FC 107/15 |
Hundred and Seventh Session |
Rome, May 2004 |
Report on the Use of Arrears |
1. In late 2002, the Organization received from the Major Contributor a payment of arrears in the amount of US$ 100 million. The use of these funds was stipulated in Conference Resolution 6/2001 (see Annex I). The conditions of the Resolution as well as the Conference Report require that amounts available after the proportional reduction in the accumulated deficit of the Organization be used taking into account that:
2. The Finance Committee received, at its 104th Session in October 2003, an oral summary on the use of arrears and asked that additional information be provided to the 107th Session in May 2004. This report has been prepared in response to the request of the Committee.
3. As indicated above, a total amount of US$ 100 million was received as a payment against arrears of Assessed Contributions, the Special Reserve Account and the Working Capital Fund. In agreement with the major contributor, the amounts were allocated as shown in Table 1.
Table 1. Payment of Amounts due as Arrears from the Major Contributor
Amounts due from the USA as: | US$ Amount Due | Allocation Indicated by USA | Balance Outstanding |
Arrears in Assessments for the Working Capital Fund (WCF) | 1,250,000 | 1,250,000 | 0 |
Arrears in Assessments for the Special Reserve Account (SRA) | 10,077,250 | 6,002,132 | 4,075,118 |
Arrears of Assessed Contributions for the General Fund | 94,500,718 | 92,747,868 | 1,752,850 |
Total Amount due as Arrears from the USA | 105,827,968 | 100,000,000 | 5,827,968 |
4. The application of the amount of US$ 92,747,868 paid to the General Fund was, according to Resolution 6/2001, to be used to reimburse the Working Capital Fund and adjust the accumulated deficit, with the remainder being available for use under Operative Clause 4 of Resolution 6/2001, as shown in Table 2.
Table 2. Allocation of Amount Available for Use
Description |
|
Total US Arrears of Assessed Contributions credited to the General Fund | 92,747,868 |
Less: transfer from the General Fund to the Working Capital Fund (reimbursement of the WCF as required under Resolution 3/99) | (8,360,000) |
Less: 98.2% of the adjusted accumulated deficit as at 31 December 2001 for the purposes of the resolution on the Use of Arrears | (39,476,000) |
Total Amount available for use under Operative Clause 4 of Resolution 6/2001 | 44,911,868 |
5. Resolution 6/2001 authorized expenditures up to US$ 50.7 million under Operative Clause 4 and hence it was necessary to realign proposed expenditures to the lower limit of US$ 44.9 million. To achieve the lower level of funding, in April 2003 revisions to the original submissions were sought from the departments concerned. A critical review of the amended proposals was undertaken based upon a set of criteria including:
6. Based upon these criteria and the guidance provided by the Deputy Director-General, target amounts were determined and communicated to the concerned Assistant Directors-General in early June 2003. The Departments determined the specific amounts for individual items and allotments for each year. Table 3 shows adjustments in resources for the areas identified in the Resolution to align proposed expenditure with the level of resources received.
Table 3. Adjustments to Align Proposed Expenditures with Resources Received (US$ ‘000)
Item | Estimated Resources in Resolution | Revised Resources Following Receipt of Funds |
1 - Biotechnology and biosecurity | 4,000 | 3,686 |
2 - Natural resource assessment and conservation, with particular emphasis on Forestry | 4,300 | 3,803 |
3 - Enhanced Language coverage through translation of reference texts into official languages including Codex Alimentarius | 2,700 | 1,943 |
4 - Multilateral trade | 2,500 | 2,509 |
5 - Statistical data – improvements in quality and coverage | 1,800 | 1,739 |
6 - Fisheries and Other Plans of Action | 2,400 | 2,108 |
7 - Information Technology (IT) infrastructure to support technical and other work of the Organization | 7,500 | 8,349 |
8 - Corporate administrative systems | 25,500 | 20,775 |
TOTAL | 50,700 | 44,912 |
7. In many cases, resources were adjusted downward taking into account expenditures from other funding sources prior to the arrears being received. In a few instances, new items were added, including: a project to strengthen the capacity of Less Developed Countries and Small Island Developing States to access electronic information; support to the one-time cost associated with the International Year of Rice; and a study of water resources as a component of national Forestry Resources Assessments.
