and looked forward to a similar commitment from other States.

MUHAMMAD MUHITH (Bangladesh), aligning himself with the statement made by South Africa on behalf of the Group of 77, said that, sadly, he was used to receiving the same information illustrating the fragility of the United Nations financial health.  The situation was alarming:  high unpaid assessed contributions, low cash in hand and a soaring amount of debt to Member States.  Though unpaid assessments had decreased from last year, they remained shockingly high at $661 million.  Therefore, strengthening the Organization’s financial foundation was crucial for it to accomplish its mandated tasks, and not to lose momentum from the 2000 Millennium Summit and 2005 World Summit.

He added that, as a Member State paying its assessed contributions to regular and peacekeeping budgets on time and in full, Bangladesh wished to see other Member States do so -- in accordance with their obligations under Article 17 of the Charter.  On the peacekeeping budget, payment of assessed contributions needed to be timelier, so that the unhealthy practice of cross-borrowing was not required.  Furthermore, delays in reimbursement added greater burdens on developing countries.  Those were the countries that most often responded to the calls of the United Nations to maintain peace and security, often mobilizing their personnel and resources under difficult circumstances.

HYUN CHO ( Republic of Korea) expressed his appreciation for the detailed report by the Controller, Warren Sach, and for the hard work of the Secretariat in United Nations financial affairs.  The financial report was mixed, he said, with gains in available cash for the Capital Master Plan and a lower amount of unpaid assessments for peacekeeping operations, which was now almost $400 million.  These positive aspects, however, were offset by the uncertainty of the regular budget and the Organization’s debt to Member States, which was expected to increase by over $300 million by the end of 2006.  The unpredictability of needs made it difficult for Member States to remain current with their payments.

The Republic of Korea hoped to fulfil its obligations ahead of schedule and clear out future peacekeeping assessments before the end of 2008, he said.  His Government was pleased with the healthy financial position of the International Tribunals, where the unpaid debt was lower than it had been reported last year.  However, he was concerned that the outstanding balance was concentrated among a few Member States, and he urged all States to fulfil their commitments, so the United Nations could promote respect for international law.

On the Capital Master Plan, he said his country welcomed the increase of cash on hand, but was again concerned by the fact that the outstanding balance remained at $66 million, compared with an assessment of $109 million.  The Republic of Korea remained committed to the Capital Master Plan, as the condition of the Secretariat building was demoralizing and unsafe.  The building would need to be upgraded, and the cost for such improvements needed to be seen as part of the overall United Nations system reform.  His Government was interested in discussing the Capital Master Plan in the current session of the General Assembly.

His country viewed with reservations the Organization’s debt to Member States, which had increased by more than $300 million, according to recent estimates, he continued.  Obligations in crucial areas of troop deployment in various missions were up, including in Côte d’Ivoire and the Democratic Republic of the Congo and missions in Lebanon and Timor-Leste.  Payments for troops and equipment were current through September, but the increase of such obligations in the final quarter were due to delays in the receipt of contributions and the inability to pay beyond December 2006, as States waited for the Assembly’s adoption of a new payment scale for 2007.  That was a structural problem that dragged the United Nations into financial uncertainty, he said.  His Government hoped that outstanding debt to Member States would be reduced.  He urged all Member States to fulfil their financial obligations with the United Nations.

LIU ZHENMIN ( China) said that solid and stable financing was of special significance to the United Nations, especially during the current reform process.  Without such a foundation, strengthening the Organization’s role in international affairs would only be empty talk.  If Member States did not faithfully fulfil their financial obligations, the result for the United Nations would be an imbalance between revenue and expenditure.  Its budget would become a piece of paper with no binding power.  The faithful fulfilment by all Member States of their respective financial obligations in the form of timely, unconditional and full payment of all assessments constituted an important guarantee of sufficient resources for the Organization.

He said that the Controller’s figures showed that, while many Member States had paid their contributions in a timely manner, there were still some that had not faithfully implemented their financial obligations to the Organization.  In spite of all kinds of practical difficulties, some Member States, especially some developing countries, had tried their very best to fulfil their financial obligations.  Hopefully, the country with the most arrears would also do as other Member States did, and show that it really attached importance to the United Nations by paying all its assessed contributions on time, in full and without conditions, as well as pay off all its arrears.

