Sixty-third General Assembly

Fifth Committee

15^th Meeting (AM)

FIFTH COMMITTEE SPEAKERS STRESS NEED FOR ADEQUATE, PREDICTABLE UNITED NATIONS

FINANCING; FULL, TIMELY, UNCONDITIONAL PAYMENT OF ASSESSED CONTRIBUTIONS

Also Warn of Impacting Global Financial Crisis

On Member States’ Ability to Pay, Organization’s Ability to Carry Out Mandate

While emphasizing the importance of adequate and predictable financing for the implementation of United Nations mandates, several speakers in the Fifth Committee (Administrative and Budgetary) this morning also drew attention to the impact of the current global financial crisis on both Member States’ ability to pay and the Organization’s ability to carry out its activities.

As the Committee considered the financial situation of the United Nations, speaker after speaker emphasized that full, timely and unconditional payment of assessed contributions by Member States was imperative for the predictability of the Organization’s financial resources, which was, in turn, indispensable for the implementation of legislative mandates.  Many delegates also expressed concern that, out of the $756 million that remained outstanding, 94 per cent was owed by the main contributor, the United States.

The representative of Antigua and Barbuda, who spoke on behalf of the “Group of 77” developing countries and China, was among the speakers who noted the “grim situation with regard to the regular budget”, which might result in a cash shortage by the end of the year, mainly due to large outstanding payments of one State.  That problem needed to be resolved permanently.

Pakistan’s representative said that it was truly a sad state of affairs that the Committee’s biannual debate on the financial health of the United Nations had no tangible outcome in the form of a decision or resolution.  The time had come to consider instituting a definite follow-up mechanism for that agenda item.

Japan’s representative expressed concern that the cash balance of the United Nations would worsen at the end of the year, with possible borrowing of $148 million from reserve accounts, as well as large amounts of “add-ons” to the regular budget that had been proposed by the Secretariat.  Moreover, with the world economy facing major difficulties, additional financial strains would be imposed on Member States.  Under the circumstances, the United Nations could not carry on with business as usual, but should make every effort to keep its programme budget affordable for Member States.  He also emphasized the importance of maintaining budgetary discipline, absorbing additional costs within existing resources, and keeping add-ons to a minimum.

The representative of Mauritius, speaking on behalf of the African Group, insisted that no effort should be spared to redress the world’s food, fuel and financial crises, which could affect the ability of developing countries to meet their obligations to the United Nations.

The “honour roll” of the countries that had paid all their dues in full as of the end of October contained a noteworthy number of 31 countries -- a marked improvement, said the representative of Australia, also on behalf of Canada and New Zealand.  He saw merit in highlighting the composition of that list, which included both developed and developing countries, and countries from all but one continent.  He looked forward to the day when the “honour roll” was no longer necessary, because all Member States had paid in full, on time and without conditions.  Until that day, however, he urged every Member State to aspire for inclusion on that list.

Speakers also expressed serious concern over the high level of the peacekeeping budget, which Japan estimated at $6.6 billion this year, as well as the $2.9 billion in unpaid peacekeeping assessments.

Mexico’s representative, speaking on behalf of the Rio Group, said that the proliferation of operations and their magnitude had a direct impact on the increase in costs.  Given their unpredictable nature and financial cycle that differed from the regular budget, it was harder to determine their evolution.  That was reflected in the fact that this year the cross-borrowing requirements between missions had more than doubled with respect to the previous year, reaching $117 million.

Many speakers were also disturbed by delays in reimbursements to the contributors of troops and equipment, with Pakistan’s representative saying that his country was owed $55 million -- the largest sum currently owed by the United Nations to any Member State.

Presenting the developments since the financial presentation by the Under-Secretary-General for Management last week, the United Nations Controller, Yun Yamazaki, informed the Committee that $216 million had been paid by the United States to the regular budget.  The United States said that his country’s late payments were a result of a process that was out of sync with the United Nations budget cycle.  The country was working hard to make payments of several hundred millions by the end of the year.  The Under-Secretary-General for Management had indicated that the financial situation of the Organization was expected to show improvement by the end of 2008, and he hoped United States payments would provide an additional improvement in that regard.

Also this morning, the Committee took up the operations of the United Nations Office for Partnerships and the statistical report of the United Nations System Chief Executives Board for Coordination on the budgetary and financial situation of the organizations of the United Nations system.

Also speaking this morning were representatives of France (on behalf of the European Union), Philippines (on behalf of the Association of South-East Asian Nations (ASEAN)), Malaysia, Republic of Korea, Singapore, Cuba, India, Syria, Venezuela, Nicaragua, Russian Federation and Argentina.

Documents before the Committee were introduced by Amir Dossal, Executive Director of the United Nations Office for Partnerships, and Remo Lalli, Secretary of the High-Level Committee on Management, via videoconferencing.

The Committee will take up appointments to fill vacancies in subsidiary and other organs at 10 a.m. Friday, 7 November.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to discuss the financial situation of the United Nations, as presented to the delegates by Under-Secretary-General for Management Angela Kane, on 28 October (see Press Release GA/AB/3873).

The Committee was also expected to discuss the United Nations Fund for International Partnerships (UNFIP) in the context of the 2008-2009 programme budget, as well as administrative and budgetary coordination relating to the United Nations, its specialized agencies and the International Atomic Energy Agency (IAEA).

The Committee had before it the Secretary-General’s second annual progress report on the United Nations Office for Partnerships (document A/63/257), which serves the Organization in three integrated areas:  as the gateway and facilitator for new alliances and partnerships with non-State actors; as high-level interface with the United Nations Foundation through UNFIP management of grants and related activities; and through the United Nations Democracy Fund, for promoting and strengthening democracy throughout the world in partnership with civil society.

