Budget Committee Voices Concern over Late Payment of Assessments, Says United Nations Has ‘Long Way to Go’ to Financial Soundness
Concerned over outstanding balances owed to the United Nations and overdue payments to Member States for peacekeeping operations, delegates said the Organization had a “long way to go” before receiving a “clean bill of financial health”, the Fifth Committee (Administrative and Budgetary) heard today.
Some speakers questioned the veracity of the “clean bill” of health at year‑end 2014 pronounced last week by Under-Secretary-General for Management, Yukio Takasu, during his semi-annual presentation to the Committee on the United Nations financial picture. Starting off today’s discussion, Mr. Takasu provided an update of Member States that had made payments since 30 April 2015. The total number of those that had paid in full, to date, was 86 for the regular budget, 31 for peacekeeping operations, 61 for the international tribunals for Rwanda and the former Yugoslavia and 181 for the Capital Master Plan. A total of 27 Member States had currently paid all their assessments for all categories.
During the ensuing debate, a number of speakers pointed out that by withholding their financial obligations, Member States were putting the Organization’s financial well-being at risk. South Africa’s representative, speaking on behalf of the “Group of 77” developing countries and China, said withholding funds for approved budgets created “artificial” political leverage and he urged Member States to pay their dues in full.
Canada’s delegate, speaking also for Australia and New Zealand, highlighted the $653 million in outstanding dues owed to troop- and police-contributing countries at the end of March 2015. “The consequences of unpaid assessments are clear,” he said. Unpaid contributions adversely affected the Organization’s cash flow. In addition, troop- and police-contributing countries were left waiting for the reimbursement of costs they had incurred, impacting negatively on their motivation to contribute personnel and assets to future operations. Cuba’s speaker agreed, calling it ironic that developing countries made up the majority of peacekeeping troop contributors and could ill afford to operate without timely payments.
Some delegates called for concrete steps at all levels to “spend more wisely”, to deliver in new ways and to ensure that the Organization operated within agreed budget levels. The representative of the European Union said “an unceasing effort to find new and creative ways to work is essential to achieve more effective delivery of mandates and sustainable use of resources”.
Responding to some of those concerns, Mr. Takasu confirmed that the financial health of the Organization was generally sound and good due to actions taken by Member States. With regard to payments owed to Member States, he said it was a top priority for the Secretary-General to resolve the issue.
In other business, the Committee discussed the Support Account for peacekeeping operations. Bettina Tucci Bartsiotas, Assistant Secretary-General and Controller, introduced the Secretary-General’s reports on the Support Account’s budget performance in 2013/14 and his budget proposal for 2015/16, and Carlos Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced his body’s report on the item.
Also speaking today were representatives of China, Ukraine and Japan.
The Committee will meet again at 10 a.m. Thursday, 21 May, to discuss the 2014/15 programme budget for the United Nations Mission for Ebola Emergency Response (UNMEER) and special political missions.
Improving the Financial Situation of the United Nations
YUKIO TAKASU, Under-Secretary-General for Management, provided updates on developments since he addressed the Committee on 6 May. His 6 May statement on the Organization’s financial situation as of 31 December 2013 and 2014 and at 30 April 2014 and 2015 is contained in the Secretary-General’s report titled “Improving the financial situation of the United Nations” (document A/69/520/Add.1).
Since the 30 April 2015 cut-off date, a total of $26.6 million in payments to the regular budget had been made from 10 Member States, including $22.96 million from Mexico, he said. For peacekeeping operations, $34 million from 22 Member States had been received, and $1.2 million from six States had been received for the international tribunals for Rwanda and the former Yugoslavia. For the Capital Master Plan, Fiji had made payment in full. He urged the remaining 11 Member States in arrears to follow Fiji’s example.
To date, the total number of Member States making full payments was 86 for the regular budget, 31 for peacekeeping operations, 61 for the tribunals and 181 for the Capital Master Plan. A total of 27 Member States had currently paid all their assessments for all categories, he said.
Responding to requests raised during the Committee’s previous meeting, Mr. Takasu also clarified technical information on the Working Capital Fund, the Special Account and unpaid peacekeeping assessments. As of 30 April 2015, the Working Capital Fund had stood at $127 million, the Special Account at $235 million and unpaid peacekeeping assessments at $1.97 billion, including $430 million outstanding for closed missions. He also noted that a corrigendum to reflect updated figures for contingent-owned equipment claims for active missions would be issued, which would replace the information provided in document A/69/520/Add.1.