He said that Member States needed to work harder to make progress on financial reform.  The Secretariat should further improve its rules, regulations and systems, reinforce financial discipline, put an end to waste, practice economy and make effective use of every penny of Member States’ contributions.  China was still a developing country with low per capita income that needed a large amount of resources for its economic development.  In spite of that, it had paid in full its assessed contribution for 2006, making a real contribution to a solid financial foundation for the United Nations.

NAIMUN ASHAKLI MOHAMMAD ( Malaysia) said reform was an evolving process that should be based on the collective views of all Member States, but the success of reforms could only be guaranteed by adequate financing.  All States should continue to fulfil their commitments to realize the Organization’s objectives.

As of October, he said, the unpaid assessment for the regular budget was $58 million less than the $179 million a year ago.  Four countries accounted for 95 per cent of the $661 million outstanding, with 80 per cent owed by one country alone.  In addition, the number of countries that had paid their regular budget assessments in full by 31 October was 122, as compared to 130 a year before.  Given the constraints and uncertainties of the current financial situation, all concerned States should fulfil their obligations in full, on time and without conditions.

Further, he said, the peacekeeping budget of $2.5 billion was a reduction of over $350 million and did not include assessments for 2007, which meant that peacekeeping assessments could not be issued beyond 31 December.  The new scale of assessments reflecting a fair, equitable and balanced rate would have to be achieved by that date and the consolidation of the peacekeeping accounts should be further considered at the resumed session.  Also, the outstanding amounts for the Tribunals for Rwanda and the Former Yugoslavia should be resolved, as in previous years.

Finally, he called for all States to engage constructively in discussions on the financing of the Capital Master Plan.  He said it was discouraging that discussions on a number of important funding-related issues were still pending, while costs escalated and serious consequences for the Organization’s work were on hold.  Also, the time had come for deliberations on a new scale of assessment for 2007-2009 to secure a healthy and stable financial position for the Organization.  The capacities of States should be kept in mind, particularly those of developing countries.  All States should take the necessary measures to settle their arrears and honour their assessed contribution fully, on time and without conditions.

ANDREY KOVALENKO ( Russian Federation) said that the information presented by the Controller showed that all the budgets of the Organization had been encountering cash deficits.  The financial situation of the United Nations had not become more stable or predictable in the past year.  Although the number of Member States that had paid their assessments in full had grown a little bit, he noted with concern that the overall amount of financial assessments owed to the Organization related to a small group of Member States.  The failure of those countries to meet their financial obligations to the United Nations took place against the background of increased expenditures in such areas as peacekeeping, and could have a negative impact on international peace and security.

Stable financing formed the basis of the Organization’s success in all spheres of its activities, including reform efforts, he continued.  Delays in payments could lead to a significant increase of the Organization’s indebtedness to troop- and equipment-contributing countries.  Non-payment also led to delays in returning to Member States funds from closed peacekeeping operations.  The information presented by the Secretariat would be useful to Member States for the consideration of such important issues as the scale of assessments for 2008-2009 and financing of the Capital Master Plan.

In conclusion, he said that his country would like to, once again, appeal to all Member States to fulfil their financial obligations to the United Nations on time, in full and without any conditions.

KAYLA CASTILLO ( Venezuela) discussed the obligations of Member States under the Charter to pay their assessed dues and emphasized the need to guarantee the financial stability of the Organization.  She said that many countries had made strong efforts to pay, despite facing economic difficulties, circumstances beyond their control or the existence of pressing domestic needs.  She pointed to her country’s efforts to pay on time, despite the political and economic difficulties the country had experienced in recent years.

However, she believed that Member States needed to look differently upon countries with enviable financial power that failed to pay on time, and said that the Controller had pointed to the biggest contributor as the cause of most of the problems.  She said delays in payments and arrears were used as a perverse instrument to control programmes and budgets, as had occurred in December 2005.  Also, she noted that Venezuela had been included in the previous week’s list of countries with unpaid dues, but she was not aware of any problems.  She added that one way of providing incentives was to recognize efforts made by developing countries to pay, in spite of the domestic sacrifices they made.

A. K.S. VIJAYAN ( India) aligned himself with the statement made by South Africa on behalf of the Group of 77, and said unconditional, timely and full payment of legitimate dues was a fundamental obligation that the United Nations Charter imposed on all Member States according to their capacity to pay.  It was not just a legal obligation, but a moral one as well.  It was distressing when those with more than adequate means did not pay their dues in full, on time and without conditions, thus creating a financial crisis.  Member States needed to do some introspection before blaming managerial and institutional failures as the sole responsibility for the alleged inefficiencies and ineffectiveness of the United Nations.