The United Nations Office for Partnerships complements partnerships fostered by the United Nations Foundation by providing advisory services and outreach to the United Nations system, the private sector, foundations, non-governmental organizations, academic institutions and philanthropists.  The United Nations Foundation, originally established to channel a gift of $1 billion by Robert Edward Turner for United Nations causes, aims to leverage the remaining $350 million of those funds to mobilize an additional $1 billion from United Nations partners.  The Foundation, UNFIP and, by extension, the United Nations Office for Partnerships continue to collaborate on innovative ways to mobilize resources for United Nations causes and address global problems through public-private partnerships.

To date, the partnership between the United Nations Foundation and UNFIP has resulted in net additional resources to the Organization of approximately $1.03 billion, out of which $405.6 million represent core Turner funds, and $597.4 million, approximately 58 per cent, have been generated by other partners.  More than 400 projects have been implemented by 39 United Nations entities in 123 countries.  UNFIP supports projects focused on: children’s health; women and population; the environment; and peace, security and human rights.

As a result of that success, the United Nations Democracy Fund was established at the 2005 World Summit.  The Fund, launched in April 2006 with a focus on supporting democratic institutions, promoting human rights and ensuring all groups’ participation in democratic processes, funded the first round of 125 projects, for a total amount of $35 million, at the beginning of 2007.  In November 2007, it launched its second round of projects and received 1,873 applications from 137 countries, representing an increase of 44 per cent over the number of applications submitted in the first round.  One third of those applications came from sub-Saharan Africa, followed by applications from the Asia-Pacific region, and Latin America and the Caribbean.

Cooperation between the United Nations and non-State actors is driven by a recognition that many of the world’s problems are too complex for any one sector to face alone.  The United Nations Office for Partnerships’ successful mobilization of resources through partnership activities has resulted, to date, in net additional resources to the United Nations system of over $1 billion.  Moreover, the Office has seen increased demand for its partnership advisory services, receiving over 700 such requests in 2007.

The United Nations Office for Partnerships intends to enhance its partnership advisory services by:  working to strengthen existing partnerships; identifying and developing new partnership opportunities; and exploring ways to increase the capacity and efficiencies of the Office, especially by creating a more user-friendly data management system.  There is a need to formalize the Office’s vast databases of partnerships and contacts, and to make them accessible to all United Nations entities.  The comprehensive database will include good practices in the areas of negotiating agreements, financial management, advocacy, risk assessment and implementation of guidelines on cooperation with the business sector.

In a note on the budgetary and financial situation of the organizations of the United Nations system (document A/63/185), the Secretary-General transmits to the General Assembly the statistical report of the United Nations System Chief Executives Board for Coordination (CEB) on the matter.  It is the only system-wide report on these statistics.  All tables and data published in the document, including some analysis of the figures presented, a number of charts on trends across recent years, and snapshots on the distribution of extra budgetary resources by country and by organization, are available on the website of the CEB secretariat (www.unsystemceb.org/).

The format and content of the tables have been revised and improved, from the previous report (documents A/61/203 and Corr.1), based on comments and suggestions of the Fifth Committee during the presentation of the last report in November 2006 and following extensive consultations within the CEB High-Level Committee on Management.  In particular, the tables on extrabudgetary resources have been expanded to provide a complete picture of the resources available to the organizations of the United Nations system from all sources.

Statements

JUN YAMAZAKI, Controller, said that, since he last reported, Angola had fully paid its assessments, joining the 31 other States in that position.  Jordan and Peru had paid their regular budget contributions, and the United Arab Emirates their assessments for the Tribunals.  The final situation for 2008 depended on action taken actions by other Member States before the end of the year.

There were arrears of $756 million for the regular budget and $2.9 billion for peacekeeping operations, he continued.  In that context, $216 million had been paid by the United States, and peacekeeping payments of $84 million had been made by China, since he last reported.

GREGORY CAZALET ( France), speaking on behalf of the European Union, said the Union remained committed to timely payments without conditions.  The Union was further committed to maintaining budgetary discipline and noted favourably that seven more Member States than at last reporting were now current.  He emphasized that a single Member State was largely responsible for the arrears.

He further reaffirmed the European Union’s commitment to timely and unconditional payments for peacekeeping operations, and noted that the situations of the International Tribunals for Rwanda and the former Yugoslavia were in a better position and were expecting a reduction in their future budgets, and that the Capital Master Plan was also in good financial shape.

Overall, he said, major indicators showed a mixed financial situation for the Organization.  The United Nations could only carry out its mission if contributions were paid in full.  In closing, he said that the European Union, which represented some 40 per cent of total contributions, would continue to promote a transparent and efficient use of resources.

CONRAD HUNTE (Antigua and Barbuda), speaking on behalf of the “Group of 77” developing countries and China, stressed that full and timely payment of assessed contributions to the United Nations was a Charter obligation, that was imperative for the predictability of financial resources to the Organization and to ensure effective implementation of all legislative mandates.  He noted the grim situation with regard to the regular budget that might result in a cash shortage by the end of the year.  That was mainly due to the large outstanding payments of one Member State.  He said that the problem needed to be resolved permanently.

He further noted that outstanding payments for peacekeeping operations had increased as compared to the end of December 2007 and said that it should be possible for all Member States to settle unpaid assessments within a certain time period.  The negative implications of persistent non-payment should be taken seriously by Member States.  He reiterated the Group’s opposition to cross-borrowing among peacekeeping operations.  Cash surpluses in any peacekeeping mission should be utilized for outstanding liabilities, such as payments for troops and equipment, or returned to individual Member States, he said.

Debt to Member States contributing troops and equipment to peacekeeping operations had decreased, he continued.  The projected amount owed by the Organization was $645 million at December 2008, compared to $779 million at the end of last year.  That was insufficient to fundamentally improve the situation for troop contributors, as it made it difficult for countries to sustain their troops and maintain equipment, especially as most of those contributions came from developing countries who were not in a position to do so on their own.

Noting developments with regard to the financial situation of the international Tribunals, he said that one Member State accounted for 85 per cent of the total arrears.  Thus, any substantial improvement in the Organization’s position would depend on action to be taken by one Member State.  On the Capital Master plan, he said that, while 120 Members had fully paid their assessed contribution, he urged the Secretary-General to ensure full and effective implementation of past and future resolutions on that project.

