Sixty-second General Assembly

Fifth Committee

17^th Meeting (AM)

BUDGET COMMITTEE TAKES UP REPORT OF UNITED NATIONS JOINT STAFF PENSION BOARD

Financing for Women’s Institute, Construction

At Economic Commission for Africa among Other Issues

As the Fifth Committee (Administrative and Budgetary) considered the budget of the United Nations Pension Fund, with $41.2 billion in assets and over 155,000 active participants and beneficiaries all over the world, several speakers spoke in support of the proposal of the Pension Board for making an ad hoc, one-time, payment of approximately $500,000 to 79 retirees, who had been adversely affected by the “dollarization” policy adopted by Ecuador.

Explaining the situation, Ecuador’s representative said that “official dollarization” had been an emergency economic measure that the Government had undertaken to cope with the worst financial crisis the country had experienced in 1999-2000.  However, the currency change had sent prices skyrocketing, and the United States dollar in Ecuador lost 60 per cent of its purchasing power due to inflation.  United Nations retirees’ pensions had been strongly impacted not only by the country’s internal economic situation, but also by the lack of action from the Pension Board to eliminate or help overcome the adverse consequences of dollarization.

While the representatives of Pakistan (on behalf of the Group of 77 and China), Dominican Republic (on behalf of the Rio Group) and Argentina were among the speakers who concurred with the proposed measure, calling it a just and timely settlement of the issue, the United States and Japan opposed the proposal, which, according to the Advisory Committee on Administrative and Budgetary Questions (ACABQ), would create a precedent, making the Pension Fund vulnerable to similar requests in the future.

With the Fund’s continuing expansion in assets and participants, the United States also advocated stringent budget discipline and effective oversight of the Pension Fund’s operations.  The importance of sound management was highlighted by Pakistan’s representative (on behalf of the Group of 77 and China), as well, who also emphasized the importance of diversification in the investments of the Fund, especially in developing countries.

As the Committee turned to a series of reports of various aspects of the 2008-2009 budget proposal, several speakers expressed satisfaction over the improved financial situation of the International Research and Training Institute for the Advancement of Women (INSTRAW), which would not require a subvention from the regular budget this year.

Emphasizing the importance of INSTRAW as the only United Nations body with a specific mandate to carry out research and training for gender and the advancement of women, several speakers expressed their appreciation to the Director and the Executive Board of the Institute for their efforts to secure sustainable financing and thanked the countries that had extended voluntary contributions to enable the Institute to reach this stage.

Several speakers also addressed the construction of additional office facilities at the Economic Commission for Africa (ECA) in Addis Ababa.   Algeria’s representative (on behalf of the African Group) said that it was a matter of concern that, while the first resolution on the matter had been adopted during the fifty-sixth session, construction work had yet to start.  The Group was also concerned that changes continued to be made on the Commission project, leading to cost escalation changes, and regretted that the project coordinator had been unable to join the ECA until April 2007, seven months after the selection.  The project had also been delayed and would now be completed in August 2010, instead of October 2009.  The Group concurred with the ACABQ that cost containment measures should be taken, so that the project did not entail further cost escalation.

Ethiopia’s representative told the Committee that, as a host country of the Commission, its Government had been taking every necessary measure to ensure that the construction of the office facilities would be completed as scheduled.  The implementation of the project would be greatly assisted by the recent signing of an addendum to the host country agreement, which gave the Commission rights to the duty-free and tax-free import of services and materials, as well as other privileges.  He also took note of the concern regarding construction of an alternate public access road by the Addis Ababa municipality, reassuring the Committee that local authorities would continue to collaborate with the Commission in actively pursuing the matter.

Other issues addressed this morning included the construction of additional conference facilities at the Vienna International Centre, a subvention request from United Nations Institute for Disarmament Research, and the budget of the International Trade Centre UNCTAD-WTO and revised agreement for the use of the premises by the International Court of Justice in The Hague.

Statements were also made by the representatives of Portugal (on behalf of the European Union) and Honduras.  Documents were introduced by Valeria Maria Gonzalez Posse, Chairperson of the United Nations Joint Staff Pension Committee; Sharon Van Buerle, Director of the Programme Planning and Budget Division; and Rajat Saha, Chairman of the ACABQ.

The Committee will consider the means of improving the financial situation of the United Nations at 10 a.m. Thursday, 15 November.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to consider the budget of the United Nations Joint Staff Pension Fund and a series of reports in connection with the Organization’s 2008-2009 budget proposal.

Pension Fund

The first document before the Committee was a report of the United Nations Joint Staff Pension Board (document A/62/175), which presents the revised budget for the Joint Staff Pension Fund for 2006-2007 and provides estimates for the 2008-2009 period.  The information for 2006-2007 indicates a reduction in appropriations amounting to some $6.13 million, reflecting under-expenditures of administrative costs ($1.55 million) and investment costs ($4.58 million).  The revised appropriations for the biennium would then amount to some $104.54 million.  Of that amount, $16.24 million is chargeable to the United Nations under the cost-sharing arrangement.

The estimates for 2008-2009 amount to $142.27 million, before recosting, including $71.77 million for administrative costs, $68.05 million for investment costs, $2.39 million for audit costs and $58,900 for Pension Board expenses.  The report provides for a total of 189 continuing posts, 25 new posts and reclassification of 2 posts.  Also proposed in the report is authorization to supplement contributions to the Emergency Fund for 2008-2009 by an amount not exceeding $200,000.

As indicated in the document, the active participant population of the Fund increased by 5.1 per cent for 2006, and the number of periodic benefits in payment for the same period increased by 2.3 per cent.  The market value of the Fund’s assets increased from $31.4 billion at the end of 2005 to $36.3 billion at the end of 2006.  That represents an increase of 15.5 per cent.