8. Further demands have also been placed upon the arrears through the actions of the Finance Committee and FAO Conference. The Finance Committee at its 104th session, when considering the Programme and Budgetary Transfers in the 2002-03 Biennium “recognized that the increased transfer into Chapter 3 was mainly due to incremental cost for field 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 security requirements, on the understanding that every effort would be made to absorb these costs within the Regular Programme”. In addition, the FAO Conference approved the following provision in the Budget Resolution 7/2003: "Invites the Director-General to make proposals to the Finance Committee for the reallocation of arrears, the use of which was subject to Conference Resolution 6/2001, to cover one-time redeployment and separation costs associated with the implementation of this budget reduction”.
9. With regard to field security costs in 2002-03, it was possible for the Regular Programme to absorb US$ 900,000 of one-time expenditures and thus avoid using arrears for this purpose. However, the Organization faces additional one-time security expenditures in 2004-05 for Amber and Red level terrorist threat duty stations and installation at Headquarters of shatter-proof film on windows and security road blocks. Therefore, the Committee is requested to extend its agreement in principle to the use of arrears for the one-time expenditure on security, again on the understanding that every effort will be made to absorb these costs within the Regular Programme.
10. Approval in principle to cover one-time redeployment and separation associated with the implementation of the budget reduction in the 2004-05 Approved PWB is also requested. An approximate estimate of the amounts involved will be provided to the Committees in the document “Adjustments to the Programme of Work and Budget 2004-05”.
11. Table 4 indicates the arrears expenditures for 2003 and forecast expenditures for 2004 and 2005. This takes into account a 10 percent reduction in 2004 and 2005 of the resources previously approved to provide contingency funds for possible use related to one-time security and redeployment and separation costs.
Table 4. Expenditure by Year (US$ ‘000)
Item | Total Resources | 2003 Actual | 2004 Estimated | 2005 Estimated |
1 - Biotechnology and biosecurity | 3,360 | 369 | 1,971 | 1,020 |
2 - Natural resource assessment and conservation, with particular emphasis on Forestry | 3,472 | 437 | 1,959 | 1,076 |
3 - Enhanced Language coverage through translation of reference texts into official languages including Codex Alimentarius | 1,775 | 245 | 903 | 627 |
4 - Multilateral trade | 2,274 | 124 | 1,495 | 655 |
5 - Statistical data – improvements in quality and coverage | 1,575 | 73 | 827 | 675 |
6 - Fisheries and Other Plans of Action | 1,918 | 173 | 804 | 941 |
7 - Information Technology (IT) infrastructure to support technical and other work of the Organization | 7,664 | 1,391 | 3,788 | 2,485 |
8 - Corporate administrative systems | 18,803 | 718 | 6,954 | 11,131 |
Contingency amount for possible use related to security and redeployment and separation | 4,071 | 0 | 2,040 | 2,031 |
TOTAL | 44,912 | 3,530 | 20,741 | 20,641 |
12. With actual expenditure in 2003 of only US$ 3.5 million (7.8 percent of the available arrears resources), it is not yet realistic to report significant achievements. However, a report on the achievements resulting from the use of arrears will be made in the Programme Implementation Report 2004-05.
13. As shown in Table 4, over US$ 26 million (nearly 60 percent) of the arrears resources are to be used for development/strengthening of corporate administrative systems and information technology (IT) infrastructure. These systems are mainly in the Administration and Finance Department, which – as indicated in Table 5 – is expected to use over US$ 20 million. A complete list of activities and the resources assigned to all Divisions is included in Annex II to this paper.
Table 5. Expenditure by Department (US$ ‘000)
Department/Office | Total Resources | 2003 Actual | 2004 Estimated | 2005 Estimated |
AF – Administration and Finance | 20,789 | 1,002 | 7,980 | 11,807 |
AG – Agriculture | 5,289 | 669 | 3,030 | 1,590 |
ES – Economic and Social | 7,655 | 723 | 4,390 | 2,542 |
FI – Fisheries | 2,731 | 173 | 1,228 | 1,330 |
FO – Forestry | 1,825 | 198 | 1,031 | 596 |
OCD – Office for Coordination of Normative, Operational and Decentralized Activities | 592 | 518 | 74 | 0 |
PBE – Office of Programme, Budget and Evaluation | 822 | 96 | 366 | 360 |
SD – Sustainable Development | 488 | 31 | 260 | 197 |
TC – Technical Cooperation | 650 | 120 | 342 | 188 |
Contingency amount for possible use related to security, redeployment and separation | 4,071 | 0 | 2,040 | 2,031 |
TOTAL | 44,912 | 3,530 | 20,741 | 20,641 |
14. Two areas in which the Organization is facing major one-time expenditures, not currently covered by Regular Programme resources, relate to security and redeployment and separation as described above. At the present time, it is not possible to identify the exact cost of either of these. The security costs are largely dependent upon decisions adopted or to be adopted by the Chief Executives Board for Coordination (CEB) and applied to all UN Organizations. Similarly, redeployment and separation associated with the implementation of the budget reduction in the 2004-05 Approved PWB depend upon the success in redeploying staff on posts identified for abolition.
