Sixty-second General Assembly

Fifth Committee

13^th Meeting (AM)

BUDGET COMMITTEE DEBATES FUNDING FOR DEVELOPMENT ACCOUNT

 

Noting that the funding mechanism for the Development Account had not been successful up to now, several members of the Fifth Committee (Administrative and Budgetary) today insisted that decisive action was needed to deal with the issue.

Created in 1997 to fund technical cooperation projects for the benefit of developing countries, the Account was initially established through the identification of savings in administration and other overhead costs, as part of the reform activities of that period.  In that connection, several speakers today recalled that, when proposing to create a “dividend for development”, the Secretary-General had maintained that it would be possible to deliver an efficiency dividend of some $200 million by 1 January 2002.

In 2006, however, the Secretary-General had reported to the Assembly that no efficiency savings had been identified to be transferred to the Account, due to the difficulty of identifying savings in the absence of dependable methodologies, such as a cost-accounting system.  He had added that, even if such a system were in place, the tendency of the programme managers would be to retain savings to meet additional mandates and workloads, rather than to surrender them for transfer to the Development Account.

The representative of India today stressed that the beneficiaries of the Account had always been highlighting its relevance and utility.  It was puzzling that, despite its evident effectiveness and relevance, there was reluctance to provide greater resources for it.  It was inexplicable that the level of the Account was stuck at $16.48 million 10 years after its creation, given the indicative target of $200 million by 2002.

All the speakers today expressed dissatisfaction with the options presented in the Secretary-General’s report, which had been prepared pursuant to the Assembly’s call for a review of the funding of the Account; a definition of procedures to identify efficiency or gains for transfer to the Account; and recommendations on identifying a further $2.5 million for the Account.  The options outlined in the report included the use of efficiency gains or savings identified by the Office of Internal Oversight Services (OIOS); better identification of efficiency savings in the context of results-based management, cost-accounting principles and implementation of an enterprise resource planning system; and realignment of priorities within the overall budget level.

Speakers also supported the view of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that the Assembly’s calls for the Secretary-General to identify additional resources for the Account had not met with success, and the three options proposed by the Secretary-General did not represent a realistic solution to the fundamental problem of the Account’s funding mechanism.  ACABQ recommended that, further to resolution 56/237, which reiterated the Assembly’s decision to keep the implementation of the Development Account under review, Member States might wish to review the Account in all its aspects.

The representative of the Dominican Republic, speaking in behalf of the Rio Group, stressed the importance of fulfilling the mandates of international development summits, and called for the level of the Account’s resources to be increased considerably during the current session.  Firm decisions to identify efficiency measures must be made towards that end.  He also emphasized with concern that Latin America had not had, in proportion, an equitable distribution of projects under the Account.

Pakistan’s representative, speaking on behalf of the “Group of 77” developing countries and China, said that with the Account’s projects meeting the highest standards of efficiency and having had a positive impact on development efforts, the Group of 77 would pursue a tangible increase in the level of the Account through appropriation in the regular budget for 2008-2009.  It would also request the Secretary-General to divert to the Account the unspent balance from the limited flexibility accorded to him by Assembly resolution 61/283.

The use of the unspent $7 million surplus from the $20 million over which the Secretary-General had been granted flexibility was supported by the representative of Venezuela, who also recalled that developed countries had to honour their commitments for transferring 0.7 per cent of their gross domestic product for official development assistance.  It was time to attach greater importance to development, one of the fundamental pillars of the United Nations, he said.

Sharing those views, Nicaragua’s representative reiterated that, after a decade of failure, it was time to put an end to the philosophy of funding development with crumbs, so that the Development Account could become an instrument for development, increasing the impact of the Organization’s projects.

The documents before the Committee were introduced by Sharon Van Buerle, Director of the Programme Planning and Budget Division; and Rajat Saha, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ).

The Committee will address appointments to fill vacancies in several United Nations bodies at 10 a.m. Friday, 2 November.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to consider the impact and funding of the Development Account, which was created in 1997 to fund technical cooperation projects for the benefit of developing countries.

