BUDGETARY FRAMEWORK

82. The following table summarizes, in a simplified manner, the projected income and utilization of resources under all sources of funds in 2000-01 under the ZRG, RG and ZNG scenarios together with comparative information for 1998-99.

83. The programme of work in the preceding table comprises those activities that are proposed to be performed on the basis of expected contributions from Member Nations, Miscellaneous Income and Other Income, and is designed according to the expected availability of these resources. Trust Fund expenditure estimates are the Secretariat's forecast of the Trust Fund resources which are expected to be made available by donors.

84. Voluntary contributions falling under the category of Other Income comprise resources largely at the disposal of the Organization, and/or resources that are managed closely with the Regular Budget Appropriation. The Organization will continue to review the classification of voluntary contributions under Financial Regulation 6.7 to improve the presentation of an integrated programme of work, taking due account of Member Nations needs for the presentation of an integrated programme of work as well as financial reporting methods implemented in the new administrative systems.

OVERVIEW OF TOTAL RESOURCE AVAILABILITY
(ZRG before cost increases)

85. The preceding table highlights the movements in budgetary resources. The decline in Miscellaneous Income is partly attributed to a reduction in the expected level of interest earnings which, in turn, reflects a combination of the foreseen payment patterns of Member Nations' net assessed contributions and the decline in rates of interest. In addition, a lower estimate for the lapsing of accrued liabilities is due to an expected improvement in the accuracy of unliquidated obligations at the end of 1999, arising from the implementation of Oracle.

86. The table also highlights a decline of US$ 12.4 million in Other Income, which has required a corresponding adjustment in the programme of work, or planned expenditure. The key factors underlying this reduction are:

• the substantial reductions in estimated Administrative and Operational Support Services (AOS) income (US$ 5.8 million) and Terminal Reports income (US$ 1.3 million) due to a large projected decline in non-emergency extra-budgetary project delivery for 2000-01;
• a decline with respect to estimated cost reimbursements from the World Bank (WB), amounting to US$ 2.5 million, which brings the estimate in line with the Memorandum of Understanding for the FAO/WB Cooperative Programme under which the WB contributes to 75 percent of the costs of the programme; and
• a reduction in the reimbursements for administrative services to World Food Programme (WFP) (US$ 1 million) which is largely due to the expected decline in treasury and payroll services arising from the implementation by WFP of their own administrative systems.

DEVELOPMENTS UNDER
EXTRA-BUDGETARY RESOURCES

87. Historical project delivery by funding source is shown in the preceding table and indicates that the total extra-budgetary field programme has increased from the low level of 1996.

88. The United Nations Development Programme (UNDP) project delivery for projects that are executed or implemented by FAO and thus earn Project Servicing Costs, has declined steadily from US$ 108.3 million in 1993 to US$ 28.6 million in 1998. Delivery in 2000-01 is expected to stabilize at about US$ 28 million per year. With regard to UNDP-funded SPPD and STS activities, the annual delivery has remained fairly stable between US$ 3.5 and US$ 4 million per year.

89. Non-emergency Trust Fund project delivery declined in both 1997 and 1998 to levels below US$ 130 million per year, after showing small increases in 1995 and 1996. It is expected that the Non-emergency Trust Fund delivery will recover during the 2000-01 biennium to levels similar to those reached during 1996.

90. Trust Fund Emergency activities, carried out by FAO's Special Relief Operations Service (TCOR), vary with circumstances. Between 1993 and 1995 work of the Emergency Centre for Locust Operations (ECLO) and the Screwworm Emergency Centre for North Africa (SECNA) resulted in expenditures of approximately US$ 30 million each year. As the work of these programmes declined, or was completed, emergency assistance delivery reached a low of US$ 15.8 million in 1996. The large increase in emergency programmes in both 1997 and 1998 is related to the Iraq Food for Oil programme which accounted for US$ 25.2 million of the US$ 35.2 million delivery in 1997 and US$ 66.9 million of the US$ 78.3 million delivery in 1998. The Iraq Food for Oil programme is expected to continue into the next biennium together with the provision of emergency supplies to conflict-affected areas in the Balkan states, with the result that the high levels of emergency activities are expected to continue throughout 2000-01. It may, therefore, be concluded from the preceding table that the current and the projected total extra-budgetary field programme reflects high levels of emergency assistance.

91. Non-emergency assistance has continued to show a steady decrease from a level of US$ 255.4 million in 1993 to US$ 157.1 million in 1998, with UNDP delivery having shown a particularly large reduction. A major consequence of the decline in non-emergency work is its impact on Project Servicing Costs and Other Administrative Support Services, under Other Income, which shows an estimated decline of US$ 5.8 million in 2000-01 versus the provision in 1998-99.

92. The anticipated extra-budgetary operational activities are largely handled by TCO, the regional operations branches and, to a small degree, by the technical units at Headquarters. They are broken down by major geographic areas in the following table (including global and interregional, which are largely handled by TCO). These forecasts reflect known facts regarding ongoing projects and reasonable expectations for projects in the pipeline.

EFFICIENCY SAVINGS AND ORGANIZATIONAL CHANGES

93. Significant efficiency savings of the past three biennia have made it possible for the Organization to reprogramme substantial resources to new thrusts and priorities. This has been achieved despite reductions in the Organization's net budget level in both real and nominal terms since 1992-93 and notwithstanding large reductions in Other Income, particularly funding from Project Servicing Costs and Other Administrative Support Services.

94. Some of the efficiency measures implemented in prior biennia are being further pursued. These include input-oriented economies such as the ongoing efforts at reducing the number of director-level posts in 2000-01 (mainly in FAORs), expansion of the partnership programmes, the implementation of cheaper and better forms of communication between locations and cost reductions through more rigorous means of tendering.

