Sixty-fifth General Assembly

Fifth Committee

2^nd Meeting (AM)

Budget Committee Takes Up Agenda Item on Scale of Assessments;

 

Hears Introduction of Committee on Contributions Report

 

Opening the second meeting of its sixty-fifth session with a discussion on the scale of assessments, the Fifth Committee (Administrative and Budgetary) today heard delegates stress the need for all Member States to fulfil their legal obligations to the Organization by making their payments on time and in full.

Used to determine the financial contribution each Member State makes annually to the budget of the United Nations, the scale of assessments involves a complex methodology that is periodically reviewed to reflect the concerns of Member States, as well as economic changes.  Chairperson Bernardo Greiver of the Committee on Contributions, a technical body that prepares the scale of assessment for each Member State using reliable, verifiable and comparable data, introduced its report this morning.

Member States repeatedly affirmed the principle of the “capacity to pay” as a fundamental criteria in assessing a country’s annual contribution, while some noted General Assembly resolution 64/248, adopted in December 2009, that recognized the need to study the methodology.

The delegates that spoke today endorsed the recommendations of the Committee on Contributions to let six Member States — the Central African Republic, Comoros, Guinea-Bissau, Liberia, Sao Tome and Principe, and Somalia — keep voting this session, even though they had fallen behind in their payments.

Article 19 of the Charter states that a Member State in arrears of its financial contributions shall have no vote in the Assembly if the amount of its arrears equals or exceeds the amount of the contributions due from it for the preceding two years.  An exception is allowed if the Members State can show that conditions beyond its control contributed to this inability to pay.

The representative of Ukraine said the scale of assessments had proven to be one of the Fifth Committee’s most disputed issues and he stressed the importance of applying a fair, balanced and depoliticized approach to obtain consensus.

Referring to Assembly resolution 64/248, he said Member States understood how to best use the existing methodology to assess contributions, yet several states were making higher contributions in the years 2010, 2011 and 2012.  The Committee of Contributions, he stressed, had to conduct a review of assessment practices and consider price adjustments for exchange rates that created distortions for relevant countries.  He reaffirmed that the capacity to pay should remain the guiding principle for the scale and be based on the most current data available for gross national income.

Speaking on behalf of the Group of 77 developing countries and China, the representative of Yemen said the core elements used in the current methodology of the scale had to be kept intact and were not negotiable, with the exception of the current maximum assessment rate.  That rate was contrary to the principle of “capacity to pay” and should be reviewed by the Assembly.

Turning to the review of the methodology, the representative of Belgium, speaking on behalf of the European Union, said he firmly believed that a fair and more balanced way to share budgetary responsibilities was essential to the Organization’s effective functioning.  The Union would keep working to ensure that the most vulnerable countries’ contributions did not go beyond their capacity to pay.  But, it was necessary to recognize that all Member States with the capacity to do so had to assume a larger share of the Organization’s expenses.  There was no reason why sharing the Organization’s costs should not follow economic changes more closely.  The Union was ready to discuss the validity, impact and current relevance of every element of the current methodology.  It was important to think about implementing the wider review discussed in the Assembly’s resolution.

As the second-largest financial contributor to the United Nations, the representative of Japan said Member States had to find a methodology that acknowledged the changing world economy and better reflected each Member State’s real and current capacity to pay in a more equitable way.  That should be based on the most current, comprehensive and comparable data available.  In line with the Assembly resolution, Member States should start reviewing all elements of the methodology during this session, based on the report of the Committee on Contributions.  Japan endorsed the Committee’s recommendations regarding the exemptions to the application of Article 19.

Also participating in the discussion were the representatives of the Côte d’Ivoire, speaking on behalf of the African Group; Cuba; Russian Federation; Mexico; and Libya.

The Committee will resume its discussion of the scale of assessments at 10 a.m. Wednesday, 6 October.

Background

The Fifth Committee (Administrative and Budgetary) had before it a report of the Committee on Contributions’ seventieth session (7-25 June 2010) (document A/65/11), in which the Committee reviewed the methodology of the scale of assessments, pursuant to rule 160 of the rules of procedure of the General Assembly, Assembly resolution 58/1 B and, specifically, to Assembly resolution 64/248.

The Committee noted that at the end of its current session on 25 June 2010, six Member States were in arrears of paying their assessed contributions to the expenses of the United Nations, under the terms of the Article 19 of the Charter, but had been permitted to vote in the Assembly until the end of the sixth-fourth session.

With regard to the application of Article 19 of the Charter, the Committee recommended that the following Member States be permitted to vote in the Assembly until the end of its sixty-fifth session:  the Central African Republic, Comoros, Guinea-Bissau, Liberia, Sao Tome and Principe, and Somalia.  It encouraged all Member States requesting an exemption under Article 19, and in a position to do so, to consider presenting a multi-year payment plan.