In response to the Assembly’s request in resolution 61/240 for “a viable ad hoc measure to adequately attenuate the adverse consequences arising from dollarization in Ecuador”, the Board recommends a total one-time payment of about $500,000 from the assets of the Fund.  In order to implement its recommendation, the Board requests resources in the amount of $46,900, which is included in the overall resource requirements for the biennium 2008-2009.

According to the Secretary-General’s report on the financial implications of the decisions of the Pension Board (document A/C.5/62/2), should the Assembly approve the latest proposals of the Board, overall requirements would amount to some $19 million at 2008-2009 rates, with the cost under the regular budget amounting to about $11.99 million and some $7.01 million reimbursed by the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA) and the United Nations Children’s Fund (UNICEF).  With the amount of some $11.24 million already included in the budget proposal, the endorsement of the Board’s recommendations would require an additional appropriation of $748,200 for 2008-2009, representing a charge against the contingency fund.  Additional requirements arise mainly from staffing changes, which include the establishment of 15 new posts, conversion of 3 temporary posts to established posts and redeployment of 2 posts from Investment Management Service to the Secretariat.  There are also increased requirements for audit costs, computer-related maintenance and services, and rental of premises related to the additional posts.

The Advisory Committee on Administrative and Budgetary Questions (ACABQ) comments on those two reports in documents A/62/7/Add.3 and Add.13.  It welcomes the improved quality of the budget report and suggests further steps to streamline the document, stating, among other things, that more attention should be paid to the results-based budgeting format, including the presentation of indicators of achievement.  For example, the indicators for improving the gender balance of staff in the Investment Management Service provide for an increased percentage of women at the Professional level and above, but the target figures for 2008-2009 do not reflect any increase.

The Advisory Committee states that given the Fund’s investments in administrative and technological capacities, it should be in a position to reflect more up-to-date actual expenditures in its performance reports prior to their submission to ACABQ.  Provided with the most recent information, the Advisory Committee estimates total expenditure for 2006-2007 at $1.29 million, which would result in projected savings of about $6.2 million.

ACABQ recommends acceptance of the Pension Board’s recommendation to charge, effective with 2006-2007, tax reimbursements for staff members who are taxed by their own Governments to the Tax Equalization Fund.  For 2006-2007, a total of $2.32 million is estimated for that purpose.  Historically, tax settlement provision has not been made in the Fund’s budget, with the cost of posts budgeted without the staff assessment component.  For 2006, however, payment for such settlements was requested by the United Nations.

Turning to the 2008-2009 budget, the Advisory Committee supports the recommendation of the Pension Board in respect of the Fund’s staffing. Recognizing the importance of ensuring that the management of the Fund’s present $41.2 billion portfolio (the market value of the Fund’s assets as at 1 October 2007) is entrusted to an experienced manager, ACABQ considers that the person chosen for the post of the Director of the Investment Management Service should possess a strong and relevant academic background, have an established record of managing long-term pension investments, and have extensive experience and competency to conduct the Management Service’s initiatives.

The Advisory Committee recommends approval of the revised estimates for 2006-2007 in the amount of $104.46 million and that the proposed budget for 2008-2009 for administrative expenses in the amount of $142.27 million, subject to the Assembly’s decision on measures to address the consequences of dollarization in Ecuador.  ACABQ has no objection to the recommendation to supplement the voluntary contributions to the Emergency Fund by an amount not exceeding $200,000 for the biennium 2008-2009.

Regarding the proposed measure to address adverse consequences of the dollarization in Ecuador, ACABQ states that it would create a precedent and the Fund could be vulnerable to other similar requests.  The proposed one-time payment would not be in conformity with the Fund’s regulations, particularly as regards the income replacement principle that is embodied there, which has been consistently upheld by the International Civil Service Commission (ICSC) and General Assembly.  The Advisory Committee is of the opinion that a policy decision on the matter would have to be taken by the General Assembly.

2008-2009 Budget Items

The Committee also had before it the proposed 2008-2009 programme budget for the International Trade Centre of the United Nations Conference on Trade and Development (UNCTAD)/World Trade Organization (WTO) (document A/62/6 (Sect.13)/Add.1).  With the United Nations and the WTO, the two parent organizations of International Trade Centre, equally sharing the funding of the Centre, the United Nations share for 2008-2009 stands at SwF 34.52 million, after recosting.  Therefore, the total proposed budget amounts to SwF 69.75 million after recosting, a .4 per cent increase from the previous period.  The main substantive changes to the proposed budget, as compared with 2006-2007, concern the proposed creation of four new Professional posts and reclassification of one Web Editor position from a P-2 post to the P-4 level.  A proposal also exists to eliminate three General Service posts.

As indicated in the report, financial resources for trade-related technical assistance have increased exponentially, and the Centre has been identified as an important recipient of trade-related technical assistance by donors. As the Centre will play a central role in delivering aid for trade, it is expected to receive a larger volume of extrabudgetary funds in 2008-2009, which are estimated at SwF 96 million for the biennium.

The Advisory Committee, in a related report (document A/62/7/Add.10) recommends approval of the Centre’s proposed programme budget for 2008-2009, subject to its recommendations.  The Advisory Committee recommends acceptance of the proposals for the establishment of a P-2 post for an Information Systems Developer and the abolition of three General Service posts, but it is not convinced that the addition of a new Senior Results-Based Management and Evaluation Officer at a P-4 level is required or would provide commensurate value.  ACABQ adds that the proposal of a new P-4 post function should be viewed as a collective effort of all concerned departments.

Bringing attention to the Centre’s changed management process, which began as a result of a comprehensive external evaluation by the Office of Internal Oversight Services, ACABQ recommends that, in the process of adopting results-based management and budgeting, the Centre draw on the lessons learned by other organizations of the system.  Furthermore, the Advisory Committee notes that it intends to follow up on the integration of the Centre’s customer relationship and enterprise content management systems with the United Nations enterprise resource planning system.  It also recommends that the Centre endeavour to harmonize the two budget fascicles of the United Nations and WTO on the Centre, in consultation with the secretariats of both organizations.  Regarding harmonization efforts thus far, the Centre had reported that such efforts had reduced the amount of work and duplication during the budget presentation process.