He was concerned about the uncertainty surrounding the regular budget for this year, in particular that it depended on the action of a few Member States in the near future, particularly the largest contributor, which accounted for nearly 80 per cent of the outstanding dues.  It was noteworthy that, if the largest contributor were to pay its 2006 assessment in full, the Organization would have a cash balance at the same level as at the end of 2005.  If that did not happen, it would have to borrow more than $200 million from the reserve account.

Turning to peacekeeping, India was distressed that, on 31 October 2006, more than $2.5 billion was outstanding for peacekeeping operations.  As with the regular budget, more than half the total was owed by two Member States.  Consequently, the Organization’s outstanding obligation to Member States that contribute troops and equipment for peacekeeping operations was projected to grow by more than $300 million this year, he said.  Adequate funding was not merely a question of financial bookkeeping, but involved a larger issue of the United Nations’ credibility and its ability to fulfil the commitments made by the international community while resolving conflicts in various parts of the world.

ANNE LUSONGO MTAMBOH ( Zambia) associated herself with the position of the Group of 77 and said that her delegation attributed great importance to the fact that, by the end of the year, the United Nations might have to borrow over $200 million from the reserve account, because many Member States had not been able to meet their obligations in full.  While recognizing that some Member States, in particular developing and least developed countries, were experiencing economic difficulties, she noted that the main contributor accounted for nearly 80 per cent of outstanding dues to the regular budget.  It was indeed ironic that, while Member States had been calling for the reform of the United Nations so that it could become a more efficient and accountable organization, they themselves were lacking in that regard.  If the Organization had insufficient funds to fulfil its programmes, Member States would have contributed directly to its ineffectiveness.

Furthermore, arising from the non-payment of assessed contributions to peacekeeping operations by some Member States, the United Nations owed the troop contributors, the majority of whom were developing countries, large amounts of money, she said.  The non-reimbursement to troop-contributing countries was making it very difficult to sustain the troops currently deployed in various peacekeeping missions.

Zambia attached great importance to the objectives of the Organization, she continued.  For that reason, it was pleased to inform the Committee that, as of 7 November, it had paid all its contributions to the United Nations.  While her delegation appreciated the fact that Member States from developing and least developed countries might not have been able to fully meet their obligations due to socio-economic difficulties, she called upon all Member States, and in particular the main contributor, to pay their assessments on time, in full and without conditions.  That was clearly linked to the notion of accountability that was currently being debated within the United Nations.  If applied, it would enable the Organization to operate in an effective and efficient manner.

RAZIFF ALJUNIED ( Singapore) said the financial situation in the United Nations remained fragile, resulting from the late or non-payment of assessments.  Almost all that could be said on the subject had been said.  While meagre improvements existed, unpaid assessments remained centred on a few Member States.  He said that failure by certain States to pay was unfair to those facing genuine difficulties in paying, and no preconditions should be attached to payment of dues.  He said the obligation to pay dues was linked to the need for greater accountability, and he was acutely aware that the problem was both financial and political in nature.  He warned that the Organization cannot be effective when it lacks the means to sustain its existence.

Mr. SACH thanked all the speakers who had supported improvement of the financial situation of the United Nations and thanked the Member States that had paid their assessments to the United Nations.  As things stood at the moment, the Organization still faced the prospect of borrowing over $200 million at the end of the year, and it was important to try to avoid that situation.  Now, there were 68 Member States that had made only partial payments, or had not made any payments.  He called on them to make payments as soon as possible, preferably by the end of the quarter.  The Organization would not be able to make payments for troops and equipment by the end of the year, due to late payment of assessments.  It would be appropriate that progress be made on all fronts by the end of the year, so the United Nations would be in a position to make reimbursements at the beginning of 2007.

He also reiterated the importance of having a scale adopted in December.  Otherwise, the Organization would not be in position to make assessments for peacekeeping operations, the Capital Master Plan and the Tribunals.  As a result, the cash flow situation would soon become severe and unmanageable.