The Committee had before it the fifth progress report on the implementation of projects financed from the Development Account (document A/62/123), the report of the Secretary-General on the Development Account (document A/62/466), and a related report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) (document A/62/7/Add.6).

According to the documents, when proposing to create a “dividend for development” from savings in administrative and other overhead costs in 1997, the Secretary-General had maintained that it would be possible to deliver an efficiency dividend of some $200 million by 1 January 2002.  The Account was initially created through the identification of savings in administration and other overhead costs as part of the reform activities of that period.

Subsequently, in view of the non-transfer of resources to the Account since its inception, the General Assembly, in its resolutions 60/246 and 61/252, requested the Secretary-General to make recommendations on how additional resources could be added to the Account in the amounts of $5 million and $2.5 million, respectively.

In 2006, the Secretary-General reported to the Assembly that no efficiency savings had been identified as a part of the unencumbered balance of the approved budget to be transferred to the Development Account.  That was attributed to the difficulty of identifying such savings in the absence of dependable methodologies, such as a cost-accounting system.  Even if such a system were in place, the tendency of the programme managers would be to retain savings to meet additional mandates and workloads, rather than to surrender them for transfer to the Development Account.

In this context, as a one-time exercise, the Assembly, at its sixtieth session, decided that the Development Account should be recosted for the biennium 2006-2007, which led to an increase of $889,100, for a total appropriation of some $13.07 million for 2004-2005.  Again, as an immediate exceptional measure, the Assembly, in its resolution 61/252, also decided to appropriate $2.5 million for the Account in 2006-2007.  The level of the Account in the proposed programme budget for the biennium 2008-2009 amounts to some $16.48 million.

According to the fifth progress report, since its inception in 1997, 90 projects have been approved under the Development Account in five tranches in all regions, with a total budget of $65 million, each tranche with a different theme.  Projects approved for the first three tranches, from 1998 to 2003, have been completed and closed.  As at 30 April 2007, the implementation rate was 64.3 per cent for the fourth tranche (2004-2005).  For the fifth tranche (2006-2007), the implementation rate was 15.3 per cent, which is in line with the experience in the first year of operation for projects under the earlier tranches.

According to the report, improvements have been made in the areas of project design through the application of logical frameworks used in results-based budgeting and project monitoring through the use of an enhanced online monitoring system.  In line with previous recommendations of the Advisory Committee, lessons learned in the implementation of projects in the earlier tranches have been applied to the programming of new projects.  Starting with the fifth tranche, an external final evaluation of all completed projects will be carried out.

The Secretary-General’s report was submitted pursuant to resolution 61/252, which called for a review of the modalities and rationale for the funding of the Development Account; a definition of procedures to identify efficiency or other gains for transfer to the Account; and recommendations on identifying a further $2.5 million for the Account.

The first part of the report reviews the impact of the Development Account, indicating that, since the projects are relatively small, with an average cost of $650,000, and are of less than four years’ duration, it is difficult to assess their impact, as this can often be determined only long after an activity has been completed.  Many implementing entities, unlike the major United Nations funds and programmes, do not have a continuing presence in the targeted countries.

The report does not draw conclusions on the long-term developmental impact of the Account.  However, it is expected that short-term results will lead to long-term impact, even if current measurement technology does not make direct attribution possible.  The report concludes that the Development Account is largely achieving its aims and purposes as defined by the Assembly, and is producing demonstrable and beneficial results.

The second part of the report contains background on the establishment, modalities and rationale for funding the Development Account.  The Secretary-General states that, with the current information technology systems, it is not possible to identify efficiency or other gains for transfer to the Development Account.

In the absence of a system to identify and record efficiency gains, the Secretary-General proposes three options: (a) efficiency gains or savings, identified by the Office of Internal Oversight Services (OIOS) through collaboration with the affected departments, that may be transferred to the Development Account; (b) better identification of tangible and sustainable resources relating to efficiencies in the context of results-based management, combined with cost-accounting principles and the implementation of an enterprise resource planning system; and (c) the realignment of programme priorities by the Assembly within the overall programme budget level.