The Secretary-General’s report on the supplementary agreement between the United Nations and the Carnegie Foundation concerning the use of the Peace Palace at The Hague by the International Court of Justice submits for the Assembly’s approval proposed amendments to the agreement, including its article II, which establishes the annual contribution payable by the United Nations for the premises occupied by the Court.  This amendment is based on the recently concluded negotiations between the two organizations, which fixed the United Nations’ annual contribution at some €1.15 million.  The new arrangements reflect an increase in the cost of security operations, cleaning and utilities, compared to the inflation adjustments that have been applied to the annual contribution since its revision in 1997.  The base amount will continue to be subject to annual increases relating only to inflation, and will be reviewed after a period of five years.

Proposed amendments to the agreement’s article IV would define clearly the allocation of space occupied by the International Court of Justice, as well as procedures for modification of such space.  Proposed revisions contained in the document would result in additional requirements estimated at $251,200 under the 2006-2007 programme budget and $552,000 under the budget for 2008-2009.  The $552,000 would be considered in the context of recosting the 2008-2009 budget proposal prior to the Assembly’s determination of initial appropriations in December 2007.

Welcoming the agreement between the United Nations and the Carnegie Foundation, the Advisory Committee, in a related report (document A/62/7/Add.8), notes that, as part of the negotiations between the two bodies, and given the lapse of time between the proposed date of the five-year review in 2002 to the conclusion of the negotiations, both parties agreed that the new agreement would take effect from 1 July 2006.  ACABQ recommends approval of the course of action proposed by the Secretary-General.

Contained in document A/C.5/62/3 is a note by the Secretary-General presenting a request for a subvention to the United Nations Institute for Disarmament Research in the amount of $485,500, before recosting, from the regular budget of the United Nations for 2008-2009.  The document presents requests for the full biennium 2008-2009 in accordance with resolution 60/248 and is consistent with what is contained in the budget proposal for 2008-2009, which includes a provision for $485,500 for United Nations Institute for Disarmament Research (UNIDIR) subvention.  The subvention is used to cover the costs of the Director, the Deputy Director and two General Service staff.

Commenting on this request, the Advisory Committee (document A/62/7/Add.5) recommends approval of the request for a subvention for UNIDIR.  As an amount corresponding to the sought amount of the subvention is already included in the budget proposal, no additional provision would be required towards that end.

According to the report, during the Advisory Committee’s exchange of views with the representatives of the Institute concerning continuing need for a subvention, given the UNIDIR’s positive financial position as regards voluntary contributions, it was informed that the subvention was requested to ensure the independence of the Director of the Institute.  That was vital given the highly political nature of disarmament and international security issues.  The Director’s independence was also important in raising voluntary funds.  Moreover, the granting of a subvention encouraged donors to consider funding UNIDIR’s research, as it was seen as a commitment to the long-term survival of the Institute and its independent character.

The Secretary-General’s report on the International Research and Training Institute for the Advancement of Women (INSTRAW) (document A/62/509) responds to the Assembly’s request for solutions that would place the financial situation of the Institute on a more stable basis without recourse to regular budget funding, in line with the statute of INSTRAW.  The Assembly appropriated $1.04 million to INSTRAW for 2006-2007, to be used if there was a shortage of voluntary contributions in 2006.  In addition, the Secretary-General was authorized, on an exceptional basis, to enter into financial commitments of up to $557,800 for the financing of INSTRAW, subject to full reimbursement, pending receipt of voluntary contributions in 2007.

The report projects that the INSTRAW Trust Fund for core activities will have an income of some $3.49 million for the biennium 2006-2007 with total expenditures of about $2.65 million.  The balance will allow the Institute to make provision for a reserve of $200,000 to cover eventual final expenditures and to reimburse the full amount of the commitment authority authorized by the Assembly.  A projected closing surplus of $85,800 would be carried over into 2008.

Voluntary contributions from Governments for core activities are estimated at $762,700, including $515,300 received as of 30 September 2007 and a further $247,400 that is expected before the end of 2007.  An additional amount of $209,000 for 2006-2007 is expected from the United Nations Stabilization Mission in Haiti (MINUSTAH) for a series of services provided by INSTRAW for the Mission’s disaster recovery centre.  With respect to 2008, expenditures are estimated at some $1.54 million, representing an increase of $98,000 over the 2007 projection, owing to increases in staff costs and operating expenses.  The estimated income for 2008 includes projected contributions of about $1.49 million and the balance of $85,800 from 2007.

To secure resources, the Institute’s Executive Board has adopted a medium-term resource mobilization strategy for 2008-2009, developed in collaboration with the United Nations Fund for International Partnerships.  This strategy is aimed at securing funds for the implementation of the Institute’s core activities, from both Member States and the private sector, and at developing strategic and collaborative partnerships with other organizations.  Emphasis is also placed on the need to monitor and follow up on receipt of projected contributions closely and to align the operational budget to the levels of contributions.

The Advisory Committee, in a related report (document A/62/7/Add.12) notes the encouraging trend reflected in the renewed commitment by Member States to supporting INSTRAW and trusts that the Institute will be placed on a path towards financial sustainability.  ACABQ welcomes the improved financial situation of INSTRAW and commends the Director and the Executive Board for their proactive approach and efforts to secure sustainable financing.

The Advisory Committee recommends that the Assembly take note of the report on the Secretary-General, and reiterate its appeal to Member States, as a matter of urgency, to contribute voluntary funds in support of the Institute and honour existing pledges in a timely manner.

