Sixty-second General Assembly

Fifth Committee

42^nd Meeting (AM)

DELEGATES VOICE CONCERN OVER CONTINUING FRAGILITY OF UNITED NATIONS FUNDING

AS FIFTH COMMITTEE CONSIDERS IMPROVING ORGANIZATION’S FINANCIAL SITUATION

Speakers Note Shortfalls in Regular, Peacekeeping, Capital Master Plan Budgets

Expressing their continuing concern that the overall financial situation of the United Nations remained weak, speakers in the Fifth Committee this morning stressed the need for all Member States to meet their assessed financial obligations to the Organization in full, on time and without conditions, so as to enable it to fulfil its mandates.

While welcoming the signs of improvement in the Organization’s financial situation in 2008 as compared to last year, Committee members expressed concern that the share of unpaid assessments had increased slightly and that 52 Member States owed the United Nations a total of $428 million, with two Member States accounting for more than 95 per cent of that debt.

Singapore’s representative said late and non-payment by major contributors was the real reason for the Organization’s financial difficulties.  Their failure had led the Secretariat to seek innovative means to keep the cash flowing, including the consolidation of peacekeeping accounts and the withholding of monies to Member States in closed peacekeeping operations.  The solution to the Organization’s financial situation was simple: Member States must pay their assessed contributions in full, on time and without conditions.

Speaking on behalf of the “Group of 77” developing countries and China, the representative of Antigua and Barbuda stressed that full and timely payment of assessed contributions was a Charter obligation that was imperative for the predictability of the Organization’s financial resources.  Regrettably, the United Nations would have to depend on borrowing from the reserve account and closed peacekeeping mission accounts to continue its business, due mainly to the large outstanding payment owed by one Member State.  The Group of 77 and China reiterated its opposition to cross-borrowing among peacekeeping operations, since cash surpluses in any peacekeeping mission should be spent on outstanding liabilities, such as reimbursements for troops and equipment, or be returned to individual Member States.

Slovenia’s representative, speaking on behalf of the European Union, warned that the United Nations could only perform its challenging and ever increasing tasks when Member States accepted their responsibility to pay in full, on time and without conditions.  A significant level of outstanding assessments reminded Member States to take their obligations to the Organization seriously.  At the same time, the European Union expected the Secretariat to use resources in the most accountable, efficient and effective manner.

New Zealand’s representative, who also spoke on behalf of Canada and Australia, said it was unacceptable that a number of Member States regularly failed to meet their financial obligations to the Organization even as the United Nations was asked to do more and the regular and peacekeeping budgets reached record levels.  The United Nations membership must break the cycle of under- and non-payment, which put at risk the implementation of established mandates and penalized both fully paid-up Member States and troop-contributing countries that were left waiting for the reimbursement of costs they had already incurred.

Cuba’s representative said it was most troubling that the country hosting United Nations Headquarters was responsible for 90.7 per cent of the arrears owed to the Capital Master Plan, another demonstration of a lack of commitment to the United Nations on the part of the United States.  As of 7 May 2008, that country had owed 83.7 per cent of the arrears to the regular budget, representing an increase of over 10 per cent compared with the previous year.  In contrast, Cuba had continued to demonstrate its true commitment to the Organization by paying its dues year after year, despite the enormous difficulties it experienced as a result of the four-decade-old embargo imposed against it by the United States.

Other speakers today were the representatives of Mexico (on behalf of the Rio Group), Republic of Korea, Bangladesh, Russian Federation and Venezuela.

At the outset of the meeting, United Nations Controller Warren Sach provided the Committee with an update on the status of contributions to the United Nations.

The Committee will meet again at 10 a.m. on Wednesday, 21 May, to take up reports on the United Nations Integrated Mission in Timor-Leste and the United Nations Mission in Liberia.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to take up its agenda item on improving the financial situation of the United Nations, which was presented on 9 May by the United Nations Controller.

Statements

WARREN SACH, United Nations Controller, said that Antigua and Barbuda, Benin and Denmark had paid all their dues since the 7 May cut-off date, joining the 25 other Member States in that position.  In addition, Colombia, Ireland and Israel had also paid in full all their assessed contributions that were currently due and payable.  Consequently, a total of 31 Member States had paid all assessed contributions currently due and payable in full.

He added that, subsequent to the cut-off date, Bosnia and Herzegovina had paid fully its assessed contributions with respect to the Capital Master Plan and the tribunals; Democratic People’s Republic of Korea with respect to the Capital Master Plan; Georgia with respect to peacekeeping operations; Ghana with respect to the Capital Master Plan; Jamaica with respect to the regular budget; Nepal with regard to the regular budget and the Capital Master Plan; and Yemen with respect to the regular budget.