The Advisory Committee, in its report, notes that the Assembly’s calls for the Secretary-General to identify additional resources for the Development Account have not met with success.  ACABQ is of the view that the funding mechanism of the Account, as currently designed, has not proven to be successful and, therefore, the base is unlikely to grow.  Furthermore, in the opinion of the Advisory Committee, the three options proposed in the report of the Secretary-General do not represent realistic or reliable solutions to the fundamental problem of the funding mechanism of the Development Account.

The Advisory Committee concludes that the Assembly may wish to review the Development Account in all its aspects.

Introduction of Documents

SHARON VAN BUERLE, Director of the Programme Planning and Budget Division, introduced the Secretary-General’s reports before the Committee, saying that the average budget per Account project had originally been set at $930,000 for the first three tranches.  However, through experience, the per project budget had been reduced to $650,000, to reflect the optimal level in terms of reconciling the ability to execute projects within existing staff resources, over the time frame of under four years.  Further, joint implementation between two or more executive agencies had emerged as a cost-effective and synergetic way to operate across sectors and regions.  Drawing on lesson learned, project design for funding had evolved, implementing entities now had a better grasp of the logical framework and the quality of project documents had improved considerably.  Based on the recommendation of the Board of Auditors, timely submission of the Development Account progress reports had been implemented through close monitoring of projects, including final and external evaluations.

Each project funded through the Account was intended to benefit multiple developing countries, she said.  Regional and interregional joint activities were being encouraged.  Based on surveys of implementing entities for the Development Account, the comprehensive report provided a summary of the seven common responses of the importance of the Account, ranging from the account being a means of building cooperative working relationships with other United Nations entities (and particularly between central units and regional commissions and among regional commissions themselves), to it being a means of building capacities that served other development objectives and activities, such as widely used basic statistical capacities and networks for such issues as trade and gender.  The report also discussed the five major aims and purposes of the Account, including sustainability, networking for knowledge sharing supported by information and communications technology, collaboration between implementing entities and with other partners, innovation and use of developing countries’ capacities.  Overall, it was considered by the implementing entities surveyed that the Account was largely achieving its aims and purposes as defined by the General Assembly and that it was producing demonstrable and beneficial results.

Chairman of ACABQ, RAJAT SAHA, introduced a related report of the Advisory Committee, saying that calls by the General Assembly for the Secretary-General to identify additional resources for the Account had not met with success.  The three options proposed in the Secretary-General’s report did not represent a realistic solution to address the fundamental problem of the Account’s funding mechanism.  Further to resolution 56/237, in which the Assembly had reiterated its decision to keep the implementation of the Development Account under review, the Assembly might wish to review the Account in all its aspects.

Statements

IMTIAZ HUSSAIN (Pakistan), speaking on behalf of the “Group of 77” developing countries and China, recalled that, 10 years ago, the Secretary-General had proposed creating a dividend for development, from savings in administration and other overhead, in the region of $200 million, and it was disappointing that, since then, the Account had only received five modest tranches of $13.06 million.  Thus, the Account remained far below the proposed level.

He noted that, through the Account, 94 projects had been funded and implemented in areas of critical importance to developing countries.  The stringent criteria and plethora of conditions for approved projects for funding from the Account were not applicable to any other programme in the Organization.  Thus, those projects met the highest standards of efficiency and had a positive impact on development efforts.  He emphasized that such projects had been rated as highly successful by programme managers in contributing to technical capacity-building in developing countries, the realization of the internationally agreed targets and goals, and complementing national development strategies.

He expressed concern that the Secretary-General’s report fell short of expectations, since the savings and efficiencies in the range of $2.5 million for the Account could not be identified.  He was disappointed that the difficult compromise reached among Member States in resolution 61/252 on the identification of $2.5 million for transfer to the Account had failed to materialize.  He also did not believe that the options listed in paragraph 78 of the report to deal with the issue in the future was of any practical value in the context of identifying the desired resources for the Account.

