Hundred and Twenty-fifth session
Rome, 26 – 28 November 2003
Report of the Hundred and fourth Session of the Finance Committee
Extension of water-related technical cooperation projects to end-beneficiaries: bridging the gap between the normative and the operational in the un system (case studies in two african countries) (JIU/REP/2002/4)
Report of the Hundred and fourth Session of the Finance Committee
FINANCIAL AND BUDGET REPORTS
|-||Programme and Budgetary Transfers in the 2002-03 Biennium||3 - 7|
|-||Financial Highlights and Status of Current Assessments and Arrears||8 - 12|
|-||UN Joint Inspection Unit Reports:|
|- Reform of the Administration of Justice in the United Nations System: Options for Higher Recourse Instances (JIU/REP/2002/5)||40|
|- United Nations System Revenue||41|
|-Producing Activities (JIU/REP/2002/6)||42|
|- Implementation of Multilingualism in the United Nations System (JIU/REP/2002/11)- Managing Information in the United Nations System Organizations: Management Information Systems (JIU/REP/2002/9)||43 - 44|
FINANCIAL POLICY MATTERS
|-||Liabilities for After Service Medical Costs||46 - 51|
|-||Programme of Work and Budget 2004-2005||53 - 61|
|-||Split Assessments||62 - 71|
|-||Capital Budgeting||72 - 76|
|-||Methodology for the Determination of Equitable Geographic Distribution||82 - 87|
1. The Committee submitted to the Council the following report of its Hundred and fourth Session.
2. The following representatives were present:
Mr Humberto Oscar Molina Reyes (Chile)
Mr Anthony Beattie (United Kingdom)
Ms Ryuko Inoue (Japan)
Ms Lamya Al-Saqqaf (Kuwait)
Mr Muhammad Saleem Khan (Pakistan)
Mr Alassane Wele (Senegal)
Mr Lothar Caviezel (Switzerland)
Ms Perpetua M.S. Hingi (Tanzania)
Mr J. Michael Cleverley (United States of America)
3. In accordance with Financial Regulation 4.5, the Committee reviewed the Director-General’s Programme and Budgetary Transfers in the 2002-03 biennium. Earlier estimates, provided in the Thirty-sixth Annual Report on Budgetary Performance and Programme and Budgetary Transfers (FC 102/3), had been reviewed by the Committee in May 2003 and endorsed by the Council in June 2003. The Committee noted the detailed explanations provided by the secretariat on the updated estimates of the likely scale of transfers between budgetary Chapters.
4. The Committee recognized that the increased transfer into Chapter 3 was mainly due to incremental costs for field staff security, resulting from the Minimum Security Telecommunications Standards (MISTS) adopted by the Chief Executives Board for Coordination (CEB). The Committee agreed in principle to the use of arrears for the one-time expenditure on equipment arising from field staff security requirements, on the understanding that every effort would be made to absorb these costs within the Regular Programme.
5. The Committee recognized that another important item contributing to the need for a budgetary transfer into Chapter 3 was the forecast shortfall in support cost income attributed to the continuing change in the volume and mix of the Organization’s extra-budgetary programmes, exacerbated by difficulties in reducing staff costs for operational support services, particularly in the Regional Operations Branches. The secretariat outlined that actions were being taken to avoid such shortfalls in future, including reducing budgeted support cost income in the PWB 2004-05 and initiating an inter-departmental review of field operations that would result in specific recommendations for bringing support cost expenditures more in line with income. The Finance Committee asked the secretariat to provide to the Committee at its May 2004 session an information paper on the recent trends in support costs and related income recoveries, on proposed steps to reduce the shortfall, and on the calculation methodology applied.
6. The Committee obtained further detail on the appeal launched on behalf of the general service staff to have the language factor reinstated and noted that the biennial impact of reinstating a language factor at 4%, estimated at US$4 million, was being held aside in case the appeal was successful.
7. The Committee approved the requested budgetary transfers between Chapters and took note that there could be some variation to the proposed transfers specified at the present time as the final outcome would be dependent upon matters outside the Organization’s direct control, such as effect of the weaker US dollar on reported expenditures transacted in other currencies or the earning of support cost income which could be directly affected by delivery of the field programme.
