CL 120/16


Hundred and Twentieth Session

Rome, 18 - 23 June 2001



1. At its Thirtieth session in November 1999, the Conference adopted Resolution 3/99 in which it noted that additional funds may become available to the Organization during the biennium 2000-01 in the form of payments of arrears of contributions, in particular by the major contributor, and further authorised:

"the Director-General, notwithstanding Financial Regulation 6.1, to use part or the whole of the balance of such payments of arrears for the following purposes, after providing for the implementation in full of the Programme of Work and Budget for the 2000-01 biennium under Resolution 2/99, and to carry forward such funds to the following biennium if necessary, subject to the receipt of such arrears and prior review of priorities by the Programme and Finance Committees and subsequent approval of those priorities by the Council:

(a) One-time activities of high priority and of the technical programmes of the Organization; and/or

(b) One-time expenditures of a capital nature for improvement to the Organization's infrastructure including its communication capacity with Members".

2. As specified above, the Council, at its 119th session, examined a list of proposals for the use of arrears prepared by the Secretariat in conformity with the criteria established in the same Resolution. As also stipulated in the Resolution, the Council welcomed the prior scrutiny of these proposals by the Committees and their related advice.

3. The Council recognised that there were continued uncertainties on the exact timing and amounts of arrears' payments to permit funding of the proposed items, either in their totality or partially. Accordingly, the Council agreed that it did not have to take a firm decision at this session, whereas it would be in a better position to do so at a future session, when the situation would become clearer.

4. Nevertheless, should the arrears' payments materialise, the Council considered that the proposed list embodied a reasonable package, subject to the observations of the Committees and Council that attention should be accorded to additional technical support to countries for strengthening national sanitary and phytosanitary systems; the development of a plant biotechnology network in Asia; and the provision of additional technical assistance to the implementation of Codex standards. It also concurred with the priority to be given to the full implementation of the Organization's corporate administrative systems, as recommended by the Director-General.

5. Given the agreement reached by the UN General Assembly at the end of 2000 to revise the UN scale of contributions and the application of that scale to FAO's assessed contributions in accordance with the provisions of Conference Resolution 9/99, it seems highly likely that arrears payments will be made to FAO in the foreseeable future. While the payments may be made either in 2001 or thereafter, it is essential that the Council approve priorities for their use as required under Conference Resolution 3/99.


6. With the finalisation of the accounts for the biennium 1998-99, the amount of the accumulated deficit as at 31 December 1999 is known. This is a key parameter as the provisions of Conference Resolution 3/99 include the requirement that:

... the Director-General apply such arrears as may be paid by the major contributor to a proportional reduction in the accumulated deficit as shown in the accounts of the Organization as at 31 December 1999 equal to the proportion of payments made by the major contributor of its total arrears in assessed contributions resulting in the replenishment of the General Fund and the Working Capital Fund as necessary, ...

7. The balance of the accumulated deficit as at 31 December 1999, as indicated in the Audited Accounts FAO 1998-991, is US$ 63.6 million. This figure is considerably higher than the US$ 38.4 million previously anticipated to the Council in the earlier paper on the Use of Arrears2. Additional charges to the accumulated deficit arose from the application of Conference Resolution 10/99 which requires that any surplus investment income on the Separation Payments Scheme and the Compensation Reserve Plan be earmarked for After Service Medical Care. The amount so earmarked increased by US$ 17.2 million because of the change in the total liability based on the actuarial review as at 31 December 1999.

8. The amount of US arrears payable to the General Fund is US$ 94.5 million (see Schedule of Assessed Contributions Outstanding for the Regular Programme3). Under the terms of the Resolution, the amount of US$ 9 million advanced from the Working Capital Fund to cover redeployment and separation costs for 2000-01 would need to be deducted together with the balance of the accumulated deficit of US$ 63.6 million. This leaves a balance of US$ 21.9 million as the amount of US arrears that could be used for other purposes. The proposals below take into account this revised amount.


9. Over and beyond the above reduction in expected available resources, the issue of priorities becomes particularly complex at the present time. Closer to the end of the biennium, this document is effectively addressing expenditure which will most likely be incurred in the period 2002-03. This is the same period covered by the Summary Programme of Work and Budget (SPWB) 2002-034 which is also before the Council. Hence some overlap was bound to occur between the SPWB and the original proposals for the use of arrears as submitted to the last session of the Council. In effect, one would expect many high-priority one-time expenses to be considered within the SPWB. However, such potential overlap has been eliminated by the units concerned and hence the figures shown below assume approval of the budget level as proposed in the SPWB. It follows that the use of arrears may need to be amended if the final budget level is different from that proposed in the SPWB.

10. The following priorities are generally based upon those proposed in the previous Council document on the use of arrears, adjusted for the reduced amount and amended to reflect the views of the Council as reported above.

Estimated Cost of Proposed One-time Expenditure


Estimated Cost
(US$ 000)

1. Biotechnology and biosecurity 2,300  
2. Forest information, resource assessment, etc. 1,200  
3. Multilateral trade 2,500  
4. Fisheries Plans of Action 1,500  
5. Information Technology (IT) infrastructure to support technical and other work of the Organization 4,900  
6. Corporate administrative systems 10,500  
  Total 22,900  

11. The proposed actions and their relationship to the Strategic Framework 2000-2015 are further described below.

Biotechnology and Biosecurity - US$ 2,300,000

12. The additional resources will contribute to Strategic Objective B1 concerning international instruments for the safe use of agricultural goods and to C2 in the adoption of appropriate technologies to sustainably intensify production. This would include:

Forest Information, Resource Assessment, etc. - US$ 1,200,000

13. This will boost under-resourced, but important, support to the achievement of Strategic Objective D2 as regards mountain environments as well as strengthened assessment of forest resources and other areas as called for under Strategic Objective E2. The proposed allocation would cover:

Multilateral Trade - US$ 2,500,000

14. Re-opened trade negotiations have generated significant demand for FAO's services. A positive response to Strategic Objective B1 in its promotion of food and agricultural trade is required and would include:

Fisheries Plans of Action - US$ 1,500,000

15. Additional one-time resources are needed to accelerate work on approved Plans of Action currently constrained by lack of resources. These activities would contribute largely to Strategic Objective D2 in conserving existing marine resources . In particular, they would allow for the more effective implementation of Plans of Action on seabirds, sharks, fishing capacity and illegal, unregulated and unreported fishing (IUU).

Information Technology (IT) Infrastructure
to Support Technical Work - US$ 4,900,00

16. Capital inputs to the IT infrastructure would directly contribute to the Organization's response to its Corporate Strategy E on information and assessments by upgrading its technical systems and of the support infrastructure to the latest technical standards. This would include:

Corporate Administrative Systems - US$ 10,500,000

17. These systems are the keystone to the cross-organizational strategy on Continuing to Improve the Management Process. An allocation of arrears, beyond what has been provided in the SPWB, would allow related development work (which has been severely constrained by lack of resources) to be completed more rapidly. The major elements are:


18. The Director-General seeks the approval by the Council of the proposed priorities for the use of arrears detailed above, allowing flexibility to the Director-General in the allocation of resources between items based upon more accurate estimates of cost as they become available.


1 C 2001/5, Statement I

2 CL 119/19 paragraph 9

3 C 2001/5 page 27 (Translator note: page nos. valid for English version - please look up USA row of table in other language versions)

4 CL 120/3