The Committee noted that, as of 31 May 2010, more than $2.4 billion was owed to the Organization for the regular budget, peacekeeping operations, the international tribunals and the capital master plan.  This was down from the $3.4 billion outstanding in the previous year, as of 31 May 2009.

The Committee also decided to consider the annual recalculation and large scale-to-scale increases in the rates of assessment at its future sessions, in light of any guidance from the Assembly.  Concerning the methodology used for the scale of assessments, the Committee reaffirmed its recommendation that the scale of assessments still be based on the most current, comprehensive and comparable gross national income data.  It recommended that the Assembly encourage Member States which have not yet done so to implement the System of National Accounts.

The Committee concluded that, once chosen, there were advantages in using the same base period for as long as possible.  It also decided to consider conversion rates, the debt-burden adjustment and the low per capita income adjustment at its next session, in light of any guidance from the Assembly.

The Committee concluded that the system of multi-year payment plans continues to be a viable vehicle for Member States to reduce their unpaid assessed contributions and provides a way for them to demonstrate their commitment to meet their financial obligations to the United Nations.

The Committee emphasized the importance of annual payments, exceeding current assessments, to avoid a further accumulation of arrears.  The Committee noted that no new multi-year payment plans had been submitted.

The Committee decided to continue reviewing its working methods at its next session, which will be held in New York from 6 to 24 June 2011.

Also before the Committee was a report of the Secretary-General entitled Multi-year payment plans (document A/65/65), in which the Secretary-General recommended that the General Assembly may wish to note this report and encourage Member States with significant arrears in contributions to consider submitting a multi-year payment plan.  In connection with resolution 57/4 B, the Secretary-General submits an annual report to the Assembly, through the Committee on Contributions, on the status of the payment plans of Member States as of 31 December each year.  This present report provides a summary of the payment plans and schedules submitted earlier by Liberia and Sao Tome and Principe and the status of the plans’ implementation as of 31 December 2009.

The status of implementation of the most recent payment plans submitted by Liberia and Sao Tome and Principe as of 31 December 2009 is summarized in a table, starting on page 5 of the report.  The plans proposed by Georgia, Iraq, Moldova, Niger and Tajikistan have been excluded, since those Member States have made the payments outlined in their payment plans and no longer fall under the provisions of Article 19 of the Charter.

The report notes that payments and credits for Liberia from 2006 to 2009 totalled $552,162 and Liberia’s outstanding assessed contributions at 31 December 2009 totalled $762,908.  Payments by the Government of Sao Tome and Principe have fallen below the level set for the 2002-2009 period in its schedule of payments.  Payments and credits totalling $34,254 were applied during that period, compared with expected payments of $694,411 for those years.  The outstanding assessed contributions of Sao Tome and Principe at 31 December 2009 totalled $763,605.

Introduction

Introducing the Report of the Committee on Contributions, Committee Chairperson BERNARDO GREIVER said that as part of its review of the methodology for the preparation of the scale of assessments, the Committee had considered and noted material from Spain, on behalf of the European Union, and the Group of 77 and China.  Material from Tajikistan was received after the Committee’s formal consideration and, while not reflected in the Committee report, the issues raised in the material had largely been considered as part of the Committee’s general review.  That included the Assembly’s request for recommendations with a view to mitigating large scale-to-scale increases for those Member States that had fulfilled multi-year payment plans.

With regard to the review of conversion rates, the Committee had asked the Statistics Division to carry out a detailed study of the systemic criteria, with a view to enhancing their transparency and objectivity.  The Committee would also study that element of methodology on the basis of additional information from the Statistics Division, and with guidance from the Assembly.

In its review, the Committee concluded that, once chosen, there were advantages in using the same base period for as long as possible and decided to consider the question of the debt-burden adjustment further at its next session, in light of any guidance provided by the Assembly.  It also reaffirmed that the scale of methodology should continue to take into account comparative per-capita income and decided to review further the low per-capita income adjustment at future sessions, in light of any guidance from the Assembly.  The Committee also had considered other suggestions and possible elements of the scale methodology and had carried out a detailed study of the question of annual recalculation.  The main benefits and drawbacks to annual recalculation were described in Chapter III, section B.1, of the Committee’s report.  The Committee also reviewed the questions of large scale-to-scale increases and discontinuity.  That was described in Chapter II, section B.2, of the report.

As indicated in Chapter V of its report, the Committee had concluded that the failure of the six Member States — the Central African Republic, Comoros, Guinea-Bissau, Liberia, Sao Tome and Principle and Somalia — to pay the full minimum amount to avoid the application of Article 19 was due to conditions beyond their control.  It recommended that they be permitted to vote until the end of the Assembly’s sixty-fifth session.