8. The Committee reviewed the Financial Highlights paper which covered the first eighteen months of the current biennium, and a working paper on the status of assessed contributions as at 15 September 2003.
9. The Committee noted the key messages to be drawn from discussion of the Financial Highlights paper were that:
10. With regard to potential implications for the financial position of the Organization with the winding up of the “Oil-for-Food” Programme in Iraq, the Committee was informed of the status of implementation of the Programme and related funding issues. The Committee noted that FAO’s operations in Iraq in 2003 had increased significantly, as the Organization had been requested to implement programmes also in the southern part of the country. As, however, the Programme as currently constituted was due to end in November 2003, there would not be sufficient time for FAO to commit the full remaining resources of the “Oil-for-Food” Programme devoted to the agricultural sector. Significant resources amounting to more than US$500 million should still remain available at that time to be allocated to UN entities, including FAO. Despite the security situation, which had led to a new evacuation of FAO’s international staff and left only five officers remaining in the country as at 19 September 2003, the FAO programme continued from Rome.
11. At the end of November 2003 when the “Oil-for–Food” Programme was expected to terminate, the needs for agricultural sector development in Iraq would be such that there would likely be a continuing role for FAO under whatever successor arrangements were to be put in place. The Committee was also informed that, should the Programme close completely, the overall level of extra-budgetary resources available to FAO would decrease significantly. Since, however, the FAO’s administrative and management costs relating to the “Oil-for-Food” Programme were funded entirely through this Programme, the suspension of such Programme would not carry financial implications for Regular Programme budgetary resources in 2003.
12. The Committee noted the increasing adoption of public sector and/or international accounting standards by public sector organizations and recommended that the secretariat review the implications that such adoption would have on the preparation and presentation of the financial statements of the Organization. The Committee was informed that the Organization participated in the UN Working Party on Accounting Standards. The work of this group was ongoing and included the review of the most recent international accounting standards and exposure drafts and their application within the UN.
13. The Committee considered the proposals set out in document FC 104/4 in relation to the staffing of the Treasury function and approved the following:
14. The Committee considered the Report on Support Costs Expenditures and Recoveries contained in document FC 104/5.
15. The Committee reaffirmed the principle that extra-budgetary activities should cover the indirect variable support costs that they incur. It also stated that project support cost rates should be equitable and competitive.
16. The Committee encouraged the secretariat to continue its efforts towards full recovery of indirect variable costs. It recognized that the present variety of project support cost rates reflected the principle that rates should be a reasonable representation of such costs and that the rate structure should not impinge on the Organization’s competitiveness.
17. The Committee approved the proposal made by the secretariat to increase the ceiling of the rate for emergency assistance by half a percentage point from 6% to 6.5%. The Committee took note that the increase was based on the results of the latest Cost Measurement Surveys. The Committee asked the External Auditor to pay attention to this issue in his audit.
18. The Committee, noting the importance and the complexity of project support cost recoveries, and recalling that a shortfall in project support cost income could impact upon programme and budgetary transfers, as it had in the 2002-2003 biennium, requested that the subject be revisited at its May 2004 Session. In this regard, the secretariat would provide an information paper on the recent trends in support costs and related income recoveries, on proposed steps to reduce the shortfall, and on the calculation methodology applied.
19. Finally, the Committee, while recognizing the important role played by the Indian Ocean Tuna Commission (IOTC), decided that it was not in a position to approve the request for a waiver of the project support cost rate currently applied to its activities. The Committee based this decision coherently with the basic principle stated above that the Organization should aim at fully recovering the indirect variable costs associated with the delivery of project activities.
20. However, the Committee recognized that there was a lack of uniformity in project support costs rates for Commissions, noting that some of those established many years ago were not charged at all. It requested the secretariat to prepare a proposal on the harmonization of support costs rates of FAO Commissions for consideration at the next session, including the feasibility of introducing support costs for those Commissions that are currently exempt.
21. The Committee took note of document FC 104/6(i) and approved the Audited Financial Statements of the FAO Credit Union as at 31 December 2002.
