I have the honour to submit to the Conference proposals for the Programme of Work and Budget (PWB) 2006-07. These were developed in the first instance from the Medium Term Plan (MTP) 2006-11, which was endorsed by the Council in November 2004. They also aim to respond to fast evolving contexts and to the collective guidance on programme priorities, budget levels, content and format of the PWB received from the Programme and Finance Committees and the Council during their deliberations of the Summary Programme of Work and Budget (SPWB) 2006-07. The advice from the Technical Committees has also been reflected, which was not possible to do in a comprehensive manner in the SPWB.
Following the general principles of avoiding repetition of information in various documents, greater use of the FAO Web site and improved focus, this PWB satisfies the desire of the governing bodies for a considerably shorter document than its predecessors. I welcome the initiation of a broader discussion in the Committees, which was supported by the June Council, to go beyond the question of document length and initiate a dialogue to streamline FAO’s overall programme budget process. The Secretariat is very committed to supporting this renewed effort, to achieve the common goal of rationalising FAO’s planning documents and better linking budget decisions with the formulation of the corresponding programme of work.
Some FAO processes are virtually unique within the United Nations system, including the presentation of detailed resource estimates in the rolling six-year MTP, the preparation of, and extensive discussion on the SPWB as an analytical preview of the PWB, and the seemingly entrenched practice of preparing two or more budget scenarios in the PWB. In fact, we have now an unprecedented situation of no less than four scenarios having been requested by the last Council. The governing bodies may wish to examine whether these onerous administrative practices facilitate a rational matching of the demands Members place upon the Organization with the resources made available through the budgetary Appropriation.
This full PWB elaborates on the three scenarios already presented in the Summary i.e. the zero real growth (ZRG) scenario, which maintains purchasing power by providing for estimated cost increases and establishes the baseline for the other scenarios; the real growth (RG) proposal of approximately 2.5% per year, as a modest collective investment to implement a programme of work that is more in tune with Members’ stated demands on the Organization; and a zero nominal growth (ZNG) scenario, which entails a real reduction of 5.7% including a US$ 4 million cut in the Technical Cooperation Programme (TCP).
A scenario of higher real growth (HRG) of 9.25% over the biennium was requested by many Members in the Committees and the Council following their review of the SPWB, to regain some of the ground lost as the result of a prolonged period of budgetary austerity and fulfil the Organization’s valuable roles at the service of the membership. It was not possible to finalise work on this scenario for inclusion in a single PWB document for the September sessions of the Programme and Finance Committees which are the first inter-governmental instances mandated to review the full PWB. Hence, the HRG scenario is transmitted in a separate Supplement to the PWB.
In applying the principle of maintaining purchasing power under ZRG, I have acted on the wish expressed by many Members that the escalating costs of security, over which we have no control other than just their forced absorption, should not be at the expense of the substantive work of the Organization. FAO has been confronted with an exceptional surge in the cost of providing security and protection of its personnel and property in the aftermath of the events of 11 September 2001. The related increases in expenditures since the PWB 2002-03 was prepared have reached US$ 10.6 million on a biennial basis. To maintain purchasing power, the ZRG scenario requires separate provision for this increase in costs, as it would not be logical to characterise a scenario as ZRG if it includes de facto net reductions in FAO’s programmes. Providing a safe environment requires adequate funding from Members and I trust that the membership will find an equitable way of meeting the extraordinary costs of security, as is the case in some other Organizations of the UN system.
The full PWB maintains emphasis on the assessment of risks and opportunities. In addressing the main risks to budgetary, financial and operational performance in 2006-07, I continue to propose practical solutions to the membership. One of these is to modify the treatment of Miscellaneous Income in order to fully fund the budgetary Appropriation until such time as the Organization returns to a stronger financial position. The creation of a new budgetary chapter on Security Expenditure, which has received unanimous support from the Finance Committee and Council, and the operation for the first time of the Capital Expenditure Facility approved by the last Conference, will also improve financial management. Whilst unrelated to the Programme of Work of the next biennium, an important aspect is also the needed support from the Conference to adequately fund the amortization of the After-service Medical Coverage (ASMC) liability.