The Secretary of the Committee on Contributions recalled that, since the adoption of the multi-year payment plan system in 2002, 5 Member States had completed payments under the system.  He noted that the report contained in document A/65/65 provided detailed information on only two remaining plans — those submitted by Liberia and Sao Tome and Principe.  He stated that no other Member States have so far submitted payment plans or schedules for the elimination of their arrears.

Statements

WALEED AL-SHAHARI (Yemen), speaking on behalf of the Group of 77 and China, stated that all Member States should fulfil their legal obligations for the expenses of the Organization, in accordance with the Charter of the United Nations and the requirements to pay their assessed contributions in full, on time and without conditions.  Noting that some developing countries faced difficulties that prevented them from temporarily meeting their financial obligations, he stressed the importance of dealing with Article 19.  As regarded discussion of administrative and budgetary matters, they had to be discussed solely within the framework of the Fifth Committee.

The Group reaffirmed the principle of “capacity to pay” as the fundamental criterion in the apportionment of the expenses of the Organization.  Further, the core elements used in the current methodology of the scale of assessment had to be kept intact and were not negotiable, with the exception of the current maximum assessment rate. That rate was contrary to the principle of “capacity to pay” and should be reviewed by the General Assembly.  On the issue of multi-year payment plans, he stated those plans should remain voluntary in nature and take into account the financial situation of the concerned Member State.  They should not be a factor in the consideration of exemption under Article 19 of the Charter.  In this context, the Group endorsed the recommendations of the Committee on Contributions to permit the Central African Republic, Comoros, Guinea-Bissau, Liberia, Sao Tome and Principe and Somalia to vote during the sixty-fifth session of the General Assembly.

JAN DE PRETER ( Belgium), speaking on behalf of the European Union and the Associated States, said the Union had, and would, consistently stress that the payment of assessed contributions be made in full, on time and without condition.  That was a fundamental duty of all Member States.  He acknowledged that some Member States, for reasons beyond their control, might have faced genuine and temporary difficulties in fulfilling their annual financial contributions.  Noting that multi-year payment plans were an effective tool to help Member States reduce their unpaid assessed contributions, he said it was rather unfortunate that some Member States had arrears, but no new multi-year payment plans had been submitted in recent years.  The Union was ready to endorse the Committee’s recommendation that would permit the six countries to keep voting until the session’s end.

Turning to the annual review of the methodology of the scale of assessments, the Union firmly believed that a fair and more balanced way to share budgetary responsibilities was essential to the Organization’s effective functioning.  Ensuring effective funding for the Organization was the joint responsibility of each Member State.  While the Union had, and would, continue to advocate the need for protecting the most vulnerable countries from contributing to the cost of the Organization beyond their capacity to pay, one should recognize that all Member States with a capacity to do so had to take a larger share in the Organization’s expenses.  There was no reason why sharing the cost of the Organization should not follow the evolution of economic reality more closely.  The fact that the current methodology did not reflect that reality was clearly demonstrated by the consensus with which the Assembly adopted resolution 64/248.

The Union was ready to discuss the validity, impact and current relevance of each and every element of the current methodology.  It was important to think about implementing the wider review agreed upon last year in Assembly resolution 64/248.  Though it was a non-scale Assembly session, it was clear that it could not be a business-as-usual situation.  The resolution adopted in December 2009 decided to review, at its earliest opportunity, all elements of the methodology of the scale of assessments.  That went beyond consideration of this year’s Committee on Contribution report.  “What is at stake in all this is the idea that effective funding for the Organization is the joint responsibility of the whole membership,” he said.

BROUZ RALPH COFFI (C ôte d’Ivoire) speaking on behalf of the African Group, associating himself with the statement made by Yemen on behalf of the Group of 77 and China, stressed the need for Member States to pay their assessed contributions in full, on time and without conditions.

In consideration of the fact that some countries faced special and genuine difficulties which prevented them from meeting their financial obligations, the African Group emphasized the importance of dealing with the issue of Article 19 “on an urgent basis”. As regarded multi-year payment plans, those plans “should remain voluntary and should take into account the financial situation of concerned Member States”.  Further, the African Group endorsed the recommendations of the Committee on Contributions to permit the six Member States to vote until the end of the sixty-fifth session of the General Assembly.

JORGE CUMBERBATCH MIGUEN (Cuba) noted the nation’s endorsement of the statement made on behalf of the Group of 77 and China and stressed the importance of assessing Member States in a balanced way, based on their capacity to pay.  “In such a complex context for global governance, in which we have been imposed parallel decision-making mechanisms affecting us all, we have witnessed continuous attempts to undermine the principle of sovereign equality,” he stated.  The scale of assessments and scale methodology had not escaped that phenomenon.