LYLE DAVIDSON (South Africa), speaking on behalf of the “Group of 77” developing countries and China, expressed continued concern about policies of withholding financial obligations due to the United Nations to create link to the reform of the Organization. Withholding funds for approved budgets created “artificial” political leverage. Despite a recent pronouncement that the Organization’s financial health was generally sound and positive, the United Nations had a “long way to go before it can in all honesty receive a clean bill of financial health”, he said.
While concerned that unpaid assessments were higher for the regular budget and peacekeeping operations than in October 2014, the Group of 77 was positive that the situation would improve, he said. The Group, however, was perturbed about the level of outstanding payments to Member States and appreciated efforts made by the Secretariat to reduce those amounts. Since many troop and police contributors were developing countries, they were not in a position to sustain their troop commitments.
FRANCESCO PRESUTTI, representative of the European Union, said that while paid assessments to the regular budget had increased from 2014, a significant level remained a concern. His delegation also noted with concern that, as of 30 April 2015, only 23 Member States had paid all peacekeeping assessments, a number that had not increased since the same time in 2014.
While the Organization’s cash position remained “healthy”, it was imperative that concrete steps be taken at all levels to “spend more wisely”, to deliver in new ways and to ensure that the Organization operated within agreed budget levels. “An unceasing effort to find new and creative ways to work is essential to achieve more effective delivery of mandates and sustainable use of resources,” he said.
JONATHAN PAUL QUINN (Canada), speaking also for Australia and New Zealand, pointed out that at the end of March 2015, $653 million had still been owed to Member States for peacekeeping activities, and while projected to drop to $561 million by year’s end, that number was still too high. The consequences of unpaid assessments were clear. Troop- and police-contributing countries were left waiting for the reimbursement of costs they had incurred, impacting negatively on their motivation to contribute personnel and assets to future operations. It also resulted in inequity between Member States that had paid their assessed contributions in full and those that had not. Unpaid contributions also adversely affected the Organization’s cash flow.
Continuing, he said that by 30 April 2015, more than $1.5 billion of the regular budget contributions remained outstanding. While the Working Capital Fund had been established to provide advances pending the receipt of contributions, it could only do so if full payments were received. “We must be vigilant over the use of this Fund,” he said, urging States to pay dues in full. He also encouraged all eligible Member States to make use of the multi-year payment mechanism. “We must all continue to provide the Organization with the resources it needs, but just as importantly, we must continue to identify areas where savings can be made.”
GUO XUEJUN (China) said it was a collective effort of Member States to ensure that the United Nations finances were sound. That was especially important as the Organization marked the seventieth anniversary of its founding and played a bigger role in maintaining international peace and security. His delegation voiced concern that unpaid assessments were higher in 2015, urging in particular some developed nations to pay their assessments in full and on time. Due consideration should be given to unpaid assessments of Member States owing to circumstances beyond their control. It was regrettable that outstanding reimbursements to troop- and police-contributing countries were higher than the Secretariat’s projections. China, as the sixth largest contributor to the Organization, had paid all assessments on time, including for the peacekeeping operations and the international tribunals.
YAROSLAV GOLITSYN (Ukraine) said his country’s arrears to the peacekeeping budgets stemmed only from the closed peacekeeping missions prior to 1996. In its decision 49/470 of December 1004, the General Assembly had regarded the arrears as of 1 January 1995 as due to conditions beyond its control. Ukraine, however, had paid a considerable amount in recent years to reduce those arrears. At the end of 2011, Ukraine had reduced its debt to the budgets of the closed peacekeeping operations by $4.2 million.
TAKESHI AKAMATSU (Japan) said that, despite using a different budget cycle from the United Nations, his Government had paid all assessments — for the regular budget, peacekeeping operations, the international tribunals and the Capital Master Plan — in full and on time, as it was the responsibility of Member States to do so. Japan continued to meet its financial commitments despite long-standing domestic financial difficulties and recent exchange-rate trends. He asked the Secretariat to closely monitor the cash position in the Organization’s regular budget and to inform the General Assembly appropriately.
JAVIER ENRIQUE SANCHEZ AZCUY (Cuba), aligning with the Group of 77 and China, said Member States must pay their assessments on time and in full, particularly as the Organization’s health was being jeopardized by non-payments. He was also concerned about substantial reductions in the level of resources and he urged Member States to respect Assembly resolutions and the Organization’s financial rules and regulations. Despite adverse economic circumstances, developing States’ efforts to meet their obligations had demonstrated their commitment to the United Nations. Among other concerns, he noted the financial obligations to a growing number of mandates, as well as the limited number of permanent Security Council seats. The balances of closed peacekeeping accounts should be returned to Member States.