Continuing, he said the report suggested that meaningful savings or efficiency gains to strengthen the Development Account were not foreseeable.  He was convinced that the General Assembly must take decisive action to deal with the issue.  He sought to pursue a tangible increase in the level of the Account through appropriation in the regular budget for 2008-2009.  He also directed the Secretary-General to divert to the Account the unspent balance from the limited flexibility accorded to him by resolution 61/283.

LUIS LITHGOW ( Dominican Republic), speaking on behalf of the Rio Group, associated himself with the statement made on behalf of the Group of 77 and China.  He first called the Committee’s attention to resolution A/61/252, in which the General Assembly requested the Secretary-General to submit a report with recommendations on how additional resources could be identified, without using surplus, to be transferred to the Development Account and to identify an additional $2.5 million, among other things.  In that connection, he was concerned that none of those questions had been given a satisfactory answer in the Secretary-General’s report.

He noted that the level of resources for the Account had not been increased during the last five bienniums.  On the contrary, it had diminished in real terms, when taking into account the devaluation and inflation of the dollar.  He expected a proposal that would take into account the interests of Member States, especially developing countries.  Furthermore, he called for the level of resources to be increased considerably during the current session.

Continuing, he said firm decisions to identify efficiency measures to increase the level of the Account must be made.  In that context, he concurred with the recommendations of ACABQ, in its report, since the designated previous funding mechanism for the Account, until now, had not been successful.  He noted that the Account had approved the financing of more than 90 projects in developing countries, including in the Latin American region with the support of, among others, the Economic Commission for Latin America and the Caribbean (ECLAC).  He emphasized, with concern, that Latin America had not had, in proportion, an equitable distribution of projects.  Concluding, he said that without development there was no peace and security.  For that reason, he believed that the Account must be maintained.  As one of the first reforms made to the system in the sphere of development, it had been vital in helping fulfil the mandates conveyed internationally by development summits.

SAMER ALOUAN KANAFANI (Venezuela) supported the position of the Group of 77 and China and the Rio Group, and said that today’s discussion offered an opportunity to examine all possible funding options to provide support to developing countries, in particular in meeting the Millennium Development Goals.  With the Account created during the first reform initiative, the original intention had been to deliver an efficiency dividend of some $200 million for the Development Account by 1 January 2002.  At present, the Account barely had $16.4 million, way below the intended level.  In several resolutions, the Assembly had asked the Secretary-General to come up with recommendations on how to incorporate additional resources for the Account, but in 2006, the Assembly had been informed that the savings had not been determined through efficiency and unencumbered balances for transfer to the Development Account.

Regarding the comprehensive report before the Committee, he agreed with the Advisory Committee that the request of the Assembly to determine additional resources for the Account had not been successful.  He disagreed with the option of maintaining the financing of the Development Account on the basis of existing surpluses from other areas, as nothing could be provided that way.  It was necessary to increase the Account to the level envisioned through an effective funding mechanism, for example through the use of the unspent $7 million surplus amount from the $20 million over which the Secretary-General had been granted flexibility.  He also recalled that developed countries had to honour their commitments for transferring 0.7 per cent of their gross domestic product (GDP) for equitable distribution among developing countries.  Without development, the international community would not achieve peace and security.  It was time to attach greater importance to development, one of the fundamental pillars of the United Nations.

MOHAMMAD SALIM (India) associated himself with the statement made on behalf of the Group of 77 and China, noting that the Development Account had been established with the laudable objective of funding short-term, low-cost, technical cooperation projects for the benefit of multiple developing countries in the priority programmatic areas, particularly as they related to advancing the goals set out in the United Nations Millennium Declaration and the outcomes of major United Nations conferences and international agreements.  The Account, along with the regular programme of technical cooperation, was the only dedicated regular budget resource provided for technical cooperation.  He noted that the Development Account activities had had a self-sustaining developmental impact, with multiplier effects.

Calling attention to the Secretary-General’s report on the implementation of projects financed by the Account, he highlighted the progress made over the last 10 years in project design and implementation, particularly through development partnerships between the United Nations and outside institutions, the use of local expertise and the forging of collaborative efforts to multiply the effects of specific activities.  It had become an important low-cost, innovative knowledge management and capacity-building tool.  He noted that 70 per cent of all completed Account projects had developed durable low-cost, scalable solutions that generated multiplier effects through distance-learning modules, networks and adaptation of previously organized workshops and previously produced research and training material.  He said the same could not be said for other programmes.

