Sixty-second General Assembly

Fifth Committee

39^th Meeting (AM)

CONTROLLER DESCRIBES ‘ENCOURAGING SIGNS OF PROGRESS’ IN UN FINANCIAL SITUATION,

SAYS 2008 OUTCOME DEPENDENT ON ACTION BY SMALL NUMBER OF COUNTRIES

Praises Member States That Have Fully Paid Assessments

To Regular Budget, Peacekeeping, Tribunals, Capital Master Plan

Presenting the financial situation of the United Nations to the Assembly’s Fifth Committee (Administrative and Budgetary) this morning, the Organization’s Controller, Warren Sach, pointed out some “encouraging signs of progress” this year, but warned that the final outcome for 2008 would depend in large measure on action by Member States that were carrying a significant level of debt to the United Nations.

As always, the financial health of the Organization depended on Member States meeting their financial obligations in full and on time, he said.  He was particularly heartened by the number of countries meeting their financial obligations to the Organization in full, but a significant level of outstanding assessments remained, with a few countries accounting for the bulk of those amounts.

Outlining the main indicators of the Organization’s financial health -- assessments issued, unpaid dues, available cash and debt to Member States -– he said that both assessments and payments had been higher in 2007 than in 2006, by $299 million and $259 million, respectively.  Unpaid assessments were up by $67 million, at $428 million on 31 December 2007, compared with $361 million at the end of 2006.

On a positive note, he said that 140 Member States had paid their regular budget assessments in full by the end of 2007.  As for the $428 million that remained outstanding at the end of 2007, 95 per cent of that amount was owed by just two Member States (United States and Argentina), with less than 5 per cent owed by the remaining 50 Member States.

A total of 86 Member States had paid their regular budget assessments in full by 7 May 2008, two more than the level achieved by 16 May 2006, he added.  Unpaid assessments were $72 million lower than a year earlier.  The breakdown of the $1.2 billion outstanding on 7 May showed that seven countries accounted for 97 per cent of the total, and just two countries ( United States and Japan) for over 85 per cent.  Clearly, the final outcome for 2008 would depend in large measure on action to be taken by those particular Member States.

Turning to peacekeeping, he underlined the unpredictable nature of the demand for peacekeeping activities, which made it very difficult to predict financial outcomes.  In addition, peacekeeping had a different financial period, running from 1 July to 30 June, rather than 1 January to 31 December.  Assessments were issued separately for each operation.  Since assessments can currently be issued only through the mandate period approved by the Security Council for each mission, they are issued for different periods throughout the year.

The total amount outstanding for peacekeeping operations at the end of 2007 had been over $2.7 billion -– about $0.8 billion more than the amount outstanding at the end of 2006.  That was mainly due to the expansion in peacekeeping and the related impact on assessments.  Approximately two thirds of the $2.7 billion outstanding was owed by two Member States ( United States and Japan).  Twenty-one Member States had paid all peacekeeping assessments due and payable on 31 December 2007.

Although cash available for peacekeeping at the end of 2007 had stood at over $2.1 billion, that was divided between separate mission accounts, and there were restrictions on the use of that cash -- the Assembly had specified that no peacekeeping mission could be financed by borrowing from other active missions.  The terms of reference of the Peacekeeping Reserve Fund restricted its use only to new operations and expansion of existing missions.  Some $1.48 billion of peacekeeping cash related to active missions; $564 million to closed missions; with $146 million available in the Reserve Fund.

The financial position of peacekeeping operations at 7 May 2008 showed some improvement, he continued.  New assessments of over $2.3 billion had been issued by that date, against which contributions of over $2.8 billion had been received, reducing the amount outstanding to under $2.3 billion.  In that context, he paid special tribute to 29 Member States that had paid all peacekeeping assessments due and payable on 7 May.  Based on available information, he expected total cash in peacekeeping accounts to amount to about $2 billion at the end of 2008, with $1.3 billion in the accounts of active missions, $521 million in closed missions’ accounts, and $156 million in the Reserve Fund.

Of the $521 million expected to be available in the accounts of closed missions, $304 million related to the amounts to be paid for outstanding liabilities, such as troop and equipment payments, and $6 million related to closed missions with overall cash deficits.  That left only $211 million freely available for possible cross-borrowing for other accounts.  Cross-borrowing from the accounts of closed missions had been required in 2007 for five active operations (United Nations Interim Administration Mission in Kosovo (UNMIK), United Nations Observer Mission in Georgia (UNOMIG), United Nations Mission for the Referendum in Western Sahara (MINURSO), United Nations Peacekeeping Force in Cyprus (UNFICYP) and the United Nations Stabilization Mission in Haiti (MINUSTAH)).

The amount owed for troops, police and contingent-owned equipment at 31 December 2007 was $779 million, reflecting a decrease from the $1 billion owed at the start of the year, he said.  New obligations were projected to increase in 2008, primarily reflecting the deployment of troops in the African Union-United Nations Hybrid Operation in Darfur (UNAMID).  By the end of 2008, it was projected that debt would go down to $728 million, based on the receipt of assessments continuing to improve during 2008, with $1.8 billion projected payments.  At 7 May, the amount owed had stood at $597 million, approximately half of it owed by seven Member States.

The financial position of the two international tribunals had improved in 2007 with outstanding assessments falling from $51 million at the end of 2006 to $34 million at the end of 2007.  The number of Member States paying their assessments for both courts in full by the end of 2007 was 105, compared with 99 at the end of 2006.  The situation in 2008 continued to show a modest improvement.  If recent positive trends continued, the tribunals should end the year with positive cash balances.  Once again, however, the actual outcome depended on Member States continuing to honour their financial obligations. 

Turning to the Capital Master Plan, he said that its total $1.8 billion budget had been approved by the Assembly on 22 December 2006.  While 12 Member States had opted for a one-time payment, 180 countries were under the multi-year payments system.  As of 7 May, 181 Member States had made payments totalling $696 million, with $150 million still outstanding.  In addition, a number of Member States, which had not opted for a one-time payment, had nevertheless made advance payments totalling $174 million.

In addition to the cost of the project, the Assembly had also approved the working capital reserve of $45 million, to be funded from the advances from Member States.  As of 7 May, 154 Member States had already made payments for the capital reserve, which totalled $44.9 million.  As of 7 May, 90 Member States had paid in full for the Capital Master Plan, while another 91 had made partial payments.  Regrettably, 11 Member States had not yet made any payments to the Plan and the amount outstanding was $150 million.

In conclusion, he paid special tribute to those Member States that had paid in full all their assessments for the regular budget, the tribunals, peacekeeping and the Capital Master Plan as at 7 May 2008:  Andorra, Australia, Austria, Azerbaijan, Brazil, Canada, Cuba, Czech Republic, Finland, France, Guatemala, Iceland, Italy, Liechtenstein, Luxembourg, Monaco, New Zealand, Norway, Papua New Guinea, Samoa, Singapore, South Africa, Sweden, Switzerland and the United Kingdom.  A payment had also been received yesterday from Denmark for its contribution to the Capital Master Plan, making it possible to add it to the list of countries that had paid all their assessments in full.

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