15. The Committee is therefore requested to approve in principle the setting aside of an amount of US$ 4.1 million, for possible use in covering one-time costs related to security and redeployment and separation, on the understanding that the Organization will make every effort to absorb these costs within the Regular Programme and inform the Committee when more reliable information becomes available on the actual costs.
THE CONFERENCE,
Noting the continued pressure to constrain public expenditure and the consequences for the Organization’s Assessed Contributions,
Recognizing that the demands placed upon the Organization in respect of its programmes exceed the level of the effective working budget as defined in its Programme of Work,
Noting that the Director-General had, as a consequence, been unable to accommodate a number of important capital and other one-time expenditures under the budget as approved by the Conference,
Noting that additional funds could become available to the Organization during the biennium 2002-2003 in the form of payments of arrears of contributions, in particular by the major contributor,
Notwithstanding the continuing generous support of Trust Fund donors to the work of the Organization and recognizing that some of the purposes mentioned below could benefit from voluntary contributions,
|
Estimated Cost | |
1. |
Biotechnology and biosecurity |
4,000 |
2. |
Natural resource assessment and conservation, with particular emphasis on Forestry |
4,300 |
3. |
Enhanced Language coverage through translation of reference texts into official languages including Codex Alimentarius |
2,700 |
4. |
Multilateral trade |
2,500 |
5. |
Statistical data – improvements in quality and coverage |
1,800 |
6. |
Fisheries and Other Plans of Action |
2,400 |
7. |
Information Technology (IT) infrastructure to support technical and other work of the Organization |
7,500 |
8. |
Corporate administrative systems |
25,500 |
Total |
50,700 |
(Adopted on 9 November 2001)
Item |
Title |
Division |
Total Resources |
2003 |
2004 |
2005 |
1 - |
Promotion of informed decision making on regulatory issues and biotechnology |
AGE |
420 |
58 |
246 |
116 |
Strengthening of plant bio-security activities through a concentrated effort to establish new phytosanitary standards, particularly in relation to genetically modified organisms (GMOs) |
AGP |
2,403 |
177 |
1,420 |
806 | |
Launching major networks on plant biotechnology in Africa and Asia as well as a global Website on Agricultural Biotechnology |
AGP |
537 |
134 |
305 |
98 | |
Total |
3,360 |
369 |
1,971 |
1,020 | ||
2 - |
A country-driven report on the state of the world's animal genetic resources |
AGA |
1,182 |
300 |
567 |
315 |
Accelerated support to the Rotterdam Convention on Prior Informed Consent for pesticides |
AGP |
747 |
0 |
492 |
255 | |
Strengthened input to Inter-national Year of Mountains for which FAO is lead agency |
FOR |
274 |
47 |
144 |
83 | |
A special effort to strengthen capacity in 30 countries to enable them to carry out national forest resources assessments |
FOR |
998 |
84 |
554 |
360 | |
New: Establishment of a network of low forest cover countries |
FOR |
271 |
6 |
202 |
63 | |
Total |
3,472 |
437 |
1,959 |
1,076 | ||
3 - |
Translation of full text of Codex Alimentarius and its procedural manuals so that they are available in all five official languages |
ESN |
817 |
0 |
446 |
371 |
Translation of Food Control Manuals into other official languages |
ESN |
676 |
184 |
326 |
166 | |
Expansion of Forestry Information System (FORIS), with particular emphasis on full language coverage |
FON |
282 |
61 |
131 |
90 | |
Total |
1,775 |
245 |
903 |
627 | ||
4 - |
Provision of technical assistance for current round of multilateral trade negotiations for agriculture |
ESC |
837 |
110 |
621 |
106 |