I also continue to give due attention to setting challenging but attainable efficiency targets as a customary, ongoing management function. Current initiatives include human resource management processes, identification of outsourcing and off-shoring opportunities, use of new publications, printing and distribution technologies, streamlining administrative activities, savings in governance and more comprehensive cost recovery for services rendered. Economies in administrative and support services, whilst always desirable, must be implemented diligently. Indeed, the Finance Committee has cautioned that internal financial controls should not be weakened at any budget level and that administrative information systems are a fundamental part of an effective organization which should be completed regardless of the budget level. FAO has already implemented a cumulative US$ 120 million per biennium of efficiency savings, if compared with 1994. Several members of the Finance Committee have acknowledged the difficulties in achieving further savings, and the Programme Committee has requested at its May 2005 session that efficiency savings targets for 2006-07 should be realistic. A renewed framework for realising efficiency and productivity gains throughout the house will be developed in 2006-07, and continued emphasis will be given to streamlining processes and operations.
Important concerns as they are, managing financial risks, exploring new efficiency gains and meeting heightened security costs are only part of the broad strategic considerations which have presided over the formulation of the PWB proposals. Indeed, evolving external and internal environments offer much opportunity to improve the Organization’s relevance and effectiveness. At the time of writing, the G8 Summit has given a clear and encouraging signal to all those involved in the fight against poverty and hunger and many donor countries have pledged to substantially increase their international aid in the coming years. FAO’s contribution to the Millennium Development Goals, particularly at country, subregional and regional level, in partnership with others and in harmony with UN reform initiatives, needs to receive the utmost attention. The Summit to be held in New York in September 2005 to discuss inter alia the implementation of the Millennium Development Goals will most certainly reinforce this effort. Key facets of this are being addressed in conjunction with the follow-up to the Independent Evaluation of Decentralization. A major review of the Technical Cooperation Programme, as well as reflection of FAO’s role as a knowledge Organization and measures to improve inter-disciplinary actions also provide evident opportunities for revitalisation. Besides the PWB, the Conference will debate the independent external evaluation of FAO to be carried out in the next biennium.
This rich context is addressed at various places in the document and more particularly in the Supplement where I have used the prospect of additional resources to submit a set of extensive programmatic and organizational reform proposals.
As the PWB is the lifeblood of the Organization, as a minimum, adequate resources must be factored to give justice to well recognised substantive priorities. Members will no doubt be able to appreciate the efforts made to ensure adequate implementation of, or follow-up to the major international agreements and instruments developed under the aegis of FAO. Notable among these are the International Treaty on Plant Genetic Resources for Food and Agriculture, the International Plant Protection Convention and Codex Alimentarius. The Code of Conduct for Responsible Fisheries and associated International Plans of Action, as well as the expected lead role of FAO in the global dialogue and initiatives on forests, also receive priority attention.
It is equally important to preserve to the maximum extent possible the irreplaceable contributions the Organization makes to the fight against and control of transboundary plant pests and animal diseases, including the desert locust and avian influenza. To match the endeavours of Members taking place in particular as part of NEPAD in Africa and in the context of similarly important cooperation and integration initiatives in other regions, policy advisory services are given a boost under the ZRG scenario by reinstating several posts lost in decentralized structures as the result of the needed revision of the PWB of the current biennium. Policy advice and the Organization’s work in establishing international agreements go hand in hand with capacity-building and direct field action which has also to be preserved, including the TCP and SPFS.
There are differences in the type of services our global membership of developed and developing countries expect from FAO, and even within groups. This is understandable in a multilateral Organization which addresses a most basic human need of reducing hunger and malnutrition. I must be sensitive to the expressed wishes of the neediest, as well as the most advanced.
The fact is, however, that the demand for FAO services is increasing and now far exceeds the funding made available by Members, which has declined by 24% in real terms over the past dozen years. The US$ 51.2 million or 6.4% real reduction in the present biennium entailed a more severe cut than the absorption of cost increases and has left several areas of the Organization’s programme of work seriously under-funded.
I am convinced that the set of reforms presented in the Supplement to the PWB, if espoused by the membership, will give a new impetus to international work in food and agriculture. Although, I do not wish to prejudge the final decision of the Conference on the budget level, it is clear that progress along the road of transformation cannot be artificially divorced from the total resource envelope available to this institution.
Ultimately, the Conference will need to act in the context of both the compelling challenges and opportunities for the Organization, and on the basis of the proposals in the PWB. I trust that Members will want FAO to be effective and well equipped in the next biennium. I must reiterate my firm belief that timely reforms combined with a clear reversal of the prolonged period of austerity is the only viable way to do this.