Regarding outstanding peacekeeping payments to Member States, he said it was ironic that troop- and police-contributing developing countries were bearing the cost of continuing operations. The United States embargo against Cuba continued, affecting his country’s efforts to pay its dues. That unilateral policy of economic aggression violated the United Nations Charter, he said, welcoming United States President Barack Obama’s recent efforts to address that issue.
Responding to speakers’ comments, Mr. TAKASU confirmed that the financial health of the Organization was generally sound and good due to actions by the Member States. The implementation of regular budget activities would be undertaken and the Secretariat would exercise utmost care in doing so.
The issue of payments owed to Member States was the Secretary-General’s top priority. Some situations had affected the ability to make those payments, including cash flow shortages in some missions. “We will continue to make the best efforts to reduce this,” he said. “The United Nations is entirely depending on you to continue to make your payments.”
Taking the floor for a second time, Mr. SANCHEZ-AZCUY (Cuba) requested updated information on how refunds for the Capital Master Plan would be carried out.
In response, Mr. TAKASU said the General Assembly had decided on the Capital Master Plan’s cash flow issues and said that by the end of the year, the situation concerning several items would balance out.
Support Account for Peacekeeping Operations
BETTINA TUCCI BARTSIOTAS, Assistant Secretary-General and Controller, introduced the Secretary-General’s reports on “Budget performance of the support account for peacekeeping operations for the period from 1 July 2013 to 30 June 2014” (documents A/69/653, A/69/653/Corr.1 and A/69/653/Add.1), as well as on the “Budget for the support account for peacekeeping operations for the period from 1 July 2015 to 30 June 2016” (documents A/69/750 and A/69/750/Corr.1).
She noted that the General Assembly had approved $327.4 million for the Support Account for the 2013/14 period, including $18.7 million for the financing of the Umoja enterprise resource planning project. Actual expenditure had been $315 million, or 96.2 per cent of the budgeted amount. Of the $12.4 million unused, $8 million related to posts due to vacancies and lower common staff costs, and $4 million related to consultants and general temporary assistance. Through the Support Account, the United Nations had been able to backstop the establishment of the United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA), continuation of the Force Intervention Brigade in the United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) and further protection of civilians in the United Nations Mission in South Sudan (UNMISS). The Umoja Foundation solution that had gone live for the pilot in the United Nations Interim Force in Lebanon (UNIFIL), and International Public Sector Accounting Standards (IPSAS)-compliant financial statements had required intense backstopping support.
Noting that the Support Account currently funded 1,458 posts and positions in 14 departments and offices, mainly in New York, she said that the financial resources required for 2015/16 were estimated at $338 million, an increase of $12 million, or 3.7 per cent, from the previous year. The combined budget of the Support Account and the United Nations Logistical Base at Brindisi, Italy, excluding enterprise resource planning costs, remained at 4.6 per cent of the total peacekeeping budget.
She said the Secretary-General proposed to regularize 45 temporary positions that had been continuously approved by the Assembly for at least four years or whose functions had been identified as being of a continuing nature. Some of the cost of information technology for projects in peacekeeping missions had been apportioned to mission budgets, resulting in a decrease in the Support Account. Because staff costs accounted for more than 75 per cent of the Support Account, determining the vacancy rate was essential for the budget’s accuracy. Given that most posts were located at Headquarters, continuing, new and temporary posts were all susceptible to similar vacancy patterns. Therefore, the vacancy rate of 12 per cent for Professional posts and 6 per cent for General Service posts had been used, regardless of their contractual nature.
Turning to non-post resources, she said requirements for the after-service health insurance would increase $0.8 million over the 2014/15 period, due to higher insurance costs for retired peacekeeping staff and a projected 1.6 per cent annual increase in the number of insurance plan members.
CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing that body’s report (document A/69/860), said that the Secretary-General’s proposed budget for 2015/16 should be reduced by $3.2 million. The Advisory Committee found it difficult to present clear, comprehensive and comparable summary data, given the different funding arrangements and operational mandates, as well as the variations in presentation. The Secretary-General was encouraged to devise a more suitable way to present such data.
The Advisory Committee noted that the total number of posts and positions under the Support Account and United Nations Logistic Base would increase from 1,882 for 2014/15 to 1,919 for 2015/16, although the number of uniformed personnel and civilian staff would decrease from 127,138 to 120,684 and from 22,542 to 21,475, respectively, he said. The total number of D-1 and D-2 posts would also increase from 40 (30 D-1 and 10 D-2) to 41 (32 D-1 and 9 D-2) over that period. In that regard, the Advisory Committee recalled that the General Assembly had repeatedly emphasized that the Support Account should correspond to the mandate and size of peacekeeping operations.