According to the Secretary-General’s report on the construction of additional conference facilities at the Vienna International Centre (document A/62/358) completion of the project is now expected by the end of 2007, with the installation of technical equipment to be completed by mid-2008.  It is envisaged that the four organizations based at the Vienna International Centre (the International Atomic Energy Agency (IAEA), the United Nations Industrial Development Organization (UNIDO), the Comprehensive Nuclear-Test-Ban Treaty Organization (CTBTO) and the United Nations Office at Vienna) will begin to move into the new building in September and October 2008, with full occupancy tentatively planned for 1 January 2009.

IAEA, UNIDO, CTBTO and the United Nations Office at Vienna would collectively contribute €2.5 million for the construction of additional conference facilities.  The United Nations share of that contribution will be covered by a provision of $117,700 in the proposed 2008-2009 budget.

The Secretary-General also indicates that the overall implementation rate of the asbestos removal now stands at 50 per cent, reflecting completion of work in relation to four of the six towers of the Vienna Centre.  Asbestos removal work in the towers that accommodate joint and common services will commence in late 2007 and continue into 2009.  Work in the building that houses conference facilities and related services is to commence during the biennium 2008-2009.  The total project plan is expected to be completed by mid-2011.

The ACABQ, in a related report (document A/62/7/Add.9) recommends that the Assembly take note of the report of the Secretary-General on the construction of additional conference facilities at the Vienna International Centre.

The Secretary-General’s report on the construction of additional office facilities at the Economic Commission for Africa (ECA) in Addis Ababa (document A/62/487) seeks the Assembly’s approval of the revised project estimate of $14.33 million and the authority to enter into a financial commitment of $1.94 million, to be reported as necessary in the context of the first performance report for 2008-2009.

The revised estimate reflects a twofold increase from the $7.71 million originally approved for the project during the Assembly’s fifty-sixth session and then the $11.38 million approved during the sixtieth session, on the Advisory Committee’s recommendation to expand the scope of the project to include two additional floors.  Delays in the project design phase, additional requirements relating to safety and security and unforeseen construction components, such as the creation of an internal access road, supplementary parking and a back-up power supply, led to the increase.  Owing to delays in design work, the project is now expected to be completed in August 2010, instead of October 2009.

Addressing those requirements, the Advisory Committee (document A/62/7/Add.11) recalls that the Secretary-General had indicated that, in the event that the ECA will have to construct the access road, additional costs for the United Nations will have to be incurred.  While the Host Country Agreement and local land lease agreement do not contain a specific clause regarding road construction, it can be inferred from the lease that it is the responsibility of the host Government to construct the external access road.  The Secretary-General should actively pursue the conclusion of the negotiations on this matter in a timely manner, so as not to delay the construction project at ECA.

With the cost of constructing a multi-storey parking facility estimated at $660,000 (capacity for 660 cars at an average cost of $1,000 per car space), ACABQ notes that ECA is currently reviewing the possibility of introducing a parking fee policy as from January 2008.  The Advisory Committee welcomes this development.

The Advisory Committee recommends that the Assembly approve the revised total cost of $14.33 million for the project and authorize the Secretary-General to enter into a commitment in the amount of $1.93 million gross under the 2008-2009 budget, to be reported in the context of the first performance report for the biennium.  At the same time, the Committee is of the view that cost-containment measures should be taken to avoid further cost escalation beyond the current proposed budget.

Introduction

VALERIA MARIA GONZALEZ POSSE, Chairperson of the United Nations Joint Staff Pension Committee, introduced that body’s report, recalling that, due to the biennialization of the work programme of the Fifth Committee, the biennial budget proposals of the Fund were now presented in the odd-numbered years.  There were currently 22 member organizations and over 155,000 active participants and beneficiaries covered by the Fund.  That represented a 42 per cent increase in individuals serviced by the Fund over the past 10 years.  The market value of the Fund’s assets, as of the close of business on 31 October, had stood at $42.3 billion.  In 2006, the annual amount of benefit payments had exceeded $1.5 billion, with payments made in 15 currencies in some 190 countries.

Reporting on the Fund’s requirements and expenses, she said, among other things, that 2 posts were being redeployed from the Investment Management Service to the Secretariat, as part of the overall information technology consolidation.  The Standing Committee of the Board had recommended, and ACABQ agreed, that serious consideration be given to consolidating the two information technology services within the Fund under a single organizational structure.  The Secretariat had been commended for the consolidation of its information technology resources proposed for 2008-2009.  The Fund would be spending over $700,000 in 2007 to prepare for the proposed migration from its legacy information technology systems to an Enterprise Resource Plan (ERP).  A full Enterprise Resource Plan implementation strategy, including a budget and project plan, would be presented to the Board next year.

As reflected in the report, the working group had approved part of the Fund’s requests for posts, and agreed that it would be an opportune moment to consider a strategic approach to the human resource requirements of the Fund.  Accordingly, it had been proposed that the Chief Executive Officer of the Fund and the representative of the Secretary-General for investments would undertake an overall review of the staffing and organizational structure in their respective areas, including drawing on relevant industry benchmarks and best practices.  The report on the results of the review would be considered by the Board next year.

She added that, in April 2005, the Fund had relocated from the United Nations Secretariat building to its new premises at 1 Dag Hammarskjold Plaza.  Since then, the staffing requirements, which included the current submission before the Committee, had increased by 23 per cent, thus necessitating additional space.  Estimated costs for rental and renovation included provisions for that additional requirement in New York.  In addition, the creation of a new Client Servicing Unit in Geneva, additional staffing needs and a growing concern regarding accessibility to the Palais des Nations by the Fund’s growing client base, had resulted in a need to upgrade and relocate that office.  Good quality space had been located near the Palais des Nations within the current appropriation and that office had successfully completed its relocation in September.