The Group was committed to providing the Organization with sufficient resources to meet the mandates bestowed upon it, as well as its share of additional resources needed to finance critical activities and reforms in 2009, in particular those for strengthening the development pillar of the Secretariat.  That was especially applicable to Member States with the capacity to pay their arrears and ensure the financial stability of the United Nations.  He urged States with unpaid assessments to settle them as soon as possible, especially those with the capacity to pay.  He further extended sympathetic understanding to Member States unable to meet their obligations due to social and economic conditions beyond their control.

JAYSEN K. RAMASAMY (Mauritius), speaking on behalf of the African Group, associated himself with the position of the Group of 77 and said that the cash and debt to Member States were mixed, owing to the borrowing from the Organization’s reserve and other sources to finance the regular budget activities.  The Group believed that there was a need to put the United Nations on a stable and sustainable financial basis.  There was undeniably a need to improve the financial situation of the Organization.  The Group was concerned that assessments and payments for the budget were both lower in October 2008 than in October 2007.  He took note that unpaid dues in October this year were $756 million, which represented a decrease of $80 million, compared to 2007.  He was encouraged that 133 Member States had paid their regular assessments in full by 24 October, but was concerned that, out of the $756 million that remained outstanding, 94 per cent was owed by a single Member State, the main contributor.  He was concerned that the implementation of the Organization’s programme and mandates was at a high risk.

The Group also remained concerned over the unpredictable nature of the demand for peacekeeping, which made it difficult to predict financial outcomes, he continued.  He was mindful that peacekeeping had a different financial period, running from 1 July to 30 June each year.  The Group was alarmed that the total outstanding amount for peacekeeping as at 24 October had been over $2.9 billion.  He was worried that, as with the regular budget, the unpaid portion of assessments was highly concentrated, with 62 per cent of the total from just two Member States, including the main contributor, and 21 per cent from four other States.  The implementation of various activities of the Organization could be put at risk.

The Group highly valued the work of the international Tribunals and was encouraged that their financial position remained “relatively acceptable” this year, he said.  He noted that the number of Member States paying their assessments for both Tribunals in full by 24 October had stood at 97, representing five more States than on 31 October last year.  With regard to the Capital Master Plan, he recalled that it had been allocated a $1.9 billion budget.  As of 24 October, payments totalling $766 million had been made against assessments due and payable, with $80 million still outstanding.  He was encouraged by that development.  In addition, a number of States, which had not opted for one-time payments, had made advance payments.

The Group was pleased that 31 Member States had paid in full all assessments due and payable on 24 October, he said, commending them for honouring their responsibilities.  He hoped the remaining Member States would pay their allocation in due course.  He was concerned that the current food, fuel and financial crises could inevitably affect the ability of developing countries to meet their obligations to the United Nations.  Therefore, no effort should be spared to redress the current crises.

CARLOS RUIZ MASSIEU (Mexico), speaking on behalf of the Rio Group, noted that the financial situation of the United Nations had not changed much compared to 2007.  However, it was still uncertain due to the lack of payment of some Member States.  In that sense, the Group was concerned that, given that fact, there was an eventual risk that $148 million might have to be borrowed from the reserve before the end of the year.  That could develop into a negative tendency that would affect significantly the financial situation of the Organization in the future.  Therefore, the financial soundness of the United Nations was essential for the implementation of all the mandates, and obligations must be fulfilled in a timely manner.

Regarding peacekeeping, he said that the proliferation of operations and their magnitude had a direct impact in the increase in costs.  Given their unpredictable nature and different financial cycle, compared to the regular budget, it was harder to determine their evolution.  That was reflected in the fact that, this year, the cross-borrowing requirements between missions had more than doubled with respect to the previous year, reaching $117 million.  Regarding reimbursements to the contributors of troops and equipment, although there had been a significant improvement, there were still delays in payments.  He urged States, once again, to fulfil their commitments on time, so that the Organization’s main function of peacekeeping could be carried out effectively and efficiently.

The Group welcomed the fact that some countries from his region appeared among the Member States that had paid their full contributions to the United Nations.  That revealed their great commitment towards the Organization.  He also pointed out that the delays of payments by the rest of the countries of the region were due only to domestic budgetary difficulties, as well as urgent social demands that needed priority attention.  In conclusion, he reaffirmed the obligation of all Member States to make their payments to the United Nations without any exception, in the share determined by the General Assembly, according to the Charter.

KERRY O’BRIEN (Australia), also speaking on behalf of Canada and New Zealand, said that, year in year out, the picture presented to the Committee was not particularly positive.  That matter became even more salient at a moment when the world was faced with a very uncertain financial climate.  In that regard, he would also like to stress the importance of ongoing collective efforts to modernize and strengthen the Organization, in order to better manage both its core programmes and emerging challenges.

He was concerned that the United Nations’ financial situation was not generally better in 2008 than in 2007, he said.  One consolation was that unpaid assessments for the Tribunals and Capital Master Plan had decreased in comparison to October 2007.  Regular budget assessments and payments were both lower -- and the decrease in assessments resulting from budget adjustments, primarily for special political missions.  Funding for those missions would, in turn, see an increase to the 2008 regular budget assessment.  The situation of unpaid peacekeeping assessments was mixed.  The total outstanding, $2.9 billion, was a huge amount.  It was also some $198 million higher than the end of 2007, but at the same time, it was $575 million lower than 31 October 2007.  More should be done by members to improve the financial situation of the United Nations by paying their contributions in full and on time.

Continuing, he noted that 133 Member states had paid their regular budget contributions by 24 October, seven higher than in 2007, but 10 less than end-2000, which, with 143 fully paid Member States, was a total Member States should aim to beat.  Unfortunately, 59 Member States had chosen not to comply with their obligations under the Charter, with one Member State accounting for 94 per cent of the amount outstanding.  The liquidity necessary to ensure efficient and effective implementation of mandated programmes depended on the timely and full payment of assessments.  He was concerned the United Nations might have to borrow just under $150 million from reserve accounts to cover regular budget expenditure, unless arrears were significantly addressed in the short term.  He hoped that Member States would fulfil their Charter obligations at the earliest time possible, paying in full and without conditions, lest delivery of United Nations programmes in 2008 be compromised.