22. The Committee took note of document FC 104/6(ii) Audited Accounts – FAO Commissary 2002 and adopted the accounts.
23. The Committee reviewed the progress made in implementing the recommendations of the External Auditor as set out in the Report of the External Auditor on the Financial Statements for the 2000-2001 Biennium.
24. The Committee noted that, in accordance with standard practice, the Progress Report included the comments of the current External Auditor and that review of progress in implementing the recommendations would be a standing item on the Committee’s agenda.
25. The Committee noted that recommendations were being implemented in line with or indeed in advance of the timelines suggested by the External Auditor, however, requested that future reports include an indication of the time-frame when implementation of the recommendations would be completed.
26. The Committee confirmed that the report provided useful information and noted that updated reports would be presented at future sessions for discussion by the Finance Committee.
27. The External Auditor presented the paper with a selection of possible topics for Value for Money (VFM) audit for the biennium 2004-2005. He indicated that the External Auditor had two main functions, namely to give an opinion on financial statements and to audit the administrative and management operations. During the current biennium time and resources had been allocated at 40% to the Value for Money audit and 60% to financial audit.
28. The External Auditor mentioned that the selection of topics was based on the experience of his work in FAO, on materiality and on the risk factors identified as well as on work performed by JIU and AUD and the suggestions from the UN Panel of External Auditors. He mentioned the following topics for possible examination and indicated that only up to four of these topics would be covered during the biennium:
29. The Committee inquired from the External Auditor on the progress of the VFM audits in the current biennium. The External Auditor informed the Committee that of the three VFM audits, initial work on audits of the procurement system and the Technical Cooperation Programme had recently been completed and the work on the audit of the budgetary process was to start shortly.
30. In accordance with standing practice, the audit findings would be reported in the form of Management Letters and the final results of the audit would be presented to the Finance Committee in the long form audit report, taking into account the response of management. The External Auditor invited the Committee to indicate their priority for the suggested topics.
31. The Committee deliberated over the suggested topics and indicated the following priorities:
32. The Committee further requested that, in future presentations, more details regarding suggested topics should be included in order to understand the underlying rationale for the selection of the audit topics. The External Auditor agreed with this request.
33. The Committee heard advice from the Legal Counsel, requested at its May 2003 session, on whether VFM audit reports could be presented separately and sequentially to the Committee as completed during the biennium, instead of waiting for the long form report. Legal Counsel expressed the opinion that the Organization’s financial regulations and longstanding practice provided for a single report and that separate reporting would therefore require a change to these regulations.
34. The Committee decided that the matter of separate reporting should be considered again at its session in May 2004 and requested that Legal Counsel further investigate alternative solutions, in the light of the introduction of similar separate reporting in WFP, the interim reporting system in WHO and relevant experience of other UN agencies.
35. The Committee took note of the information in documents CL 125/INF/10 and CL 125/INF/11 respectively.
36. In addition to the review of the above reports, the Committee engaged in an informative discussion on the relationship between JIU and FAO. The Committee welcomed having been provided with the document Clarifications on some aspects of the FAO/JIU relationship (doc. PC 90/6a), as well as the Annual Report and the Programme of Work of the JIU. The Committee suggested that the information contained in document PC 90/6a be provided in future to all new Finance Committee Members.
37. The Chairperson of the JIU provided additional clarifications on the following items, as outlined in its Statute:
38. On the budgetary aspect, the secretariat indicated that the formula applied for sharing the costs of the JIU was derived from the expenditures reported in the audited accounts of the participating organizations. FAO currently paid approximately US$440 000 per biennium, which was 5.8% of the total JIU biennial budget.
39. In reviewing the individual reports of the JIU, the Committee decided to focus attention on those reports that were particularly relevant to its mandate.
40. The Committee considered the report of the JIU Reform of the Administration of Justice in the United Nations System: Options for Higher Recourse Instances. The Committee endorsed the views of the Director-General on the various recommendations formulated by the JIU in its report, as presented by the Legal Counsel. In this connection, the Committee was apprised of the recently approved FAO policy on prevention of harassment and the procedures for dealing with relevant complaints through investigatory panels and mediation, as well as of on-going discussions regarding the Statute of the ILO Administrative Tribunal among the organizations having accepted the jurisdiction of this Tribunal and their respective staff associations, which were of relevance from the point of view of the recommendations of the JIU. The outcome of the process would be reported to the Finance Committee and the Committee on Constitutional and Legal Matters, as may be required.