Regarding the proposed measure to attenuate the adverse consequences arising from dollarization in Ecuador, she said it was important to note that the actuaries had agreed that, if it were limited to a one-time payment only to those affected since 1 January 2007 and before 30 June 2007, the eligible recipients would be a closed group and the parameters would, therefore, be defined so that the costs would be fully contained.  The estimated cost of such a one-time payment would amount to about $500,000, which would be met from the principal of the Fund.  The Board had specifically noted that the proposed payment would not serve as a precedent for any future action by the Board.

SHARON VAN BUERLE, Director of the Programme Planning and Budget Division, then introduced the Secretary-General’s report on the administrative and financial implications of the Pension Board’s decisions.

Introducing the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), its Chairman, RAJAT SAHA, said that, as of 1 January 2007, the International Organization for Migration (IOM) had joined the Fund, adding about 1,500 new participants.

He said the Advisory Committee noted that an ad hoc working group had been established by the Pension Board to review the revised budget estimate for 2006-2007 and the proposed estimates for 2008-2009 and to make recommendations to the Board.  ACABQ supported the recommendations of the Pension Board on the proposed staffing of the Fund.  As for the ad hoc, one-time, ex gratia payment to the retirees and other beneficiaries of the Fund who had been affected by the dollarization policy adopted in Ecuador, the Advisory Committee pointed out that it would create a precedent and that the Fund could be vulnerable to similar requests.  The payment would not be in conformity with the regulations of the Fund, particularly as regards the income replacement principle that had been consistently upheld by the International Civil Service Commission (ICSC) and General Assembly.  The Advisory Committee was of the opinion that it was a policy decision to be taken by the Assembly.

Statements

AHMED FAROOQ (Pakistan), speaking on behalf of the “Group of 77” developing countries and China, said he attached great importance to the work of the Joint Staff Pension Fund, which provided retirement, death, disability and related benefits for the United Nations staff and other organizations.  He welcomed the improvement in quality of the budget document and agreed with the proposed $150 million Fund budget, as well as the proposed staffing level for 2008-2009.  The Group believed each sanctioned post entailed specific assigned functions that were adversely affected if not filled in a timely manner.  He noted that the ACABQ had been informed that all 14 vacant posts in the Fund would be filled by the end of the year.  He concurred with the ACABQ observation that a well-qualified and experienced person needed to be selected for the post of Director of the Investment Management Service, given that the post would be entrusted with the management of a portfolio of over $40 billion.

Turning to the performance report of the Fund for 2006-2007, he said the revised estimate of $104.5 million for the period represented a reduction of $6.1 million, as compared to original estimates.  The Group supported the approval of the revised estimates, as proposed, and welcomed the efficiency gains made by the Fund.  Taking up the Board’s proposal to deal with the dollarization in Ecuador, the Group fully concurred with those proposals and was of the view that their approval would be a just and timely settlement of the issue.  Further, the Group was pleased to note that the market value of the Fund’s assets had increased from $36.3 billion in December 2006 to $41.2 billion in October 2007.  In that regard, he highlighted the importance of sound management and diversification in the investments of the Fund, especially in developing countries.  He hoped further reports of the Secretary-General would include information on those aspects of the Fund, including the comprehensive asset liability management study.

OLIVIO FERMÍN (Dominican Republic), speaking on behalf of the Rio Group, was concerned by the mandate of the General Assembly to the Pension Board in resolution 59/269, in that the Assembly had not adequately addressed effects of dollarization on retirees in Ecuador.  He noted that the report of the Pension Board had indicated that dollarization had had a negative impact on retirees and other beneficiaries in that country.  Regarding the recommendation in resolution 61/240 to come up with a viable ad hoc measure to adequately attenuate the adverse consequences arising from dollarization in Ecuador, he said that, although the proposed measure was not the best possible solution, Member States had come up with a proposal to issue a single payment limited to those affected from 1 January 2000 and prior to 30 June 2007.  The Rio Group was ready to approve the measure.

He would like more information on the investment flows of the Pension Fund that would involve developing policy on the Fund for the region, in alignment with efforts to diversify the investment Fund in all areas.  Through good asset management, there had been a 15.5 per cent increase in market value of the Fund’s assets.  He would like to see such increases maintained for the benefit of the staff of the United Nations.

BRUCE RASHKOW ( United States) applauded the decision of the Pension Board to appoint two external members to the Audit Committee.  With its 22 member organizations and 155,151 active participants and beneficiaries as of 31 December 2006, he commended the Fund for maintaining a sound actuarial situation.  He was encouraged that the market value of the Fund assets had increased by 16.45 per cent from $36.3 billion at the end of December 2006 to $42.274 billion as of 31 October 2007.  That was a remarkable figure and was evident of what could be accomplished through sound, long-term financial planning and strong management.

However, as the Fund grew in size and number, more stringent budget discipline had to be applied.  He noted that the Board reported under-expenditures for 2006-2007 in excess of $6 million, yet the Fund’s proposed budget for 2008-2009 represented a 28.6 per cent increase before recosting.  Further, although the Board reported 14 vacant posts as of 15 October 2007, it was requesting 25 additional posts for the upcoming biennium.  He agreed with the observations of the working group that the proposed increases in posts were poorly justified in terms of workload, functional need and organizational structure.  He believed that the Fund should fully and effectively utilize all allocated resources before requesting additional funding and personnel.

With the Fund’s continuing expansion in assets and participants, it was particularly important that effective oversight be a cornerstone of its operations, he continued.  He felt that the Office of Internal Oversight Services should establish a permanent presence in the Pension Fund.  Further, as pension funds of such size were a rarity, he believed it was essential that those auditing the Fund were “experts” in the appropriate fields.