Expressing disappointment over the $2.9 billion outstanding for peacekeeping, he said that, with missions increasing in number, size and complexity, it was essential that sufficient resources be provided to effectively carry out their mandates.  He urged the 161 Member States that had not yet paid their dues to do so in full and without condition.  Not doing so put the United Nations military and civilian personnel on the ground, and the people they were trying to help, at risk.  It also contributed to delays in reimbursing troop-contributing countries.

He had noted Under-Secretary-General Kane’s advice regarding the likely retention of a projected $227 million in the closed mission accounts, in order to manage cash shortfalls in other accounts.  The decision to retain funds continued to penalize Member States that had paid their assessments, in order to manage the consequences of those that did not.  Continued retention of closed mission funds was a short-term solution to managing cash-flow problems, but it was a solution that the Secretary-General was forced to use.  If the Assembly wished to maintain its restrictions on cross-borrowing, then it must provide the liquidity for all peacekeeping missions and Tribunals, so that cross-borrowing was not needed.  He was heartened that unpaid dues for the Tribunals had declined again and, while the number of countries with amounts outstanding had declined since last year, he still noted with concern that 95 Members had amounts outstanding.

The “honour roll” contained a noteworthy number of 31 countries, he said in conclusion -- a marked improvement.  He saw merit in highlighting the honour roll composition -- it included both developed and developing countries, and countries from all but one continent.  He looked forward to the day when the “honour roll” was no longer necessary, because all Member States had fulfilled their Charter obligations and paid in full, on time and without conditions.  Until that day, however, he urged every Member State to aspire for inclusion on that list.

LESLIE B. GATAN ( Philippines), speaking on behalf of the Association of South-East Asian Nations (ASEAN), aligned the Association with the statement of the Group of 77 and China.  He said that monetary resources were necessary to implement the programmes and activities of the three main pillars of the United Nations, most importantly the development pillar.  The present global financial crisis brought the impact closer to home, and reinforced the need for compliance by Member States with their obligation to bear the expenses of the Organization.  However, consideration should be given to Member States who had legitimate reasons for temporarily being unable to pay.

The ASEAN welcomed the information that 133 Member States had paid regular budget assessments in full as of 24 October 2008, an increase of seven over the same date last year.  However, he expressed concern at the large increase in unpaid assessments, from a certain few Member States.  That translated into a cash deficiency in the regular budget and an overall decrease in the combined general fund.  He hoped that action could be taken by year’s end that would provide a clear and positive picture of the United Nations’ financial situation.

Regarding peacekeeping, he noted that there had been an increase in resources available from closed peacekeeping missions for cross-borrowing this year, and he reiterated ASEAN’s opposition to cross-borrowing from such missions.  He hoped that the Secretariat would exercise creative cash-flow management to avoid the practice.  He further expressed concern at perennial delays in paying debts to Member States that provided troops and equipment for peacekeeping operations, which put an additional burden on them.

HAMIDON ALI ( Malaysia) associated himself with the statements of the Group of 77 and of ASEAN.  Acknowledging progress towards achieving financing of the regular, peacekeeping, tribunal and Capital Master Plan budgets, he said that the Organization’s financial outlook was still doubtful.  The situation was similar almost every year.  He noted that, at $756 million, unpaid contributions for the regular budget were $80 million lower than at 31 October last year.  Ninety-four per cent of that amount was owed by a single Member State.  The current situation reflected a shortage for the regular budget, due primarily to special political mission expenditures during the first year of the current biennium, and to the general weakening of the United States dollar.

He further noted that:  the Organization might have to borrow $148 million from reserve accounts by the end of the year; that the current outstanding amount of the peacekeeping budget had increased by $198 million over December 2007; that the unpredictable amount and timing of peacekeeping assessments created difficulties for Member States to keep fully current with their assessments; that there would be positive cash balances by the end of the year for the Tribunals for Rwanda and the former Yugoslavia; and timely execution of the Capital Master Plan depended on the commitment by Member States to pay their assessed contributions in full and on time.

Despite the difficulties arising from the financial situation, he upheld fundamental principles, noting that:  a sound financial footing was a prerequisite for the Organization’s reform and functioning; the Organization must be provided the resources necessary to fulfil its mandates; the principle of “capacity to pay” must continue as the basis for calculating assessments; and that Member States should fulfil their obligations in full, on time and without conditions.

He also acknowledged fundamental principles for planning and budgetary processes.  They included:  equal attention to all the Organization’s pillars; adequate resources for all mandated programmes and activities on a continuous and predictable basis; the need to establish clear and objective priorities; and the establishment of a realistic timeline, resources and capacities for the implementation of mandates.

SHIN BOO NAM ( Republic of Korea) said that one of the most important obligations of Member States rested in paying their assessments in full, on time and without condition.  All States, including 31 countries that had fully paid their dues as of 24 October, were fully aware of the importance of both the Organization’s sound financial future and the responsibility to make every effort to meet their financial obligations.

Continuing, he noted the unpaid regular and peacekeeping assessments, which were below the levels of 31 October 2007.  The number of Member States paying their regular assessments in full had increased and the number of countries paying all assessments had also increased.  The decline of debt owed to troop and equipment contributors was expected to continue until the end of December, and he highly welcomed that development. Reduction of debt to Member States should be given greater importance, since the issue involved ensuring the accountability of both Member States and the Secretariat.

With regard to the regular budget cash position, he said there was a small possibility that the cash position would turn into red.  His delegation expected that the regular budget account would record a positive cash balance at the end of the year, owing to the Member States that would honour their obligations for the regular budget in full.