GLENTIS THOMAS (Antigua and Barbuda), speaking on behalf of the “Group of 77” developing countries and China, said the full and on-time payment of assessed contributions to the United Nations budgets was a Charter obligation.  It was imperative for the predictability of the Organization’s financial resources and to ensure effective implementation of all legislative mandates.  The Group of 77 regretted that the overall financial situation of the United Nations remained weak, a recurring pattern seen over the last few years.  There had been no major improvement in the payment of assessed contributions since last year, and the Organization would have to depend on borrowing from the reserve account as well as closed peacekeeping mission accounts to continue its business.

That situation was due mainly to the large outstanding payment by one Member State, he said, reiterating the need to resolve that systemic problem permanently.  The negative implications of persistent non-payment of assessments must be taken seriously by concerned Member States.  The Group of 77 reiterated also its opposition to cross-borrowing among peacekeeping operations as cash surpluses in any peacekeeping mission should, preferably, be utilized for outstanding liabilities such as troop and equipment payments, or be returned to individual Member States.  The Group was concerned over the outstanding $597 million in debt owed to Member States for providing troops and equipment to peacekeeping operations.

Despite some improvements in the payment of those debts, the overall picture remained grim, he continued.  Late payment to troop contributors was of particular concern to the Group of 77, because most troop and equipment contributors were developing countries that were not in a position to sustain their troops and maintain their equipment indefinitely on their own.  The Group understood that the principal reason for late reimbursement was delays in the payment of contributions and hoped that payments by the major contributors, critical for the Organization’s financial stability, would be made in full, on time and without conditions.

MATEJA BIZILJ ( Slovenia), speaking on behalf of the European Union and associated States, said the recent presentation had shown some signs of improvement, but there were still reasons for concern.  The position of the regular budget for 2007 had not improved, compared with 2006.  As of 31 December 2007, one more Member State had paid its regular budget assessments in full -- 140 paid-up assessments compared to 139 in 2006.  However, the share of unpaid assessments had increased slightly.  That left 52 Member States owing a total of $428 million, with over 95 per cent of that owed by two Member States.

Noting that peacekeeping had a different financial period from other accounts, she said assessments were issued separately for each operation and for different periods throughout the year.  The financial situation of peacekeeping operations at the end of 2007 had been better than a year before, with the share of unpaid assessments decreasing substantially, from 54.8 per cent in 2006 to 39.2 per cent in 2007.  The situation on 7 May 2008 showed further improvement.  At the same time, an amount of $2.3 billion was still outstanding.

Appealing to all Member States to continue the positive trend and pay their assessments in order to enable effective implementation of peacekeeping mandates, she stressed that timely and unconditional payments would allow timely reimbursements to troop contributors.  The European Union wished to reiterate, in that context, that the balance of any funds in the accounts of closed missions should be returned to Member States.  Continued retention of funds was not acceptable.

She said the financial situation of international tribunals was improving, and expressed appreciation for payments made by 67 Member States amounting to $198 million so far for 2008.  The European Union stressed also the importance of the Capital Master Plan, on which the Committee had spent much time and effort to decide.  All Member States were expected to pay their assessments to enable the implementation of the Plan according to schedule.  With an amount outstanding at $150 million, all Member States should pay their assessments in full and on time.

In conclusion, she said the United Nations could only perform its ever increasing and challenging tasks when Member States accepted their responsibility to pay in full, on time and without conditions.  A significant level of outstanding assessments reminded Member States to take their obligations to the Organization seriously.  At the same time, the European Union expected the Secretariat to use resources in the most accountable, efficient and effective manner.

CARLOS RUIZ MASSIEU ( Mexico), speaking on behalf of the Rio Group, underlined that the United Nations stable financial situation was essential to implementation of all mandates.  Every Member State must fulfil its obligations on time.  While the Rio Group acknowledged the increased number, size and costs of peacekeeping operations, as well as their sometimes unpredictable nature and different financial period from the regular budget, it was concerned that unpaid peacekeeping contributions had almost doubled compared to 2006.  In addition, the situation of reimbursement for troops and contingent-owned equipment was still unsatisfactory.  All States were urged to fulfil their peacekeeping commitments in a timely manner in order to allow the Organization to carry out one of its main functions in an effective and efficient way.

Turning to the Capital Master Plan, he encouraged all Member States to continue to support that project, so it could be implemented within the established time frame.  The Rio Group was pleased that 90 Member States had paid their assessments by now and wished to acknowledge the States that had paid all their assessments in full, including several from its region.  For other countries in that region, the delay in payments was caused mainly by domestic budgetary difficulties and the urgency of social needs that required priority attention.  In other cases, the countries of the Group had been able to pay their dues in full, though not without sacrifice.  All Member States had the obligation to defray all expenses of the United Nations, without exception, in the proportion determined by the General Assembly and in accordance with the United Nations Charter.