United Nations Fund for International Partnerships

AMIR DOSSAL, Executive Director of the United Nations Fund for International Partnerships (UNFIP), then introduced the Secretary-General’s annual report on the activities of the Fund (document A/61/189).  He said that, as a result of the successful partnership with the United Nations Foundation, UNFIP was increasingly seen as “a one-stop service” for partnership-building by the United Nations system and, more importantly, by outside entities who approached the Fund for advice on how to build successful partnerships with the United Nations, as well as at the country level.

According to the document, the Fund facilitates new partnerships and alliances with the private sector, foundations and civil society organizations.  It also works with the intergovernmental machinery, including the General Assembly and the Economic and Social Council, providing advice on public-private partnerships, and on outreach and advocacy opportunities.  A total of $170.5 million was programmed for 2005, with nearly 85 per cent of the funds going towards children’s health and most of the remainder spent on population and women, the environment and peace, security and human rights.  Some $10.5 million went towards seven projects outside those four thematic areas.  The Fund continued its partnership activities with the United Nations Foundation (which was established by Ted Turner to disburse his $1 billion contribution to United Nations causes).  Since the beginning of the partnership in 1998, a total of $809.5 million, inclusive of co-financing, has been allocated to fund 376 projects, with activities in 121 countries involving 39 United Nations organizations.

The Indian Ocean Tsunami of 24 December 2004 and the Pakistan earthquake of 8 October 2005 made 2005 an especially challenging year, states the report.  Although providing relief assistance was a new direction for the Fund, it became clear that the needs of the survivors of these disasters could be met by channelling resources through existing programme frameworks.  The Fund also helped foundations and members of the international private sector develop partnerships with United Nations common system organizations.  The Secretary-General also tasked the Fund with establishment and executive management of the new United Nations Democracy Fund.

In an update to the report on the Democracy Fund, Mr. DOSSAL said that the Fund had gotten off to a very successful start.  In the past few months, another eight Member States had contributed to the Democracy Fund, bringing the total from 16 to 24.  The latest donors were Bulgaria, Denmark, Estonia, Ireland, Israel, Republic of Korea, Slovenia and Spain.  Today, the Fund had over $51 million in contributions and had programmed more than $36 million for 125 projects with global reach.  There were beneficiaries in over 72 countries.

Ms. LOCK (South Africa), speaking on behalf of the Group of 77, welcomed the Secretary-General’s report on the activities of the United Nations Fund for International Partnerships and said that the Group appreciated the contribution of the Fund, which had been established to promote partnership between the United Nations and the United Nations Foundation.  It also recognized the personal contribution of Robert Edward Turner to the United Nations.  She commended the Fund, which, through its collaboration with the United Nations Foundation, had supported $809.5 million in programming in the areas of children’s health, population and women, the environment, and peace, security and human rights.

Turning to the Fund’s activities in 2005, she noted with appreciation that a total of $170.5 million had been allocated for that period.  Furthermore, the Group appreciated the assistance provided by the United Nations Foundation and UNFIP in 2005 to the victims of the Indian Ocean tsunami and the earthquake in Pakistan.  She also noted the preparatory work undertaken by UNFIP for the launch of the United Nations Democracy Fund and its activities, as called for in the World Summit Outcome document.

Continuing, she noted the role of UNFIP in facilitating new partnerships and alliances with the private sector, foundations and civil society organizations for the activities of the United Nations system.  The work of UNFIP illustrated the positive contribution that public-private partnerships could make towards the work of the United Nations, as envisaged by the Secretary-General when he urged business leaders in 1998 to increase their investment in developing countries and work in partnership with the United Nations system.  Recent United Nations conferences and the World Summit had given further impetus to the growth of partnerships, both in terms of projects on the ground and strategic global partnerships.  To that end, the activities of UNFIP continued to play an important role with respect to the implementation of commitments made at major United Nations conferences and summits, and to working towards meeting the Millennium Development Goals and implementing the World Summit decisions.  The Group of 77 remained appreciative of the positive contribution of the Fund to projects in developing and least developed countries.

The Committee decided that the Secretariat should prepare a draft decision on UNFIP for the consideration of the Committee.