In that context, the principle of capacity to pay was relative, as was the removal of the ceiling by the General Assembly.  Excluding the element of the ceiling, the effectiveness of the current methodology had been proven over time.  Indeed, it was endorsed by the data for the triennium 2010-2012.  But, important world economies had their percentages considerably reduced, and “a set of these countries are the same that promote unjust changes in the scale methodology”. 

He supported the recommendations by the Committee on Contributions to exempt a small group of nations from the Implementation of Article 19.  Also, along these lines, hr reiterated support for the multi-year payment mechanism to help those Member States facing difficulties meet their obligations.

Mr. PROKHOROV (Russian Federation) stated that his country paid much attention to the equitable approach to expenses and to the fundamental principle whereby assessed countries pay fully, on time and unconditionally.  He noted, in that regard, that the Committee on Contributions was an important subsidiary body in terms of looking at the range of elements used in the scale of assessments.  But, procedurally, the very consensus of the Committee was being tested in the absence of methods that worked.  The Committee had to develop those methods.  Further, the development of those methods had to figure in the instructions of the General Assembly to the Committee.

The current scale of methodology in future years did not require substantial modifications, he said.  “It was not the Committee’s intention to review the methodology at the seventy-first session,” he said.  He recalled with “disappointment” discussions during the sixty-fourth session whereby the principle of consensus was breached by 5 Member States, which applied a low per-capita income adjustment.  A repeat of that situation was unacceptable, he said, and required a technological and depoliticized solution.  Concerning Article 19, he did not object to allowing those States mentioned by the Group of 77 and China to vote at the end of the current session.

As the second-largest financial contributor to the United Nations, MASATOSHI SUGIURA (Japan) said Japan attached great importance to the scale of assessments.  The country had faithfully paid its dues, even through it faced economic and financial difficulties at home.  Japan believed each Member State should pay its assessed contribution according to its “capacity to pay”.

Acknowledging the changing world economy, the Member States had to find a methodology that would better reflect each Member State’s real and current capacity to pay in a more equitable way, based on the most current, comprehensive and comparable data available.  In line with Assembly resolution 64/248, Member States should begin reviewing all elements of the methodology of the scale of assessments during this session, based on the report of the Committee on Contributions.  Japan endorsed the Committee’s recommendations regarding the exemptions to the application of Article 19.

YEVHENII TSYMBALIUK (Ukraine) stated that scale of assessments had proven to be one of the most disputed issues of the Fifth Committee, and he stressed the importance of applying a fair, balanced and depoliticized approach to obtain consensus.

Referring to General Assembly resolution 248 adopted in 2009, he stated that Member States understood how to best use existing methodology to assess contributions, yet the years 2010, 2011 and 2012 had led to subsequent increases for a number of Member States.  The Committee of Contributions had to conduct a review of assessment practices, taking into consideration price adjustments for exchange rates that caused distortions for relevant countries.  Further, that review should rely on a statistical basis using current formulas.  Finally, he reaffirmed that capacity-to-pay should remain the guiding principle for scale of assessments and should be based on the most current data available for gross national income.

CARLOS G. RUIZ MASSIEU ( Mexico) said that he hoped the process of review would produce a more fair scale of assessments.  He recalled that, during its general debate, the Assembly had said the United Nations scale of assessment would have to reflect current conditions.  When looking at the way the Organization had to be financed, these arguments held true.  The system now reflected the world as it was 10 years ago.  Currently, Mexico paid 53 per cent of the contributions from Latin America and the Caribbean.

Mexico would like to determine if the Committee on Contributions was well equipped enough.  He would like to hear the views of the Chairperson.  He said the system favoured privileged political aspects over technical aspects.  He suggested that technical, external contributions to the Committee might be made.  Mexico endorsed the Committee’s recommendation that the six countries could vote during this session.  Mexico was open to reviewing all aspects of the methodology, with a view to producing a system that was as fair as possible.

Mr. BELKHEIR (Libya) supported the statement on behalf of the Group of 77 and China, as well as the one made on behalf of the African States.  The scale of assessments was the most important item in the Fifth Committee, as it was essential in providing the necessary resources to the Organization.  In that context, it was vital that all Member States pay their contributions fully, unconditionally and on time.

He expressed his understanding of the financial situation of the Organization, but stated that the application of the current methodology had resulted in burdening some States with large increases.  Libya, he noted, now had to pay a higher percentage of the United Nations budget.  He requested the Committee to take into account nations’ ability to pay, noting that the current methodology negatively impacted developing states through increases in assessment.  Concerning Article 19, Libya supported the waiver request and allowing those States to vote until the end of the sixty-fifth session of the General Assembly.

Mr. GREIVER said all the delegates’ points of concerns and statements would be sent on to all the Committee members.  He noted that replies to their concerns and various options were in the Committee’s report.  The Committee had examined all the elements and offered options for solutions to those questions.  He looked forward to informal consultations, where their work would continue.

* *** *

For information media • not an official record