He said the Secretary-General, in his introductory remarks on the proposed programme budget for 2008-2009, had conveyed his intention of reinforcing South-South cooperation.  The account offered an existing, cost-effective source for financing South-South technical cooperation projects.  Resource utilization could be made more efficient by more engagement with experts, locally or from other developing countries.  That would not only be more cost-effective, but better attuned to the needs and realities of targeted beneficiaries.  It was puzzling that, despite the evident effectiveness and relevance of the Account, there was reluctance to provide greater resources for it.  It was inexplicable that the level of the Account was stuck at $16.48 million after 10 years, given the indicative target of $200 million by 2003.

While he agreed with those who advocated efficient resource utilization, fiscal prudence, strengthened oversight and accountability through the budget, he believed that the Account, with its modest resources, should not be made a scapegoat for fiscal profligacy in other parts of the Organization.  The Account was an initiative deeply valued by the vast majority of Member States, and was largely achieving the goals that had been set for it.  Resources allocated to the Account were comparatively modest and it was never meant to be a panacea for all the economic and social ills of the world.

He also agreed that measuring the Account’s long-term impact had its limitations, given the nature of the short-term, low-cost projects that the Account funded.  Nonetheless, he was willing to examine and rectify the reported shortcomings of the programme in order to further strengthen it.  Other sources of predictable, sustainable and adequate funding needed to be explored.  In that connection, the three options mentioned in the Secretary-General’s report seemed unrealistic and not implementable.  Fresh ideas were required.  There was near unanimity among the vast majority of Member States that the level of resources for the Account had to be increased in the regular budget.

DANILO ROSALES DIAZ (Nicaragua) endorsed the statements made on behalf of the Group of 77 and the Rio Group, and said that, in 1970, for the first time in United Nations history, the Assembly had started appealing to industrialized countries to direct 0.7 per cent of their gross domestic product to official development assistance (ODA).  Four decades later, development assistance had increased to 0.33 per cent of gross domestic product, not even half of that commitment.  During that same period, the world had faced the emergence of new challenges, including climate change, with catastrophic consequences for developing countries, including the loss of lives and destruction of infrastructure.  The ability to mitigate and adapt to those challenges were closely linked to development and consumption patterns.

In 2000, he continued, all leaders at the Millennium Summit had reaffirmed that development was a number one priority.  That had been confirmed during the review of the implementation of the Millennium Development Goals, and the Monterrey Conference on Financing for Development had reiterated the 0.7 per cent commitment.  The bitter reality in 2007, halfway to the 2015 anti-poverty target, was that development assistance had decreased since 2005.  As seen at the High-Level Dialogue on Financing for Development earlier this month, many developing countries would not manage to attain the Millennium Development Goals.

In establishing the Development Account, the aim had been to identify some $200 million through efficiency savings by 2002.  Now, Member States had been presented with an Account at a much smaller amount, not even touching $16.5 million.  The Development Account stood only at 0.37 per cent of the incomplete proposed budget.  Of the $20 million flexibility accorded to the Secretary-General, $7 million remained, but it did not even occur to anybody to make that amount available for the Development Account.  That was clearly not in line with the goals determined by the General Assembly, and was most regrettable.  He agreed with ACABQ that it was time to review the mechanisms for financing the Development Account.  As stated during the presentation of the budget, after a decade of failure, it was time to put an end to the philosophy of funding development with crumbs, so that the Account could become an instrument for development, increasing the impact of the Organization’s projects.

He added that his delegation was surprised by the options presented by the Secretary-General, and agreed with the Advisory Committee that those options were not realistic and not sufficiently ambitious.  The same creativity that the Secretary-General had shown in proposing a restructuring of the Department of Political Affairs, without even a clear mandate, should be used to restructure the Development Account.  The Account should be used to offset the significant shortcomings in financing for development.

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