A one-time effort to provide additional technical support to Members needed for implementation of Codex food quality and safety standards and in strengthening national sanitary and phytosanitary systems |
ESN |
1,257 |
14 |
784 |
459 | |
Provision of technical assistance for current round of multilateral trade negotiations for fisheries products |
FII |
180 |
0 |
90 |
90 | |
Total |
2,274 |
124 |
1,495 |
655 | ||
5 - |
Preparation of guidelines on compilation of data on agricultural resources and inputs (and on Food Security and Agricultural Development Strategies) |
ESS |
470 |
14 |
291 |
165 |
Strengthening of the national statistical systems in selected countries |
ESS |
353 |
40 |
156 |
157 | |
Strengthening of the national statistical systems in selected countries |
FID |
58 |
0 |
29 |
29 | |
Development of a World Fisheries Resources Monitoring System |
FID |
450 |
0 |
225 |
225 | |
Strengthening of the national statistical systems in selected countries |
FIR |
35 |
0 |
35 |
0 | |
Creation of conceptual framework and methodo-logical tools for a land data base on agrarian structures |
SDA |
209 |
19 |
91 |
99 | |
Total |
1,575 |
73 |
827 |
675 | ||
6 - |
The more effective implementation of Plans of Action on sea birds, sharks, fishing capacity and illegal, unregulated and unreported fishing (IUU) |
FIP |
1,648 |
173 |
660 |
815 |
Implementation of the Plan of Action for Small Island Developing States |
FIP |
90 |
0 |
45 |
45 | |
New: Study & analysis on environmental costs of aquaculture production in comparison with other food production sectors |
FIR |
90 |
0 |
45 |
45 | |
New: CITES related activities toward the 13th Conference of the Parties |
FIR |
90 |
0 |
54 |
36 | |
Total |
1,918 |
173 |
804 |
941 | ||
7 - |
Upgrading of HQ Local Area Network (LAN), including Intranet and Extranet |
AFI |
304 |
0 |
304 |
0 |
Full Implementation of Secondary Computer/PABX Centre and In-house Cold Recovery Facility |
AFI |
308 |
63 |
245 |
0 | |
Replacing/upgrading the World Agricultural Informat-ion Centre's (WAICENT) server and network hardware |
AFI |
1,468 |
11 |
395 |
1,062 | |
Relocation and Renovation of Computer Centre |
AFI |
298 |
34 |
264 |
0 | |
New: Information Risk Assessment |
AFI |
543 |
34 |
347 |
162 | |
Relocation and Renovation of Computer Centre |
AFS |
537 |
358 |
179 |
0 | |
Modernization of FAOSTAT working systems |
ESS |
2,841 |
330 |
1,553 |
958 | |
Information systems on fish utilization and sea foods |
FII |
90 |
0 |
45 |
45 | |
Upgrading of FAO's remote sensing and Geographical Information System (GIS) infrastructure/software, access to its outputs |
SDR |
279 |
12 |
169 |
98 | |
Replacing the current Wide Area Network so as to better meet telecommunication requirements of decentralized offices |
AFI |
0 |
0 |
0 |
0 | |
Development of a technical support package for launching national Food Insecurity and Vulnerability Information and Mapping System (FIVIMS) |
ESD |
404 |
31 |
213 |
160 | |
New: Strengthening the capacity of LDCs and SIDs in accessing electronic information |
OCD |
592 |
518 |
74 |
0 | |
Total |
7,664 |
1,391 |
3,788 |
2,485 | ||
8 - |
Unbudgeted cost of consoli-dating implemented modules of Oracle "Financials" |
AFF |
3,352 |
216 |
1,557 |
1,579 |
Development of the replace-ment payroll and human re-sources management modules |
AFH |
13,979 |
286 |
4,689 |
9,004 | |
Development of the budget preparation, work planning and programme implemen-tation monitoring modules |
PBE |
822 |
96 |
366 |
360 | |
New: Integration of TCI Financial Operations in Oracle |
TCI |
129 |
44 |
85 |
0 | |
Completion of development of the Field Programme Manage-ment Information System (FPMIS) |
TCO |
521 |
76 |
257 |
188 | |
Total |
18,803 |
718 |
6,954 |
11,131 | ||
Contingency amount for possible use related to security and redeployment and separation |
4,071 |
0 |
2,040 |
2,031 | ||
Grand Total |
44,912 |
3,530 |
20,741 |
20,641 |