Statistical Report

REMO LALLI, Inter-Agency Advisor for Budget and Finance of the United Nations System Chief Executives Board for Coordination (CEB), introduced a report on the budgetary and financial situation of organizations of the United Nations system, the only system-wide source of statistics on the matter.  The ninth report of its kind to be presented by CEB, the document contained statistical tables, which were grouped under the subject headings of regular resources; extrabudgetary resources; total expenditure; assessed contributions; and working capital funds.  The format and content of the tables had been revised and improved since the last report.  The CEB Secretariat had completed its biennial survey on the budgetary and financial situation of the organizations of the United Nations system in July 2006, he explained, and participation in the survey had been excellent, which had resulted in a collection of comprehensive data of good quality.

HITOSHI KOZAKI ( Japan) said the statistical report of CEB on the budgetary and financial situation was valuable, and noted with appreciation the revised and improved format of the paper.  He encouraged the Secretary-General to take further steps by providing consistent information on all contributions to the maximum extent possible.  He particularly sought clarification on why data on peacekeeping operations had been eliminated from the report, and requested that the Secretary-General include such vital information in future reports to make them more comprehensive.

Mr. LALLI thanked the representative of Japan for his suggestion that, to the extent possible, the Secretariat provide information on all contributions.  To some extent, that information could be found in the report on the status of contributions.  As for peacekeeping operations, the differences in budget cycles made the data on peacekeeping not a perfect match for the cycle of a biennial report.

The Committee decided that the Secretariat would prepare a draft decision for the consideration of the Committee, by which it would recommend to the General Assembly that it take note of the document containing the statistical report of CEB contained in documents A/61/203 and Corr.1.

Other Matters

BRUCE C. RASHKOW (United States) said that he was taking the floor reluctantly following a request by the representative of the Russian Federation on Monday that a series of questions be addressed to the Office of Legal Affairs regarding the waiver of immunity by the Secretary-General covering a member of the Joint Inspection Unit (JIU) and the former Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ).  The question of immunity of the Inspector had been addressed in the JIU report before the Committee for appropriate action.  However, the waiver of immunity for the former Chair of ACABQ, which was not before the Committee, had been raised by the former Chairman in the criminal proceeding instituted against him by criminal authorities before a United States court, and was being addressed in that context.

He said that his delegation had no concern with the request for written responses to questions addressing the waiver of immunity of the member of JIU, or generally addressing the matter of the waiver raised in the JIU report before the Committee.  However, he was greatly concerned by any request from the Committee regarding the waiver for the former Chair of ACABQ -- an issue that had specifically been raised by the former Chair in connection with the proceedings in United States courts, which continued to be addressed there.  The request from the Committee on behalf of a delegation intruded into the ongoing criminal proceedings before the court.  His delegation asked that the request for a response from the Office of Legal Affairs be reviewed in view of those concerns.

Mr. KOVALENKO (Russian Federation) said his delegation had asked the Secretariat for information pertaining to the procedures used in waiving immunities for a number of elected officials of the Organization, particularly the JIU Inspector and the former Chairman of ACABQ.  He said it was the right of every delegation to ask for and receive from the Secretariat information and replies on all matters it deemed necessary.  He looked forward to the information that should be submitted to forthcoming meetings of Committee.  He noted that questions had been raised pertaining to the internal functioning of the Organization and observance by the Secretary-General of its rules and procedures, especially pertaining to the waiver of diplomatic immunity for elected officials.

He warned that any effort to prevent the response of the Secretariat to the inquiry was a serious violation of the procedures and work of the Committee and the General Assembly as a whole.  It was unprecedented and could have unfavourable consequences for the work of the Organization.  He insisted on following established procedures, and sought submission by the Secretariat of the information requested.

Ms. LOCK ( South Africa) next said that every Member State had the right to ask questions, and did not believe it was the intention of any delegation to censor the information to be provided, or to try and prevent another delegation from getting the information it sought.  She trusted that the Secretariat, in responding to the request, would refrain from making comments that might impact on matters not before the Committee.  Bearing in mind all of that, she attached great importance to the practice of the Committee and, in her assessment, there was agreement in the room that the practice of the Committee should be maintained, and caution should be used in providing the information.

PABLO BERTI OLIVA ( Cuba) agreed with South Africa’s representative on the practice of Committee.  He said the Secretariat should be prepared, as it should have the information, should know what information can be given to the Committee and should know how it can be given so it does not interfere with any legal procedures.  In the Fifth Committee’s practice, he said, it had been possible to deal with subjects very different from the one now being raised.  He said a reply should be given to the questions that had been asked.

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For information media • not an official record