41. The Committee noted the document United Nations System Revenue-producing Activities (JIU/REP/2002/6)(doc. CL 125/INF/13) with interest. Observing that the secretariat had adopted all recommendations with the exception of number 8 on which it accepted the views of the Director-General, the Finance Committee endorsed the Report and the Director-General’s comments.
42. The Committee noted the JIU report (JIU/REP/2002/11) Implementation of Multilingualism in the United Nations System (CL 125/INF/14) and confirmed the secretariat’s position endorsing all recommendations.
43. The JIU Chairperson introduced the report indicating that the Director-General had endorsed all recommendations, except recommendation 2 (to appoint a senior official to serve as Chief Information Officer). In the response to recommendation 2, the Director-General had indicated that the arrangements in place in FAO (the Information Management and Technology Committee) followed the direction indicated by the JIU, and were considered to be appropriate. The JIU was satisfied with the response, although FAO had rejected recommendation 2, because this recommendation was to be considered in light of Organization-specific circumstances.
44. The Committee noted that, with respect to the recommendation rejected, there was no requirement to make any further comment. The report was adopted.
45. The Committee took note of the information provided in the relevant JIU reports.
46. The Committee considered the issues relating to After Service Medical Care (ASMC) liabilities as set out in document FC 104/10, aided also by a presentation delivered by the secretariat.
47. The Committee confirmed that current arrangements for funding the ASMC liabilities (i.e. limited to earmarking any investment income or value of investments in excess of that needed to fund the Separation Payment Scheme and Staff Compensation Plan) were clearly insufficient. The Committee, therefore, decided that the issue needed to be approached as a matter of urgency and agreed that the liabilities should begin to be funded from its Regular Programme Budget.
48. The Committee agreed with the recommendation that the 2004-2005 Budget Resolution include an amount of US$14.1 million to match the amount of the liability to be amortized during the biennium, as determined by the biennial actuarial valuation, and recognized that such amount would be reviewed in each subsequent biennium and be adjusted to reflect the latest valuation.
49. Whilst noting that the overall benefits of the ASMC component of the current medical scheme were generally similar to those in place across the UN system, the Committee felt that it would be useful to review the terms of after service care in more detail in particular in relation to the reasonableness of the ASMC benefits provided for under the scheme, the extent to which the scheme was managed in accordance with best practice and the reasonableness of the cost sharing arrangements in place.
50. The Committee was informed that a study of the entire medical scheme in place at FAO had been carried out during 2000 by independent consultants and that such study covered the competitiveness and reasonableness of benefits provided for by the scheme and the performance of the medical plans administrator. The Committee was also informed that the UN’s High Level Committee on Management (HLCM) planned to study the matter of After Service Medical arrangements in place throughout the UN System.
51. Having in mind these elements, the Committee took note and requested that the secretariat prepare an executive summary of the above noted report of the independent consultants, together with any statements by the High Level Committee on Management on the subject of After Service Medical arrangements in place throughout the UN System and that this matter be included in the agenda for the May 2004 Session of the Finance Committee.
52. The Committee took note of document FC 104/11 and concurred with the rate of 0.33 per cent suggested by the Director-General for use in determining the amount of discount for each member nation that had paid its contributions before 31 March 2003. The discount earned would be credited against 2004 contributions.
53. The Committee considered the Director-General’s proposals for the Programme of Work and Budget 2004-05, contained in document C 2003/3 with particular attention given to the section on Resources and the proposals for Chapters 5 (Support Services) and 6 (Common Services).
54. The Committee congratulated the secretariat on the high quality of the document and welcomed the inclusion of information on the risk assessment and efficiency savings. The Committee requested and the secretariat agreed that efforts would be made to accelerate the application of results-based approaches in the non-technical programmes leading to the implementation of the new efficiency saving measures.