Regarding concerns about the worldwide economic slowdown, he said that United Nations activities were unlikely to be free from the emerging economic turmoil.  At the domestic level, the lower economic growth rate meant a reduction in tax revenues, as well as an increase in expenditures to carry out economic stimulus plans.  Under those circumstances, excessive increases in assessed contributions to the United Nations would not be easily accepted by the people in economic distress and, thus, more scrutiny on budget items would be sought. However, it was also time to look at the situation from a different perspective. The current economic hardship might serve as a valuable moment for Member States to show their commitment to the United Nations.  From the long-term perspective, economic growth in developing countries would function to lessen the ups and downs in economic cycles, thus, upholding world demand, and the United Nations’ efforts to boost worldwide development should not be discontinued.

Turning to the Secretariat’s accountability towards Member States, he urged the Secretariat to redouble its efforts to enhance cost-efficiency in all areas of United Nations activities.  He also welcomed the Secretariat’s plan to bring about efficiency gains.  It was a good sign, and meant Member States could be confident that the Secretariat shared a similar view on budgetary matters.

HOE YEEN TECK ( Singapore) said that the weakness of the United Nations funding base had an adverse effect on the ability of the Secretariat to carry out its work in a timely and effective manner.  Year after year, Member States heard the same call for payments to be more regular and dependable.  But, year after year, the situation hardly changed.  As a result, the United Nations found itself operating under precarious financial conditions.  That applied not just to the regular budget, but also to the peacekeeping operations and the Tribunals.  One hundred thirty-three Member States had paid their regular budget assessments in full by October 2008, but that represented only four fifths of the total.  Some $756 million remained outstanding, with over 94 per cent owed by one contributor.  The situation for the Tribunals and Capital Master Plan was equally unsatisfactory.  The irony was that those financial “difficulties” were entirely avoidable.

Some countries faced genuine difficulties in paying their assessments, he continued, and he empathized with them.  But, they did not constitute a large proportion of the budget.  The real issue was the late and non-payment by major contributors.  “We are not asking them to pay more than they are assessed”, he said.  “We are simply asking them to pay what they owe in full and on time.”  That alone would go a long way in mitigating much of the Organization’s financial difficulties.  It would also resolve a number of secondary and frankly unnecessary problems, such as the stagnant funds of closed peacekeeping missions.   Singapore urged Member States to honour their assessed contributions in full, on time and without conditions.  That simple act would help the United Nations immeasurably.  The practice of certain Member States withholding their contributions in the name of addressing the inefficiencies of the United Nations was not the right way to do things.  There was no question that inefficiencies should be addressed, but a more systematic, objective and consultative way was the better approach.  Ultimately, how well the United Nations worked depended on Member States and their willingness to fund it.

JORGE CUMBERBACH ( Cuba), endorsing the statement of the Group of 77, said that year after year the same situation occurred.  One Member State owed 94 per cent of the regular budget, one third of arrears for peacekeeping and 85 per cent of debts to the Tribunals.  It was the United States, which was responsible for the principal distortion in calculating the scale of assessments, which tried to evade its financial responsibilities, while developing countries made enormous efforts to meet their obligations.

Despite “the obstacles imposed by the strengthening of the US genocidal policy of the economic, commercial and financial blockade against Cuba, our country is up to date with [its] contributions to the regular budget, capital master plan and the tribunals”, and had made important payments to peacekeeping operations during the current year, he said.  He denounced the use of the United States dollar in international transactions, including for payments to international organizations, which made those transactions subject to market currency fluctuations and negatively impacted Cuba’s capacity to pay.  He also noted that Cuba was forced to make those transactions through a third country.

He said that the contempt of the Bush Administration for the United Nations could not be more evident, noting that last 29 October, 185 of 192 Member States demanded that the United States end its criminal actions.

Noting that the effectiveness of the Secretariat was proportional to resources at its disposal, he was outraged at how the issue of a 2 per cent reduction in the Organization’s budget had been handled.  The explanation provided during informal consultations Monday, 3 November, was “unacceptable”, he said.  The events constituted an attack on the United Nations.  Not only was there a request to cut $400 million from the budget proposal, further reductions were also requested.  Most reform processes were to the benefit of developed countries.  No games should be played with the political support of United Nations Member States.  Rather, such support should be expressed through fulfilment of the legal obligations and contributions to finance the Organization.

RAJEEV SHUKLA ( India) supported the position of the Group of 77 and said that payment of assessed contributions by Member States, in full, on time and without conditions was not just a Charter obligation, but also a moral one.  Sympathetic consideration should be given to those Member States that were unable to pay their assessments due to circumstances beyond their control.  While expecting clear and across-the-board accountability from the Secretariat for effective delivery of mandates, it was also necessary to ensure the provision of timely and adequate resources to facilitate full implementation of the mandated tasks.

On the regular budget, he welcomed the decrease in unpaid dues from $836 million in October 2007 to $756 million in October 2008.  Nevertheless, the outstanding balance still amounted to a considerable 40 per cent of total assessments and could affect the Secretariat’s mandate delivery.  Notably, 94 per cent of unpaid assessments was concentrated in one Member State.  He was also concerned that the cash position of the regular budget was in a deficit of $66 million, due to higher expenditures on special political missions and a general weakening of the dollar.  It was also a manifestation of poor budgetary practices, exacerbated by non-payment of assessed contributions.  He hoped that unhappy situation would be addressed urgently by all the parties concerned.

As a major troop contributor, which also had significant contingent-owned equipment deployed with United Nations peacekeeping operations, he was particularly troubled by the amount of $2.9 billion outstanding for peacekeeping.  That was partly due to the peacekeeping financial cycle, but the major portion was due to non-payment by Member States.  As in the regular budget, unpaid dues were highly concentrated, with 62 per cent owed by just two States.  The delay in receipt of contributions from Member States adversely impacted the Secretariat’s capacity to make quarterly payments to troop and equipment contributors.   India’s contribution to peacekeeping was not a commercial enterprise, but a manifestation of the country’s commitment to the principles and purposes of the Charter.  However, once a written memorandum of understanding had been signed with the United Nations, his country was justified in expecting that all sides fulfilled their obligations.  Delayed payments and sometimes non-payment of reimbursements, as in a few closed missions, reflected poorly on the United Nations.  It also made it difficult for troop contributors to explain to national legislatures.  Unless the situation was rectified, it could have a negative impact on Member States’ commitment towards future peacekeeping operations.