The Advisory Committee noted that uniform vacancy rates had been applied to the 2015/16 estimates for both new and continuing posts and positions, in order to align the budgetary process for the Support Account with that of the regular budget, resulting in a $1.1 million increase in those resource categories. He recommended against a departure from the established practice of applying higher vacancy rates to new posts and positions, which more accurately reflected the time taken to fill them.
The Advisory Committee also noted that some development costs for information technology applications and for supply chain management, which had previously been included under the Support Account, had been earmarked under the budgets of peacekeeping missions, he said. The Secretary-General had not properly justified that apportionment, given that projects under development should fall under the Support Account’s budget. Thus, it was recommended that those costs be re-included in the Support Account.
Regarding general temporary assistance, he said the Advisory Committee believed the criteria for converting 45 temporary posts to regular posts lacked coherence and the proposals for 2015/16 to cover leave replacement were not supported by recent trends. It therefore recommended that the resources under that category be maintained at the 2014/15 level. The Advisory Committee acknowledged the efforts made to reduce the dependence on consultants, and encouraged the Secretary-General to continue such efforts. As for official travel, it recommended an overall 10 per cent cut to the proposed resources. Insufficient attention was given to the implementation of the standards of air travel, particularly the 16-day advance booking of tickets, and other cost-saving measures.
For the 2013/14 period, the General Assembly should reduce the appropriation from $327.43 million to $325.15 million to match the amount assessed on Member States, and apply the unencumbered balance of $10.14 million for 2013/14 to the Support Account for 2015/16, he said.
Mr. DAVIDSON (South Africa), speaking for the Group of 77 and China, said all peacekeeping operations must be provided with the necessary resources, including sufficient backstopping, to fulfil their mandates. The level of the Support Account should broadly correspond to the given mandate, number, size and complexity of the missions. Integrated support to missions by Headquarters was essential and all efforts in that regard should be aimed at qualitative improvements in service delivery to the civilian and uniformed personnel on the ground. He recalled relevant Assembly resolutions that asked the Secretary-General to ensure adequate representation of troop-contributing countries in the Departments of Peacekeeping and Field Support, and said there was considerable room for improvement in that area.
The Group of 77 would follow up on that, as well as explore variations and rationale for the Support Account’s performance, taking note of the budget for the Account for 2013/14, the $338 million proposed for 2015/16 and detailed elements of proposed resource levels, he said.. Reflecting on the Advisory Committee’s comments and recommendations on budgeting for new initiatives related to information and communications technology deployed in the field and supply chain management in mission-specific budgets instead of the Support Account, the Group was interested to learn in detail the rationale for inconsistencies in the application of existing principles.
Turning to human resource management, the Group of 77 was disappointed with the trend of shifting resources between areas in the context of vacancies and would be seeking clarification during informal consultations on proposed abolishment, reclassification and redeployment of posts and functions, he said. Concerned that the Office for Internal Oversight Services (OIOS) continued to experience high vacancy rates, the Group sought in detail the reasons for that negative trend and to what extend OIOS had established itself at the Regional Service Centre in Entebbe as part of implementing the outcome of the pilot. On restructuring units and sections, the Group was concerned that the Secretary-General continued to implement some efforts in the Secretariat without Member States’ approval and that proposals, similar to those rejected in the past, continued to be presented to the Fifth Committee. On procurement, the Group sought details about outreach programme activities as they related to Support Account funding.
CARMEL POWER, representative of the European Union, shared ACABQ’s observations on challenges to presenting Support Account reports, and encouraged the Secretary-General to explore presentational improvements to future reports to facilitate understanding and comparisons between financial periods. She noted the proposed increases for peacekeeping for 2015/16, and that the increase in the number of requested posts was mostly due to proposed conversions from general temporary assistance. The Secretary-General’s proposal understated the real size of the increase if information and communications technology costs were factored in. As those costs had previously been included in the Support Account and had been transferred last year to the proposed mission budgets, in reality the increase to the Support Account was some $3.4 million higher. As ACABQ noted, there was a similar impact on the proposed resource level of the Support Account when considering the $4 million of supply chain management costs, which had been included in the mission budget proposals rather than the Support Account.
Continuing, she said the proposed increase in total posts and positions under the Support Account came at a time when, in the same period, the numbers of military and police personnel and civilian staff decreased. Bearing in mind that support functions should match the scope and size of operations, her delegation was interested in hearing how the Secretariat took account of that in its review of requirements for 2015/16, how it was reflected in the current proposed budget and the rationale for converting general temporary assistance positions to posts. In closing, she said the Support Account should be properly structured, transparent and relevant in relation to the evolving mandates so that it provided the core or basic capacity to support operations.