55. The Committee was informed that a Zero Nominal Growth (ZNG) budget scenario would be provided to members in mid-October. It noted that, as requested in the report of the Council, the ZNG budget level would be US$651.8 million, implying the absorption of both cost increases and exchange rate effects. It was informed that information on the ZNG impact in relation to Zero Real Growth (ZRG) would be presented at programme level, rather than the detailed programme entity presentation of the full PWB document. One member requested that the ZNG document reflect the structure of the PWB. Some members requested that the ZNG document take into account the potential impact of split assessments, noting that this would effectively exclude the absorption of the exchange rate impact from ZNG. However, it was recognized that since the sponsors of the Council request had specified that exchange rate effects be included in ZNG, it would not be feasible to base ZNG on this lesser reduction although the information in the document should allow some appreciation of what such a lower amount might imply.
56. In examining the impact of various exchange rates on the budget, the Committee was informed that the methodology that was developed as part of the preparatory work for split assessment was much more comprehensive than the pre-existing technique, which only recognised the exchange rate effect of Rome based salaries. The Committee noted that the improved methodology would be applied for the purposes of the ZNG calculation and for the eventual adjustment of the budget to the approved rate of exchange.
57. The Committee endorsed the calculation of the cost increases (US$34 million) as well as the assumptions on which they were based. It also recalled its discussion to recommend the addition to this amount of US$14.1 million to fund the amortization of the liability for after service medical care.
58. The Committee noted resource shifts between Major Programmes that had been introduced into the PWB in response to requests for strengthening areas such as IPPC, Codex, Fisheries and Forestry, as well as the consequent negative impact on extension and training activities. Several members indicated the need for a balance to be maintained between normative and operational activities, while others felt that greater emphasis should be given to operational activities, in particular, to TCP and all activities contributing to a reduction in hunger.
59. The Committee placed particular importance on implementation of the Human Resources (HR) Action Plan. It was informed that the incremental resources foreseen for the implementation of the HR Action Plan were estimated at a level of US$2.5 million. Of this amount, US$1.6 million had been foreseen in the Medium Term Plan 2004-09. Because of the budget constraints, only US$550 000 was provided under the Real Growth scenario in the PWB, and had to be eliminated under ZRG. The majority of the members of the Finance Committee requested that an appropriate level of funding be provided for implementation of the Action Plan and that it be protected independently of the budget scenario adopted.
60. The Committee noted the request of some members for appropriate resource allocations for their regions and requested that information be provided comparing budgetary allocations by region over the last three biennia.
61. The Committee members expressed differing views on the budget level, with several members supporting a budget level of RG or ZRG while others supported ZNG or less than ZNG.
62. The Committee considered the Report on Split Assessment contained in document FC 104/13.
63. The Committee recalled the expressed views of the 123rd session of the Council that the approved Programme of Work and Budget should be protected to the maximum extent possible from the effects of fluctuating exchange rates and that the US dollar remained the functional currency of the Organization.
64. The Committee welcomed the updated information and additional clarifications provided in the document. The proposed alternative approach on the presentation of split assessment in the budget document was considered to be a substantial improvement. The Committee appreciated the proposed tables (paragraphs 9 and 10) which presented clearly the impact of exchange rate fluctuations under a split assessment methodology.
65. The secretariat clarified that both the budget document and the Appropriation Resolution would reflect the impact of the new exchange rate on the budget. For the current biennium, the budget rate of exchange would be established on the day of the vote in Conference, as per past practice. However, under the new procedure, the US dollar/Euro rate of exchange proposed for adoption would be the forward rate for two years as at 1 July of the year preceding the new biennium; that is, just before finalization of the full PWB document.
66. Some members referred to the importance of FAO’s efforts to absorb the risk of exchange rate fluctuations into the management of its resources to the extent possible before transferring the exchange risk to member states.
67. One member was opposed in principle to the split currency assessment concept, but did not wish to block a consensus view. This member stressed the need to ensure 1) transparency in the way the impact of exchange rates fluctuations would be reflected in the budget of the Organization; and 2) continued discretion among the members regarding the budget level (i.e. no automaticity).
68. This member also proposed that those member countries that strongly supported the proposal might provide voluntary contributions to offset FAO’s costs (ranging between US$150 000 to US$250 000) to implement split assessments.