95. Further savings in 2000-01 will focus on process-oriented change. They will necessitate changes in policies, procedures and ways of working, with the aim of streamlining operational and administrative functions, which will lead to changes in organizational structures. They will include further modifications to the delegation of authority conferred on officials of the Organization, whilst ensuring that acceptable levels of internal control and stewardship of resources are retained.

96. The recent "Phase 1" implementation of new administrative systems has provided an opportunity for reviewing procedures and ways of working. However, the implementation of process-oriented savings requires extensive internal discussion and evaluation, and sometimes involves prior agreement with third parties. Given the lack of operational experience with Oracle so far, the implementation of such changes in 2000-01 is not devoid of risks.

97. It is recalled that the existing Headquarters MSUs are to be replaced by a centralized management support structure, reporting to the Assistant Director-General, AF, providing personnel servicing and financial transaction processing support to all Headquarters departments and divisions. The full details of this restructuring will require further scrutiny and approval in accordance with established internal procedures and the impact of these new arrangements on the work of AFF and AFP may also have to be further considered in this context. Despite the additional internal effort required to finalize the arrangements and modalities of this restructuring, the biennial savings from these arrangements are estimated at approximately US$ 7 million under the ZRG scenario and US$ 7.5 million under the ZNG scenario.

98. A significant adjustment to the Headquarters Field Operations Division (TCO), including the abolition of the Fellowships and Reports Branch and the assumption of its functions in TCOC (which will be renamed Project Operations Coordination, Reports and Support Branch) will also yield considerable savings in 2000-01.

99. It is also recalled that additional potential synergies between the regional office technical departmental groups, operations branches and the MSUs are being studied and that related economies are already reflected under ZNG.

100. The 2000-01 ZRG proposals also include structural changes in GI Department, particularly in GII and GIL. In the case of GIL, the proposals include the proposed phasing out of the AGRIS processing centre in Vienna from 2000, with the function being achieved through more economical and effective means.

101. The proposed Organization Chart effective 1 January 2000 is attached to the back of this document. It includes the impact of the organizational changes noted above. Although the revised Organization chart takes account of numerous changes to the structure of AF Department, further changes in AF are likely, to take account of the impact of new working arrangements under Oracle. The chart also reflects two further organizational changes but which have minimal impact on the 2000-01 budgetary proposals:

• the merger of the Plant Nutrition Management Service (AGLN) and Soil Resources, Management and Conservation Service (AGLS) into a unified Land and Plant Nutrition Management Service (AGLL), which produced staff savings in the 1998-99 budget and has since been formalized; and
• a new unit, the Livestock Information, Sector Analysis and Policy Branch (AGAL), is proposed to be created within AGA through the reassignment of resources within AGA.

POSTS

102. The incorporation of Support Costs and Other Income within the budget, and the implementation of a new framework for FAO publications and documents, led to the inclusion of a number of non-Regular Programme positions in the total establishment for 1998-99. The adoption of a zero nominal growth (ZNG) budget in 1998-99 brought the total 1998-99 establishment down to 3 599 posts, of which 3 387 are funded by the Regular Programme and the balance from Other Income.

103. The Administration and Finance Department (AF) has made further proposals in the Programme of Work and Budget 2000-01 involving consolidation of the communications functions within the Information Systems and Technology Division (AFI). Although the proposals are cost neutral for AF, five professional posts and 26 general service posts are proposed for transfer from the divisional budgets to the Information Technology (IT) Pool account as part of this restructuring, thus integrating all posts dealing with telecommunications in all its forms.

104. Furthermore, a proposed transformation of the editorial services pool into a centrally-managed and funded provision for core multilingual editorial services to technical departments to be placed in the GII Division is cost neutral from a staffing viewpoint. It entails the transfer of six professional posts and eight general service posts from the hitherto Editorial Services pool account to the GII budget.

105. As noted above, the details of the restructuring of the Headquarters MSUs are still being worked out. Nevertheless, the ZRG scenario envisages the net abolition of nine professional and 42 general service posts. In addition, the ZNG scenario tentatively foresees the abolition of a further five general service posts, so as to maximize economies in administrative areas.

106. Potential for economies has been identified in three out of the four Regional Office Operations branches (namely RAF, RAP and RNE) where the benefit of experience in decentralized operations and foreseen levels of field programme delivery will make it possible to abolish 8 professional and 10 general service posts. As noted above, further restructuring and post abolitions may be recognized following completion of the review of the responsibilities and modalities for providing administrative and technical support to field programme operations in the regions, but no specific abolitions can be identified at this stage.

107. The following table summarizes the evolution of established posts from the 1998-99 approved budget to the proposals for the Programme of Work and Budget 2000-01. The transfer of posts between Pools and Other Funds and Regular Programme related to the AFI/AFS and GII pool restructuring, the impact of Headquarters MSU restructuring and abolitions in Regional Office Operations branches, are shown separately from the impact of the remaining programme changes.

108. Despite efforts made to "protect" general service posts, the proposals will mean a significant reduction in the number of such posts during the biennium. However, continuing pressure on resources and the need to accelerate the organizational changes described above made further reductions necessary. Fortunately, in the short term, most general service staff whose posts have been cut can be accommodated through redeployment to vacancies which arise during this period because of the relatively high rate of mandatory and early retirement of this category and the freeze on recruitment of general service staff, which has been in place since 1994. This should allow these adjustments to take place without large scale loss of jobs and hardship to staff members.

109. Within the other programme changes referred to above, 56 new posts and 70 post abolitions are proposed under the Regular Programme. The following table lists all new posts and abolitions to the Regular Budget falling under the column "other programme changes" in the table above.