Regarding the Board’s decision to seek authorization from the General Assembly for payment of an ad hoc, one-time, ex gratia payment to retirees and other beneficiaries of the Fund who had been “adversely” affected by dollarization in Ecuador, he said, contrary to the Board’s report, he agreed with the opinion of the Advisory Committee that it would create a bad precedent and leave the Fund vulnerable to similar requests in the future.  As the ACABQ pointed out, the one-time payment was not in conformity with the regulations of the United Nations Pension Fund and General Assembly resolutions and he thus wondered how the approved proposal could be considered a viable solution.

Regarding the assertion that the one-time payment had to be made out of humanitarian concerns, he was concerned about the well-being of all former employees and did not believe the situation of the 79 pensioners in Ecuador qualified as a “humanitarian concern”, noting that, according the World Bank, Ecuador’s gross national income per capita in 2006 was $2,840.  While he had not been informed of the amounts that the 79 pensioners received, given the understanding of the salaries that Professional staff members made and the generous manner in which pension benefits were calculated, those pensioners should be considered, from an economic point of view, as very well-off by any standard, including the standard of living in Ecuador.

It was worth noting that Professionals in the United Nations under the Noblemaire principle were paid according to the highest national standards and the pension benefits were tied directly to the salary they earned.  The argument that the one-time payment needed to be made of out of “humanitarian concern” was not justified.  Moreover, the Board’s proposed one-time payment would mark a departure from the income replacement concept in the Pension Fund regulations.  He placed great importance on the concept and saw no reason to establish a precedent that would undermine it.

Further, he said, the Fund’s “two-track” adjustment system was optional for participants.  He noted that all staff members had the responsibility to decide which track was appropriate to their circumstances.  In that regard, he noted that all 79 Ecuadorian pensioners elected the dollar track and benefited from receiving a dollar pension during the period preceding dollarization, which was market by tremendous volatility in the value of local currency.  As a matter of equity for Pension Fund participants and beneficiaries, he said it would be inappropriate for the General Assembly to authorize a special payment to those individuals.  Exceptional financial circumstances arose from time to time for individuals that might warrant the attention of the Board.  He was not convinced that the Ecuadorian pensioner situation should qualify for emergency fund distribution, but could see that individual cases might warrant a review.

MONICA SANCHEZ IZQUIERDO ( Ecuador) supported the position of the Group of 77 and said that in 1999-2000, her country had undergone the greatest financial crisis in its history.  The Ecuadorian Government had decided to formally adopt the official dollarization policy, as an emergency measure to deal with the situation.  Unfortunately, the process of dollarization had not gone hand in hand with measures to reduce the impact, including skyrocketing prices.  Inflation was placed under control only 4 years later, and the dollar had lost much of its purchasing power in Ecuador.  As a result, there had been a revision of salaries and pensions by the Government.  The private sector had done the same.  However, the pensions of United Nations retirees had not kept pace with the economic developments, because the Pension Fund did not have any measures for adjustment to offset the negative consequences.  Obviously, when the rules of the Fund had been established, no one could have anticipated the circumstances.

She said that, while the Assembly had adopted some decisions in consideration of exceptional cases in the past, “all sorts of reasons” had been presented to deny the Ecuadorian retirees the measures to mitigate the loss of their purchasing power.  In 2006, the General Assembly, in resolution 61/240, had asked the Pension Board to hold consultations to elaborate a viable measure to attenuate the adverse consequences of dollarization in Ecuador.  She hoped that finally, this year, 79 retirees in Ecuador would see a resolution of the problem, even if they had had to wait 8 years for a single exceptional payment to offset the difficulties they were facing.

ALEJANDRO TORRES LEPORI (Argentina) speaking also on behalf of Brazil, endorsed the position of the Group of 77 and Rio Group and the statement by the representative of Ecuador, who defended a fair claim.  He recognized the improvements in the quality of the Pension Fund’s budget report and asked if there had been any progress in hiring for 14 posts vacant since October, especially the investments manager post.  He was pleased that the International Organization for Migration had joined the Pension Fund in January 2007, in accordance with resolution 61/240.  However, that text contained other mandates, as well.  In particular, it had requested a viable ad hoc measure to attenuate the adverse impact of the dollarization in Ecuador.

The Pension Board had agreed in its recent report that dollarization had had adverse consequences for retirees and beneficiaries in Ecuador, he continued.  He was pleased that the Board had recommended a measure for a one-time exceptional payment in accordance with the Board’s suggestions.  It was not the best solution, but one that could obtain consensus in the Assembly.  Thus, Argentina and Brazil supported the proposed measure and called on Member States to conclude the discussion that had been going on for a number of years.

YASUO KISHIMOTO ( Japan) attached great importance to the pension system as a means of ensuring retirement, death, disability and related benefits for the staff of the United and other organizations.  He understood that the report on the administrative expenses of the United Nations Joint Staff Pension Fund for the biennium 2008-2009 was the result of the considered efforts of the Fund and the Pension Board to settle on an appropriate way to manage the increased assets of the Fund in a complex world economic market.

In the meantime, he said it went without saying that the assets of the Fund had to be safeguarded to meet future liabilities.  He shared the concern expressed by the ACABQ that ad hoc payment measures for retirees in Ecuador would create a precedent and leave the Fund open to similar requests in the future.  Payment measures of the Fund should not be influenced by the economic situation of each country, which was apart from the current adjustment methodology for the pension payment.  Therefore, he did not support the proposal for the ad hoc measures for retirees in Ecuador.

Other Reports

Ms. VAN BUERLE then introduced the rest of the Secretary-General’s reports before the Committee.

The Advisory Committee’s related reports were introduced by its Chairman.

Mr. HUSSAIN (Pakistan), speaking on behalf of the Group of 77, reaffirmed the Group’s strong support for the International Court of Justice and said he was pleased to note the supplementary agreement between the United Nations and Carnegie Foundation on the use of the Peace Palace at The Hague.  The Group hoped that the clarity on allocation of space occupied by the International Court of Justice and in the procedures for modifications of such space would help the Court in further adjustments.  The Group agreed with the amendments to the supplementary agreement and would take appropriate action with regard to the additional financial requirements in the context of the 2006-2007 and 2008-2009 budgets.