69. In addressing these concerns, the secretariat noted that “the use of a split assessment does not preclude discretion on the part of the membership in determining whatever budget level it thinks fit”.
70. Taking into account the points raised above, the Committee recommended the adoption of the split assessment methodology beginning with the 2004-2005 biennium for endorsement by the Council.
71. The Committee endorsed the proposed revisions to the Financial Regulations and the prototype of the Appropriations Resolution (see Annex I) for transmission to the CCLM for endorsement and submission to the Council.
72. The Finance Committee recalled that it had considered this issue at its last session and that it had requested the secretariat to prepare revised proposals. It reviewed the document, which described the revised approach to planning and funding capital expenditures which were defined as being expenditures on tangible or intangible assets with a useful life in excess of FAO’s financial period of two years and which generally required a level of resources which could not be funded within the appropriation for a single biennium.
73. The Committee noted that FAO capital budgets would have their origins in the Strategic Framework and each proposal should relate to one or more of the six Strategies to Address Cross-Organizational Issues (SACOIs), endorsed by the membership in the Strategic Framework 2000-15. It welcomed the proposed addition of a six-year capital expenditure plan to the Medium Term Plan and its subsequent inclusion of the relevant two-year segment in Chapter 8 of the Programme of Work and Budget.
74. The Committee noted that the issues raised at the last meeting had been adequately addressed and therefore endorsed for consideration by the Council the establishment of a Capital Expenditures Facility which would consist of two separate but inter-related elements:
75. The Committee also endorsed the draft text of the proposed Financial Regulation 6.10 (see Annex II), for submission through the Committee on Constitutional and Legal Matters to the Council.
76. Furthermore, the Committee supported in principle FAO’s adoption of a concept of introducing a user charge for the delivery of capital investment services as one source of capital asset funding, and agreed that the secretariat should prepare a study examining precise modalities for such a charging regime.
77. The Committee welcomed the progress report prepared by the secretariat on the initiatives undertaken and projected targets relating to human resources management.
78. Acknowledging that human resources were a vital asset of the Organization, the Committee underlined the importance of allocating sufficient resources to implement the initiatives outlined in the action plan in the report. In this regard, it felt that the requisite resources should be provided to ensure the timely implementation of the Oracle Human Resource Management Information System (HRMS), which was a key element in the effective management of the Organization’s human resources.
79. The Committee further recommended that:
80. Given the paramount importance it attributed to human resources management issues, the Committee decided to continue to follow the Organization’s initiatives in this area and requested the secretariat to submit a progress report on this subject, in a format similar to that presented in document FC 104/15, at its next session.
81. The Committee took note of document FC 104/16 regarding the recommendations and decisions of the ICSC and the UN Joint Staff Pension Board to the General Assembly, including on changes in salary scales and allowances.
82. The Committee noted with appreciation the report provided by the secretariat on the methodology for the determination of equitable geographic distribution (doc. CL 124/15-Add.1).
83. Acknowledging that the issues relating to the geographic distribution methodology were complex, the Committee observed that many other UN system organizations had addressed this issue. It felt, therefore, that consistency within the UN system would be desirable.
84. With regard to the three options presented, the majority of the Committee members were in favour of Option #21, while some expressed preference for Option #32.
85. In view of the foregoing, the Committee felt that the Council might wish to consider the establishment of a working group to review:
86. One member, while expressing support for an assessment of geograhpic distribution on an equitable basis, considered reaching a decision on a methodology to be premature. First, the secretariat must present specific measures to rectify existing geographic distribution imbalances.
87. Finally, the Committee agreed that there was a need for further concrete measures to be taken concurrently to redress the under-representation of certain member states and of some regions, irrespective of the option to be selected. Accordingly, the secretariat was requested to report to the Committee at its next session regarding the further concrete efforts to be undertaken on this matter.
88. The Committee was informed that the Hundred and fifth Session was scheduled to be held in Rome from 6 to 7 October 2003. Furthermore, the Committee was informed that the Hundred and sixth Session was tentatively scheduled to be held in Rome from 10 to 14 May 2004. The final dates of the session would be decided in consultation with the Chairperson.