He was happy to note that the Organization’s debt to Member States at the end of 2008 was projected at around $645 million, which was lower than last year, but still considerable by any standard.  Despite the decrease, an indebted United Nations should not be expected to evoke confidence from the peoples it aspired to serve.  It was, therefore, essential that States assisted the Organization in achieving zero indebtedness as an integral part of their common quest for prudent budgetary and financial management.  Last week, the Under-Secretary-General for Management had concluded that the position of the regular budget was uncertain, given the current and projected cash situation, and the final outcome would depend on action by a few Member States.  He urged all countries, especially those with the requisite means, to take expeditious action to meet their financial obligations, so that the United Nations could return to a healthy and sound financial situation, and it would not be necessary to draw unsavoury comparisons with the collapsing giants of the global financial markets.

YASSAR DIAB ( Syria) supported the statement of the Group of 77 and emphasized the need for full and timely payments of assessments, without condition, an obligation under the Charter, so that the Organization could carry out its work and fulfil its mandates.  He deplored the weak financial situation of the United Nations due to non-payment of contributions, despite improvement over last year.  The resulting report on the Organization’s situation was always that the Organization’s situation was fragile due to arrears.  In that context, it was understandable that some developing countries were behind due to economic factors beyond their control.

When those countries overcame their difficulties, they paid, because they understood the importance of their payments, although those contributions were only a small part of the budget, he said.  What was difficult to understand was why the major contributor to the Organization was not fulfilling its obligations, despite the fact that its economy represented 30 per cent of the world’s economy, and despite the fact that its assessed contributions were proportionally lower than what it would pay if its assessments were calculated on the same basis as those of other Member States.

When that country had requested a decrease to 22 per cent from a 25 per cent cap in assessments, Member States agreed, so that that country could fulfil its obligations.  Eight years on, it had yet to do so.  That was the primary reason for the Organization’s financial difficulties, he said.  He asked why the major contributor to the United Nations budget had accumulated such arrears.  Was it deliberate?  If so, what was the reason?  Was it reasonable to think that the Government of that contributor had still not adopted national legislation to avoid such delays?

He reaffirmed that major contributors to the United Nations budget should pay on time and without conditions, as they were the decisive factor in maintaining the Organization’s good health.

MASATOSHI SIGIURA ( Japan) said that Japan had fulfilled its obligation to the Organization, in spite of the very difficult fiscal situation faced by the Government.  As for the regular budget, he said the lower amount of assessments and unpaid dues seemed to be an improvement, but the proportion of unpaid contributions remained at 40 per cent.  He was concerned that the cash balance would worsen, with possible borrowing of $148 million from reserve accounts.  That was 72 per cent larger than those in last year’s report.  The cash balance should have improved, with lower unpaid contributions this year.  The Secretariat was expected to improve its management of cash resources.

In addition to possible borrowings, large amounts of add-ons to the regular budget had been proposed by the Secretariat, he continued.  Moreover, with the world economy facing major difficulties, it was certain that additional financial strains would be imposed on Member States.  Under the circumstances, the United Nations could not carry on business as usual, but should make every effort to keep its programme budget affordable for Member States.  He also emphasized the importance of maintaining budgetary discipline, absorbing the additional costs within existing resources and keeping add-on to a minimum, in line with resolutions 41/213 and 42/211.  In that context, he supported the initiative taken by the Secretary-General, within his prerogative to consider savings for reallocation of resources based on priority, in preparing the budget outline for the next biennium.

It was said that a shortage for the regular budget was primarily due to special political mission expenditure levels and the general weakening of the United States dollar, he continued.  The Committee had been told that the special political mission expenditure had been lower than last year, when this year’s regular budget had been assessed, but had increased significantly since then.  It was obviously vital to secure the efficiency and effectiveness of special political missions, through a thorough examination of the mandate and budget of each one.  The impact of currency exchange rates should be examined carefully, with due consideration of its relative nature.  While the United States dollar had weakened against some currencies, it was now stronger against the euro.

On peacekeeping, he said its budget seemed to amount to $6.6 billion, which was well over three times the regular budget per annum.  He was concerned about the significant increase in peacekeeping operations assessments in recent years, which was a burden on Member States and had made timely payment difficult.  The Secretariat should make peacekeeping missions more efficient through a comprehensive examination of the relations between peacekeeping operations and special political missions, to avoid duplications and secure a clear line of command for every mission.  His delegation would be looking carefully at every means of making the missions more cost-effective.  For more transparency, he also requested updated information on unpaid assessments at the second resumed session this year.

On the Capital Master Plan, he added that Japan had made an accelerated single payment of its assessments for five years.  He believed it would improve cash balances and contribute to smooth implementation of the project.  His delegation reaffirmed its commitment to contributing to the financial health of the Organization.  To address the current financial situation of the United Nations, it was both critical for Member States to meet their financial responsibility and for the Secretariat to ensure efficiency and effectiveness of its operations, as well as its accountability to Member States.

ALOUAN KANAFANI ( Venezuela) supported the statements of the Group of 77 and the Rio Group.  He said that contributions by Member States were comparable to taxes paid by citizens of States, and obligatory as reflected in the Charter.  Member States were required to agree on the shares to be paid.  Those financial obligations must be complied with on time, in full and without conditions.  Venezuela was up to date in its payments for the regular budget, the Capital Master Plan, the funds and programmes and for most peacekeeping operations.

He noted that $711 million of arrears, or 94 per cent of the total owed for the regular budget, fell to the Organization’s major contributor.  As a consequence, $148 million might have to be borrowed from reserve funds by the end of year.  He was concerned that that could become a negative trend.  How productive could the Organization be if those arrears were not paid? he asked.  It could have a positive result on cash flow.