Turning to the construction of additional office facilities at the Economic Commission for Africa, he said that the additional resources requested were essential to address the additional requirements relating to safety and security, positioning of the elevators and the electrical work, design change and cost escalation.  The Group would like to emphasize the need for strict adherence to the project budget, as well as the timeline of 2010 for the completion of the project.  He hoped that the Commission would be able to accomplish the essential construction work with the approval of additional resources as requested by the Secretary-General.

Noting the report on the construction of additional facilities at the Vienna International Centre, he said the Group would like to take into consideration the information provided by the Secretary-General in the report in the context of budget section 32.  He also took note of the report on the financial situation of INSTRAW, expressing the Group’s deep appreciation to the Director and the Executive Board of the Institute for their efforts that had helped INSTRAW to secure sustainable financing.  The Group was satisfied that its support to the Institute had been well placed and helped it to achieve financial stability.  That was a welcome development for the Institute, as well as for the number of useful projects that it planned to carry out in the future.  He thanked the countries that had extended their voluntary contributions to enable the Institute to reach this stage.  Nevertheless, the Group would request that the Institute redouble its fund-raising efforts and ensure that voluntary pledges were delivered, so that INSTRAW never faced the difficulties it had encountered in the past.

Noting the request for the subvention to UNIDIR, he expressed the Group’s appreciation for the useful work carried out by the Institute, as well as the countries that had pledged their voluntary contributions to its activities.  He supported the approval of the total amount of $485,500 for UNIDIR from the regular budget for 2008-2009.  Given the clarity of the recommendations of the Advisory Committee, the Group hoped that the Fifth Committee would reach an early agreement on all those issues.

He also expressed the Group’s strong support for the activities of the UNCTAD-WTO Centre, with its focus on technical assistance for developing countries, including post-conflict countries and countries of Africa.

EDUARDO RAMOS(Portugal), speaking on behalf of the European Union, took up construction of additional facilities in Vienna, Addis Ababa and the Peace Palace at The Hague.  He expressed continued appreciation for the cooperation of the host Governments involved in these projects.  In particular, he expressed gratitude to Austria for bearing associated costs, noting its willingness to remove asbestos from the facility in Vienna.  He then thanked Addis Ababa for the contribution of the land for the construction project of the Economic Commission for Africa.  He was also grateful to the Netherlands for the maintenance of the Peace Palace at The Hague.  He welcomed the work of the Secretary-General and Carnegie Foundation for the maintenance of the space.

LUIS LITHGOW ( Dominican Republic), speaking on behalf of the Rio Group, endorsed the statement made on behalf of the Group of 77 and China.  He said INSTRAW was the only institute in the United Nations with the specific mandate to carry out research and training for gender equality and the empowerment of women.  Accordingly, he reaffirmed the importance of INSTRAW.  He was pleased to see that INSTRAW was moving forward with more stability, in spite of its financial situation over the years.  He recognized the work of INSTRAW’s staff to improve the visibility and its interaction with other Untied Nations bodies, as well as continued actions to secure sustained resources.  He also commended the work of the Executive Boards in eliciting the interest of Governments in the work of INSTRAW and the work on the strategic plan between 2008 and 2011.  He supported the revised work plan, which would encourage discussions on migration and development and financing for development.  He commended work on INSTRAW’s proposed budget for 2008-2009, saying it would allow the Institute to elicit funds from Member States and the private sector.  He supported the recommendations in the reports of ACABQ and the Secretary-General, regarding INSTRAW.

ABDELATIF DEBABECHE (Algeria), speaking on behalf of the African Group, supported the position of the Group of 77 and said that the construction of additional office facilities in Addis Ababa had been on the Assembly’s agenda for quite some time now, especially after the adoption of resolution 56/270.  It was a matter of concern that, while the Assembly was now at its sixty-second session, construction work was yet to start.  The Group, however, was pleased that the addendum to the host country agreement had now been signed.  He hoped that the rights and privileges granted to the Economic Commission for Africa by the addendum would speed up the project.  He also welcomed the collaborative efforts between Commission and local authorities in Addis Ababa on the construction of the alternative public access road.  The willingness of the municipal authorities for its timely construction was most welcome.  He hoped the matter would be resolved sooner than later, to allow commencement of work.

As in the case of the Capital Master Plan, the Group noted with concern that changes continued to be made on the Economic Commission for Africa project, he continued.  Such changes had inevitably entailed cost escalation.  Beside the changes, the Group further regretted that the project coordinator had been unable to join the Economic Commission for Africa until April 2007 (seven months after selection).  In addition to cost escalation, the project had been delayed and would now be completed in August 2010, instead of October 2009.  The Group concurred with ACABQ that “cost containment measures should be taken, so that the project does not entail further cost escalation”.

The Group also took note of the ongoing bidding exercise for the selection of a general contractor to be finalized in February 2008, he said.  According to the Secretary-General, construction would begin immediately thereafter.  He believed the selection should be done in line with existing procurement guidelines and welcomed the decision to hire a locally-based architect for the project.  Reliance on an international architect, who had coordinated the project from abroad, had been one of the contributing factors to the delay of the project.  The Group equally took note of the intention to appoint an independent surveyor to provide oversight for the project.  He hoped those processes would proceed without hindrance, and that construction would commence as envisaged.