89. The Committee recalled that in the absence of a policy framework agreed by the Governing Bodies on the use of extra-budgetary funds, some member states had expressed concern about the scope of activities carried out with such resources. Accordingly, the Committee requested that a paper be prepared for the May 2004 session on an oversight framework for the use of extra-budgetary funds. It was noted that this paper should also be submitted to the Programme Committee.
90. The Committee took note of the information provided in document PC 90/6(b) / FC 104/INF/20(a) recalling that its substantive discussion of the JIU recommendations pertinent to the work of the Committee took place under other agenda items.
91. The Committee asked that it receive a document on the Use of Arrears at its May 2004 session. Meanwhile, it received an oral summary of the situation as follows:
92. The amount of US$92.7 million had been allocated as follows:
93. Resolution 6/2001 authorized expenditures up to US$50.7 million and hence it had been necessary to realign proposed expenditures to the lower limits of US$44.9 million. This had been completed and the responsible divisions had completed spending plans by year for the period 2003-2005. Allotments had been issued for 2003 and spending had commenced.
94. A more detailed report would be produced for the May session as requested.
95. The attention of the Committee was drawn to a request by Japan at the 123rd Session of the Council for additional financial information to be provided in the Programme Implementation Report 2000-01. The Committee noted that this request would be pursued separately with the secretariat.
96. The Japanese delegate also expressed interest in the Programme Implementation Report (PIR) and indicated a need for a more results-oriented approach with proper consideration of the financial aspects. The delegate also noted that a financial analysis of the cost efficiencies by programme could be useful in setting priorities. The Committee was informed that the PIR 2000-01 was the last in the current format and that the next session of the Programme Committee would be considering a proposal which better took into account the new programme model.
97. Concerning the proposal of Japan for more involvement of the Finance Committee in priority setting, it was noted that this subject was within the mandate of the Programme Committee, which was devoting significant effort to this area of its work. The secretariat agreed to provide the background documentation to the Japanese delegate.
5.1 The appropriations for a financial period, subject to related adjustments effected in accordance with Regulation 5.2, shall be financed by annual contributions from Member Nations and Associate Members. Contributions from Member Nations shall be assessed in accordance with the scale of contributions determined by the Conference, which scale shall not include contributions from Associate Members. Contributions from Associate Members shall as far as feasible be calculated on the same basis as contributions from Member Nations, the amount thus obtained being reduced by four tenths to take account of the difference of status between Member Nations and Associate Members, and shall be credited to Miscellaneous Income. Pending receipt of contributions, appropriations may be financed from the Working Capital Fund.
5.2 In the assessment of the contributions of Member Nations and Associate Members for each financial period, adjustments shall be made in respect of:
5.3 For determining the annual contribution of each Member Nation and Associate Member, the assessment of each such Member Nation and Associate Member for the financial period shall be divided into two equal instalments, one of which shall be payable in the first calendar year and the other in the second calendar year of the financial period.
5.4 At the beginning of each calendar year the Director-General shall:
5.5 Contributions and advances shall be due and payable in full within 30 days of the receipt of the communication of the Director-General referred to in Regulation 5.4 above, or as of the first day of the calendar year to which they relate, whichever is the later. As of 1 January of the following calendar year, the unpaid balance of such contributions and advances shall be considered to be one year in arrears.
5.6 Annual contributions to the budget shall be assessed partly in United States dollars and partly in euro. Each biennium, the Conference will determine the proportionate share of the budget payable by all Member Nations and Associate Members in United States dollars and in euro respectively. Unless the amounts assessed are received simultaneously and in full in the currencies in which they were assessed, credit for any partial payment shall be given against contributions due in proportion to the amounts assessed in both currencies.