Some countries could not pay because of factors beyond their control, he continued.  Even so, many countries made great sacrifices to pay their assessments.  Countries that were economically strong and did not meet their obligations should be viewed differently.  The major contributor was frequently responsible for the high percentage of debt to the regular, peacekeeping and other budgets.  He suggested that the practice of delaying payments was being used as a “sly instrument of pressure”.  He urged major contributors to pay their arrears.  Complying with the legal obligation to finance the Organization demonstrated political support for its work.

DANILO ROSALES DIAZ ( Nicaragua) supported the statements of the Group of 77 and of the Rio Group.  He said the role of the Organization must be strengthened, given the growing challenges to development and peace.  Only by strengthening multilateralism could those challenges be met.  Without resources, however, his position had no meaning, he continued.  As many delegations had said, all Member States were legally obligated to pay their assessments on time, in full and without conditions, if the Organization was to carry out its mandates.

He said that $756 million were still owed, 94 per cent of which was owed by the Organization’s primary debtor.  With what authority, he asked, could greater efficiency and productivity be demanded from the Secretariat if the main debtor did not supply its share of the cost?  No one who failed to comply with its obligation to pay should point the finger at the Secretariat.  Time and again the Organization’s precarious situation was due to delayed payments by the primary debtor, which used its delaying tactics to press its own priorities.

He said he regretted the possible need to borrow $148 million from the reserve fund due to the shortfall from non-payment of contributions.  Liquidity would improve if there were separate accounts for special political missions.  He expressed concern that $2.9 billion was owed to peacekeeping operations, 66 per cent of which was owed by major contributors.  That deeply affected the developing countries that provided troops and equipment.  Reimbursement to those countries must be a priority.  The United Nations could not be effective if its financial situation was precarious.

Noting that Nicaragua was dealing with numerous social problems, as well as the food, economic and fuel crises, he said it still had paid its contributions to the regular and Capital Master Plan budgets in full, and would continue to pay its obligations.

AHMED FAROOQ ( Pakistan) supported the position of the Group of 77 and said that no organization could deliver in the absence of sufficient resources.  The Charter responsibility of Member States to pay their assessments in full, on time and without preconditions could not be overemphasized.  As the Committee had a number of reform and administration items on its agenda, it was only appropriate to stress the need to make sufficient and predictable resources available to the United Nations.

Despite some improvements, the overall financial situation of the Organization still remained unstable, he continued.  Although unpaid assessments to the regular budget had decreased by some $80 million, the peacekeeping unpaid dues had increased to almost $3 billion.  That had direct bearing on the work of the Organization and its ability not only to deliver mandates, but also meet its financial obligations to Member States.  He was deeply concerned over the mounting debt of the United Nations to Member States, which currently stood at $488 million.  That had a particularly heavy cost for countries like Pakistan, which provided troops for peacekeeping missions.  The amount owed to Pakistan stood at over $55 million, the largest sum currently owed by the United Nations to any one Member State.  Notwithstanding its financial difficulties, Pakistan had always responded to the call of the United Nations to play its role in the maintenance of international peace and security and had been punctual in the payment of its dues.

His delegation would also like to record its reservations regarding the decade-long practice of cross-borrowing from peacekeeping operations, which had resulted in delayed reimbursements to troop-contributing countries, most of whom were developing countries.  The key to improving the financial situation of the United Nations was honouring Member States’ obligations under the Charter.  Every year, the Committee discussed the financial situation of the United Nations, but those discussions did not find a concrete expression in the form of a resolution or decision.  It was truly a sad state of affairs that the debate on the item should have no tangible outcome.  The time had come to consider instituting a definite follow-up mechanism for that agenda item.

VLADIMIR A. IOSIFOV ( Russian Federation) said that the Organization’s financial situation was not sufficiently stable.  Although cash balances for the international Tribunals and the Capital Master Plan would be higher than at the end of 2007, the balances for peacekeeping operations, which accounted for a significant proportion of expenditures, and the regular budget were likely to be lower.  He noted with concern that the Secretariat might need to borrow reserve funds to finance the regular budget.  On peacekeeping budgets, he noted with satisfaction the decrease by $134 million in the debt to countries providing contingents to those operations, but said it was not yet time to say the problem had been resolved.

Despite the fact that the number of States who had paid all their contributions on time and in full had grown, the bulk of unpaid obligations rested with a few Member States.  Failure to fulfil financial obligations to the Organization could negatively affect its activity and undermine the achievement of results.  At the same time, those States who bore the financial burden had the right to demand, of the Secretariat, rational financial planning and a realistic assessment of the human and material resources it needed to fulfil United Nations mandates.

In closing, he said that Member States must comply with their payment obligations under the Charter without conditions and must not turn such compliance into an instrument of political pressure.  He expected Member States to pay their arrears to the Organization, so that it could carry out its mandates.

As the second largest debtor to the Organization, ALEJANDRO TORRES LEPORI ( Argentina) informed the Fifth Committee that its national treasurer had ordered a transfer of $16 million to the Organization, which would cancel 80 per cent of its debt.  Due to technical difficulties, that transfer had not occurred this week, but payment would be made in the coming days.  He further said that Argentina hoped to pay the remainder of its debt to the regular budget and a significant portion of its debt to peacekeeping budgets by year’s end, and noted that it was up to date on its payments for the Capital Master Plan and the international Tribunals.  He hoped the country would be able to cancel all its debts in a timely manner.

THOMAS REPASCH ( United States) thanked the Controller for the update, including the acknowledgement that the United States had just made a payment of over $200 million to the regular budget of the United Nations.  Comments by Cuba were not only fallacious, but also irrelevant, so he would ignore them.  He would like to address ...

On a point of order, Mr. CUMBERBACH ( Cuba) then drew attention to the fact that the United States’ statement was a right of reply, and that country’s representative should wait for the list of speakers to be exhausted.