He added that strengthening of security and safety of United Nations staff was of paramount importance and required proper budgeting.  The Group did not encourage funding of such an endeavour through existing resources.  In line with that, he welcomed the Secretary-General’s proposal to establish 25 posts in that area.  The ACABQ had recommended in favour of that proposal.  The African Group expressed its appreciation for the intention to reposition the Economic Commission for Africa.  The reforms would refocus the activities from the Commission’s headquarters to the region.  The repositioning would enhance the role of the Commission in strengthening coordination and collaboration among agencies.  The Group had observed that the reform of the Commission required additional posts and expected that resources for the reform would be favourably considered.

YOSEPH KASSAYE (Ethiopia), aligned with the statements made on behalf of the Group of 77 and China and the African Group, firmly believed that the timely completion of the construction work of additional office facilities at the Economic Commission for Africa headquarters in Addis Ababa would enable the Commission to further enhance its services in a more efficient manner.  Accordingly, as a host country of the Commission, Ethiopia had been taking every necessary measure to ensure that the construction of the office facilities would be completed, as scheduled.  In that regard, as clearly indicated in the Secretary-General’s report, the addendum to the host country agreement, which gave the Commission rights to the duty-free and tax-free import of services and materials, as well as other related privileges, had already been signed.  He was of the conviction that it would greatly assist the implementation of the project.

He took note of the concern, reflected in the Secretary-General’s report, regarding the timely construction of an alternate public access road by the Addis Ababa municipality.  He reassured the Committee that the municipality remained committed and would continue to collaborate with Economic Commission for Africa in actively pursuing the matter with a view to speeding up the timely construction of the road and the entire construction of the project.  He welcomed the decision to hire a locally-based architect for the construction phase, which would, indeed, be more cost-effective in facilitating the day-to-day management of the project.  He also appreciated the proposal to hire 25 additional security officers to provide security services to the construction site and other areas of the complex.  Concluding, he said his delegation was committed to completing the project by 2010.

Mr. RASHKOW ( United States) welcomed INSTRAW’s improved financial situation, in particular its projected ability to reimburse the full commitment authority of $557,800 authorized by the Assembly for the biennium 2006-2007.  In light of the serious financial situation facing INSTRAW earlier this year, it was reassuring that the Institute did not now require yet another subvention to conclude its work for the current calendar year, and that it would enter 2008 with a projected balance of $85,800 after the commitment authority had been reimbursed.  He commended the INSTRAW Executive Board for taking the necessary steps to place the Institute on a more stable financial basis, in particular the approval of a medium-term resource mobilization strategy for 2008-2009 to secure sustained resources to fund the Institute’s core activities.  It was imperative that the Board sustained its reinvigorated fund-raising activities and that it took responsible decisions to ensure that INSTRAW’s expenditures and operating budget coincided with income levels.

It was the responsibility of the Executive Board and Director to adjust the programme of work, should projected voluntary contributions fall short of expectations, he continued.  In that regard, his delegation harboured concerns about INSTRAW’s workplan and corresponding operational budget for 2008 of $1.54 million, as approved by the Executive Board, especially since the estimated income projections for 2008 of $1.49 million appeared overly optimistic.  However, he was encouraged to learn from the ACABQ report that the assured contributions for 2008 for core activities would likely be higher than the figures cited in the Secretary-General’s report.  That information, if confirmed by the Institute, would help to reduce his delegation’s concerns.  The United States encouraged the Assembly to welcome INSTRAW’s progress towards greater financial stability and reiterate its appeal to Member States to continue to provide voluntary contributions to support the Institute’s ongoing work.

UNIDIR also had the mandate to be funded through voluntary contributions, but, despite that mandate, it had been receiving subventions from the United Nations regular budget, he added.  The United States opposed the subvention and proposed that the Institute be entirely funded through voluntary contributions.  If UNIDIR’s work was worthwhile, Member States would support its work.  A system of voluntary contributions demonstrated that donors had enough confidence to be willing to back it financially.

Turning to the construction at the Economic Commission for Africa, he noted the delays, additional security and safety requirements and unforeseen escalation of costs over the initial budget request.  He expressed appreciation to the Government of Ethiopia for granting additional land for the project and said that it was necessary to actively pursue an agreement for the construction of an access road at no additional cost.  He also supported the Advisory Committee’s call for cost containment measures, so the cost of the construction did not escalate any further.  Cost containment, coupled with vigorous oversight and review, was needed to ensure the fiscal discipline of the project.

IVÁN ROMERO-MARTINEZ (Honduras), associating with the statements made by the Chairman of the ACABQ and on behalf of the Group of 77 and the Rio Group, said INSTRAW was established in accordance with Charter, as an international Institute to conduct training and research for women, to promote their integration and mobilization in development and to prepare women around the world to respond to new problems and issues.  Regarding the Executive Board, which was comprised of representatives from 10 countries with a firm commitment to the Institute, he said all of its members had an equal role in making decisions and have committed to transparency and responsibility.

He noted that the Executive Board had appointed and approved an Executive Officer in Addis Ababa to promote and establish projects in that region.  He also noted that the financial situation had improved gradually, and that, at the end of 2007, INSTRAW would be able to reimburse expenditures received through loans.  He urged all Members States to make voluntary contributions to the Institute as soon as possible and called attention to a pledging conference taking place today.  It was important that INSTRAW pursue its objectives.  Concluding, he thanked, on behalf of the Executive Board, all sectors that had supported INSTRAW.

Addressing INSTRAW’s financial situation, JUN YAMADA (Japan) recalled that, in the past, his delegation had underscored that the Institute should be funded by voluntary contributions, in accordance with its statute, and expressed reservations for the subventions, which undermined sound management and financial discipline practices.  As reported in the Secretary-General’s and ACABQ reports before the Committee, INSTRAW was now expected to complete the year with a projected balance of $643,600, of which $557,900 would be paid as reimbursement of the commitment authority provided by the Assembly, with a projected surplus in 2008.  He noted with appreciation the improved financial situation of the Institute and urged the Institute to maintain its sound financing practices.

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For information media • not an official record