Annual contributions to the budget shall be assessed in United States dollars. To the extent that the Conference, after ascertaining in what currencies Member Nations and Associate Members propose to make their contributions in the ensuing financial period, finds that anticipated United States dollar income will be inadequate to meet estimated United States dollar expenditures of the Organization as determined by the Conference,Should a the Conference will determine the proportionate share of contribution that all Member Nations and Associate Members who do not pay their contributions in full in United States dollars shall pay in that currency. Each Member Nation or and Associate Member shall pay any the remainderpart of its current year contributions in a currency other than United States dollar or euro lire, or in its own currency which, for the purposes of its contributions to the Organization, it will the responsibility of that Member to ensure the free convertibility of that currency into United States dollars and/or Euro. must be freely convertible into lire, the convertibility being the responsibility of the contributing government. The exchange rates applicable to such contributionto partial payment or payment in other currencies as described in this paragraph rate shall be the market official rates of the the Euro and the lire to theUnited States Dollar to the currency of payment dollar on the first business day in January of the calendar year in which the contribution is due, or the rate in effect on the day the payment is made, whichever is more favourable to the Organization the higher.
5.8Obligations of Member Nations and Associate Members, including arrears of contribution, shall remain payable in the currency of contribution of the year in which they were due.
5.8 Any nation admitted to membership or any territory or group of territories admitted to associate membership shall pay a contribution to the budget for the financial period in which the membership or associate membership becomes effective. Such contributions shall be an amount determined by the Conference and shall begin with the quarter in which the application was approved. All new Member Nations shall be required to make advances to the Working Capital Fund in accordance with Regulation 6.2 (b) (ii).
5.9 Non-member nations of the Organization that are members of intergovernmental commodity groups; subcommittees, subsidiary working parties and study groups established by the Committee on Fisheries; or of bodies established by conventions or agreements concluded under Article XIV of the Constitution shall contribute towards the expenses incurred by the Organization with respect to the activities of those groups or bodies in an amount determined by the Director-General except as otherwise decided by the Conference or the Council.
5.10 The Council, at any of its sessions, may advise the Director-General as to any steps that ought to be taken in order to expedite the payment of contributions. The Council may submit to the Conference such recommendations in this regard as it may consider appropriate.
Budgetary Appropriations 2004-05
Having considered the Director-General's Programme of Work and Budget:
|Approves a total net Appropriation of US$ 721,678,000 for the financial period 2004-05|
Appropriations are voted for the following purposes:
Chapter 1: General Policy and Direction
Chapter 2: Technical and Economic Programmes
Chapter 3: Cooperation and Partnerships
Chapter 4: Technical Cooperation Programme
Chapter 5: Support Services
Chapter 6: Common Services
Chapter 7: Contingencies
Total Appropriation (Net)
Chapter 8: Transfer to Tax Equalization Fund
Total Appropriation (Gross)
The appropriations (gross) voted in paragraph (a) above, plus an amount of US$ 14,100,000 to fund the amortization of After Service Medical Care, shall be financed by assessments on Member Nations, after deduction of Miscellaneous Income in the amount of US$ 9,195,000, thus resulting in assessments against Member Nations of US$ 823,543,000.
In establishing the actual amounts of contributions to be paid by individual Member Nations, the assessment of each Member Nation shall be reduced by any amount standing to its credit in the Tax Equalization Fund provided that the credit of a Member Nation that levies taxes on the salaries, emoluments and indemnities received from FAO by staff members shall be reduced by the estimated amounts of such taxes to be reimbursed to the staff member by FAO. An estimate of US$ 5,000,000 has been withheld for this purpose.
The contributions due from Member Nations in 2004 and 2005 shall be paid in accordance with the scale adopted by the Conference at its Thirty-second session, which contributions, after the deduction of amounts standing to the credit of Member Nations in the Tax Equalization Fund, result in net amounts payable totalling US$ 731,583,000.
The contributions shall be established in US Dollars and Euro and shall consist of US$ 381,390,000 and € 397,947,000, which represents 52.0% to be paid in US Dollars and 48.0% in Euro.
The foregoing appropriations are calculated at the budget rate of
98. Noting the recommendations of external experts and of the JIU that the Organization should introducing capital budgeting;
99. Recognizing the desirability of integrating capital expending planning into the existing planning framework:
Draft Financial Regulation on the Establishment of a Capital Expenditure Account
6.10 There shall be established:
1 This option was based on three factors (membership, population and contribution) and included a grade-level weighting system.
2 This option was essentially the same as Option #2, but did not include the grade-level weighting system.