PHILLIP TAULA (New Zealand), speaking also on behalf of Canada and Australia, stressed the need for all Member States to fulfil their Charter obligations to pay assessed contributions in full, on time and without preconditions.  It was unacceptable that a number of Member States regularly failed to meet those obligations even as the United Nations was asked to do more and the regular and peacekeeping budgets reached record levels.  It was necessary to ensure that the Organization’s programme of work was organized and implemented as effectively and as efficiently as possible.  Ways should continually be sought to eliminate waste and duplication, rationalize activities, redeploy resources and streamline the administration of the United Nations.

He said that, while CANZ ( Canada, Australia and New Zealand) understood that Governments might find it difficult to fulfil each and every one of their financial obligations, all Governments were under that pressure.  The United Nations membership needed to break the cycle of underpayment and non-payment that put at risk the implementation of established mandates and penalized both Member States that had paid in full and on time, and troop-contributing countries that were left waiting for reimbursement of the costs they had incurred.

HOE YEEN TECK ( Singapore) said that, as the Organization approached the third anniversary of the 2005 World Summit, United Nations finances remained weak.  While the amount owed by Member States had decreased from $1.3 billion to $1.2 billion, the amount owed to the peacekeeping budget had ballooned from $1.9 billion to $2.7 billion.  One reason for that was the addition of two of the largest peacekeeping operations in United Nations history.  The situation was similar in respect of the tribunals and the Capital Master Plan.

Noting that his delegation had repeatedly stated that those financial “difficulties” were avoidable, he said he understood that some countries faced genuine problems in paying their assessments, but those countries did not account for a large proportion of the budget.  The real reason for the situation was late and non-payment by major contributors.  Their failure had led the Secretariat to seek innovative means to keep the cash flowing, such as the consolidation of peacekeeping accounts and the withholding of monies to Member States from closed peacekeeping operations.  The solution was simple: Member States should pay in full, on time and without conditions.  That was a Charter obligation and the agreed condition for membership in the United Nations.

Of course, timely payment was only one aspect of financial management, he continued.  While Member States had every right to demand that the Secretariat be accountable and use resources efficiently and effectively, the practice by certain Member States of withholding contributions was not the right approach.  Doing so undermined the commitment they had undertaken when joining the United Nations.  “In the end, we have to ask ourselves if we want a UN that is effective, or one that is hobbled by self-inflicted financial weakness,” he said.

KIM BONG-HYUN ( Republic of Korea) welcomed the improved financial situation of the United Nations in 2008, saying it was essential that Member States and the Secretariat exert efforts to strengthen the Organization’s financial capability.  The whole budgeting process, including assessment and payment of contributions, should serve as a tool to build and fortify mutual trust among Member States, and between Member States and the Secretariat.  The nature of mutual accountability deserved a great deal of attention given the rapid increase in the budget.

He said that while there had been no instance of delayed payment by a Member State severely crippling the Organization’s functioning, timely payment was required in order to provide the Secretariat with financial and human resources.  It was advisable for the Secretariat to understand that Member States had to consider the needs of their domestic audiences, who expected budget appropriations to be systematic and sustainable for the long term.  If those taxpayers were confident that the budgetary projects of the United Nations were well planned and implemented efficiently, they would pay their assessed contributions more willingly and in a timely manner.

Unfortunately, there had been many cases that had led to over-assessment in the peacekeeping operations budget, he said.  The Republic of Korea regretted that the Secretariat had issued the report requesting additional financial requirements to finance costs associated with the Capital Master Plan, despite Member States having urged the Secretary-General to absorb such costs within the approved budget for the project.  The Secretariat must redouble its efforts to prevent over-assessments by making planning more accurate and to reduce the budgetary burden on Member States by accommodating additional financial requirements within approved budgets to the extent possible.

MUHAMMAD MUHITH ( Bangladesh) said his delegation found little reason to be complacent about the slight improvement in the financial situation of the United Nations.  The fragility was so evident that the Organization had no other option but to depend heavily on the payment of overdue assessments.  Bangladesh, which had been paying its dues on time and in full, was distressed by the fact that, as at 31 December 2007, the outstanding amount for the regular budget had stood at $428 million, $67 million higher than in 2006.  Although the situation with regard to the tribunals and the Capital Master Plan showed modest improvements, the outstanding amounts remained at $34 million as at 31 December 2007 and $150 million as at 7 may 2008.  That was not very encouraging.