Mr. REPASCH ( United States) said that he was making a statement and not exercising his right of reply.  He would like to address the comments by others on the financial situation of the United Nations by saying that his country strongly supported the United Nations, at least in part by payment of hundreds of millions of dollars this year.  The United States acknowledged that its late payments were a result of a process that was out of sync with the United Nations budget cycle, and his country was working hard to make payments of several hundred millions by the end of the year.  The Under-Secretary-General for Management had indicated that the financial situation of the Organization was expected to show improvement by the end of 2008, and he hoped United States payments would provide an additional improvement in that regard.

The CONTROLLER said that the Secretariat had taken note of the request to give an update on payments to the second half of the resumed session of the General Assembly.

Introductions

AMIR DOSSAL, Executive Director of the United Nations Office for Partnerships, introduced the report of the Secretary-General on that body.

Mr. ROSALES DIAZ ( Nicaragua) said that the work of the United Nations Office for Partnerships was extremely important for his country and he would like to pay tribute to the work being done.  Given the importance of the trust funds under the supervision of the Office, he would also like to make an appeal that those funds be used in strict compliance with the rules of the funds themselves, as well as the purposes and principles of the United Nations Charter.  That was even more important, because if the terms of reference of the funds were not respected and if the purposes and principles of the Charter were not respected, that could undermine the work carried out by those funds.  The funds under the Office’s supervision should at no time be manipulated by organizations outside the United Nations, which had purposes different from those established for the funds.  It was important that that kind of manipulation, which had taken place, not be repeated.  The Office must fully exercise its authority to avoid repetition of those events.

Mr. CUMBERBACH (Cuba) said that his delegation, like Nicaragua, wanted to draw attention to the need for the work of the United Nations system organizations working with the Office for Partnerships to clearly bear in mind the principles of the Charter, including those of non-interference in internal affairs of States, and to abstain from trying to influence a segment of a population.  It was no secret that his delegation, given the way the Democracy Fund had been set up, had been always concerned that it had not been established by a resolution.  Unfortunately, the Fund’s approach to the democratic requirements was that difficulties existed only in developing countries.  He was in full disagreement with that assessment.

Responding to those comments, Mr. DOSSAL said that the speakers were absolutely correct regarding the need to adhere to the United Nations principles and Charter.  At no point had the Office intended to approach that issue any differently.  Those principles were and would be adhered to.  What happened was that some of the procedures had fallen through the cracks, but several important components had been tightened since, including those relating to the technical review.  When such a review took place, the Office would be reaching out to the resident coordinator to ensure that the project was consistent with national priorities.  Several United Nations system organizations participated in the technical review by the executive head of the Fund, who ensured that it was consistent with the terms of reference and the priorities of the international and United Nations agenda.  Then, the project was submitted to the advisory board for its review and recommendations.

One of the things introduced was to have the project sent to recipient-country permanent missions prior to its submission to the Secretary-General for approval.  That way, it was possible to ensure that the issues raised by Nicaragua and Cuba would be addressed.  As for the terms of reference, the Office sought to streamline them further, and the intention was to do that in 2009.

Mr. KANAFANI ( Venezuela) associated himself with the position of Nicaragua and Cuba and said that he had heard the Secretariat representative say that, on some occasions, some methodological elements had not been used.  That aspect was of great importance to the recipient countries.  It was a matter of extreme concern when that element was not taken into account.  On different occasions, the methodological aspect had been set aside, and he did want it to be taken into account.  The Fund promoted democracy and held some consultative meetings.  In that connection, he asked which bodies it consulted with.

Mr. DOSSAL said that the Democracy Fund focused on funding projects and was not involved in any consultative process, as such.  However, it was often called upon to participate in conferences and meetings, either upon request of Member States or institutions, but it did not start the consultative process.

The Committee then decided that a draft decision would be prepared, taking note of the report of the United Nations Office for Partnerships, which would subsequently become part of the draft resolution on special subjects relating to the programme budget for 2008-2009.

REMO LALLI, Secretary of the High-Level Committee on Management, introduced the biennial report on the budgetary and financial situation of the organizations of the United Nations system.

He noted that, to date, the CEB database contained comprehensive data on three consecutive bienniums -- 2002-2003, 2004-2005 and 2006-2007 -- as per audited financial statements and sound estimates of regular and extrabudgetary income for the biennium 2008-2009.  That made the CEB budgetary and financial situation of the organizations of the United Nations system the most complete and comprehensive system-wide financial statistics database currently published, and publicly available through the CEB website.

REINA TOMITA ( Japan) said the report was valuable as the only source of statistics analysing the budgetary and financial situation of the United Nations system-wide.  To improve the report’s presentation, she encouraged the Secretary-General to provide information consistently on all contributions, including contributions to the peacekeeping budget.  She asked why current data on peacekeeping operations had not been included in the report.  While acknowledging that there was a line in the new version of the survey to separately record peacekeeping expenditures and extrabudgetary resources and that the data collected was provided in the Secretariat’s monthly reports on the status of contributions, she requested that information on the assessed contributions for peacekeeping operations be included in the report, so that it would be more comprehensive.

The representative of Cuba expressed concern about extrabudgetary contributions to the work of the Organization, even though he was grateful for the benefit Cuba sometimes received from them.  He also noted that, in the Spanish text of the report, tables 7 and 8 were missing, although they appeared in the English version of the document.  He said that was an example of translation problems into the Spanish language.  Also, noting that he was not familiar with Fifth Committee procedure, he wanted to better understand the status of proposed oral decisions before the Committee, and asked specifically about the status of today’s draft decision.

Mr. LALLI, responding to the question raised by Japan, said that information on peacekeeping operations was already available in other documents that were published more frequently than the biennial exercise he had presented.  He noted that the current report addressed many of the suggestions from Japan in 2006, particularly regarding extrabudgetary resources, but chose to omit peacekeeping information because it was documented more frequently elsewhere.  Consideration would be given to including it in the online report, which was a fuller document.

MOFSES ABELIAN, Secretary of the Fifth Committee, said that he would bring the issue of the missing text to the attention of the Department for General Assembly and Conference Management today.  Regarding oral draft decisions, he noted that had been the practice of the Committee for the last 10 years.

The Committee decided that a draft decision would be prepared for further action.

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