As for the peacekeeping budget, he said that, although the Controller had described the $2.3 billion in unpaid assessments as at 7 May 2008 as a sign of some improvement, it was a cause of concern.  It was equally disturbing that, as at the same date, the amount owed to troop- and police-contributing countries stood at $597 million.  The projected debt by the end of the year was likely to reach $728 million.  Sufficient funding of peacekeeping operations was directly contingent upon the ability and credibility of the Organization in resolving conflicts and maintaining peace and security across the globe.  In the same vein, countries contributing personnel and equipment, despite many predicaments, should not be penalized for their commitment to United Nations ideals.

As in the past, he said, Bangladesh reiterated its reservations about the unhealthy practice of cross-borrowing from the peacekeeping budget for other accounts, including the regular budget and the tribunals, as that contributed to the delay in reimbursing troop and police contributors.  The issues of closed peacekeeping operations and consolidation of peacekeeping accounts, now under consideration by the Fifth Committee, might not yield a fruitful outcome in light of unpaid contributions.  Member States should pay their dues in full and on time to provide the United Nations with a strong and dependable basis for effective delivery.

YURI V. SPIRIN ( Russian Federation) noted that the Controller’s presentation indicated an improvement in the financial situation of the Organization compared to last year.  Unpaid assessments as of 7 May were $72 million less than a year before, while unpaid peacekeeping assessments had gone down by $425 million.  Another positive piece of information was the rise in the number of Member States that had paid their assessments in full to the various budgets.  However, it was a matter of concern that the bulk of the unpaid financial obligations were still attributable to a small group of Member States.  The Russian Federation was also concerned that a number of Member States had not made any payment to the Capital Master Plan and that the amount of unpaid assessments for that project stood at $150 million.

However, the Russian Federation was pleased to note the reduction in the Organization’s debt to Member States contributing troops to peacekeeping operations, he said.  But a final solution to the Organization’s financial situation was still a long way off and failure to address it could lead to significant liability for the United Nations.  While Member States should demand realistic assessments, the Russian Federation’s position remained unchanged, and was the same as that of many other delegations -- the only way to ensure a more stable financial basis for the United Nations was through the full and timely payment by Member States of their obligations to the Organization.

SAMER S. ALOUAN KANAFANI (Venezuela), associating himself with the Group of 77 and the Rio Group, said assessed contributions could be compared to the taxes paid by the citizens of Member States.  The Charter stated that the Organization’s expenses should be borne by the Member States, which meant they should fulfil their obligations in full and on time.  While some countries had difficulties in paying their contributions owing to domestic financial problems, that did not apply to countries that enjoyed an enviable economic status and still failed to meet their obligations.  That situation had led Venezuela to wonder whether the bad practice of delaying payments was not a rather perverse instrument used by some countries to exert pressure on the United Nations.  Those countries should fulfil their obligations in order to ensure the Organization’s functioning.

PABLO BERTI OLIVA ( Cuba) said he viewed with concern the picture presented by the Controller.  Despite a certain improvement, the situation was still complicated, with the financial well-being of the United Nations dependent on the financial contributions of a small group of countries.  That demonstrated the uncertainty and unpredictability of the Organization’s financing.  Clearly, all Member States must fulfil their obligations in that respect.

While it was important to take into account the special circumstances of some countries, due to economic difficulties beyond their control, it was the main contributor that continued to be the main debtor to the United Nations.  As of 7 May 2008, that country owed 83.7 per cent of the arrears to the regular budget, representing an increase of more than 10 per cent compared with the previous year, which, in fact, represented a deterioration of the situation, particularly considering that the assessments were lower.  Neither was the situation with the tribunals and peacekeeping operations something of which that country could be proud.

The most troubling thing was that the country hosting the United Nations Headquarters owed 90.7 per cent of the arrears to the Capital Master Plan, he said, describing the situation as yet another demonstration of a lack of commitment to the United Nations on the part of the United States.  For its part, Cuba had continued to demonstrate its true commitment to the Organization year after year, by paying its dues despite the enormous difficulties it experienced as a result of the four-decade-old blockade imposed against it by the United States.  Cuba also faced difficulties arising from the use of the United States dollar in international transactions, including payments to the United Nations.

That resulted in serious financial fluctuations which compounded Cuba’s difficulties in carrying out its transactions through a third country, he said, adding that, despite an apparent improvement in the budgetary calculations, a number of troop contributors from developing countries were still not reimbursed on time.  Cuba called for corrective measures to stop that “vicious cycle” and for a substantive debate or resolution on that issue.  Member States’ political support to the United Nations must be expressed in compliance with the obligation to contribute to the financing of the Organization.

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For information media • not an official record