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IV. FINANCIAL AND BUDGETARY OVERVIEW

132. Although the reform proposals are not linked to a given budget level, the guiding principles underlying the reform proposals, outlined in Section II, have been applied at the level requested by the Council with an option to offer a basis for comparison with the “business as usual” scenario in the main PWB. The proposed budget demonstrates in financial terms one of the main aims of the reform - to make better use of the human resources of the Organization, including increased recourse to the technical capacity present in developing countries. In summary, it evidences an absolute decrease in the overall number of staff positions, together with a 31% increase in the planned utilization of non-staff human resources. This will produce a significant shift in the provision of human expertise away from established posts in favour of non-staff resources. The proposed budget also indicates a substantial increase in the proportion of planned non-staff expenditure in the overall Regular Programme funded work, from 34% at present to 41%.

133. An “integrated” budget presentation is provided in this section. This indicates separately Regular Programme funding, Direct Support to Regular Programme activities through voluntary contributions, and other Extra-budgetary Resources expected for FAO’s own operations, thus showing total resource projections for the Organization in 2006-07. A broader perspective of overall resource needs of member countries in the context of investment requirements for agricultural development and hunger reduction is also presented, to raise awareness of how the Organization’s resources fit with this and to permit an appreciation of the resource mobilization efforts required to assist Members.

Regular Programme

Net appropriation

134. The net appropriation for Real Growth (RG) and Higher Real Growth (HRG) by Chapter, tabulated below, shows the relative balance of resources applied to the three main interdisciplinary thrusts of the new chapter and programme structure. The rationale for allocations under RG is further explained in Section III a.

Table 1. Overview of Reform Scenarios
(All amounts in US$ 000)
Chapter
RG 2006-07 Appropriation
HRG 2006-07 Appropriation
1 Corporate Governance
21,624
21,624
2 Sustainable Food and Agricultural Systems
210,858
210,858
3 Knowledge Exchange, Policy and Advocacy
189,042
189,042
4 Decentralization, UN Cooperation and Programme Delivery
213,822
247,622
5 Management and Supervision Services
126,072
126,072
6 Contingencies
600
600
8 Capital Expenditure
8,600
13,799
9 Security Expenditure
19,982
19,982
Total before Cost Increases
790,601
829,600
Cost Increases
50,124
52,600
Total with Cost Increases
840,725
882,200

135. A draft Appropriations Resolution (at RG level with cost increases) is provided in Annex I.

Higher real growth scenario

136. The HRG scenario involves an overall biennial growth rate of 9.25%, as expressly requested by the Council. This amounts to a net increase in the budget beyond ZRG of US$ 70 million, before cost increases, and would permit allocation of additional resources amounting to US$ 39 million over the RG scenario.

137. The additional resources over the RG scenario would be targeted towards two specific areas of work:

138. In view of the straightforward nature of the differences between the proposed provisions under the RG and HRG assumptions, all budgetary tables in this Supplement are presented at the RG level.

Evolution of budget by expenditure components and location

139. In formulating the reform proposals, considerable emphasis has been given to optimizing the mix of budget components across various dimensions. The results of proposed de-layering of the management structure, more effective deployment of international decentralized staff, increased use of national professional officers for country and sub-regional level work, as well as allocation of more non-staff resources for the acquisition of short-term specialized expertise and for operational activities, are summarized in the following tables.

Table 2: Evolution of Regular Programme Posts - post counts by location
Category
2004-05 PWB
Reform Proposal
Change
2006-07 RG
Reform Proposal
Headquarters

Professional

983

(39)

944

General Service

953

(37)

916

Total HQ

1,936

(76)

1,860

Regional/Sub-Regional and Liaison Offices

International Professional

241

(41)

200

National Professional

0

53

53

General Service

299

(18)

281

Total RO/SRO/LO

540

(6)

534

FAO Representations

International Professional

92

(21)

71

National Professional

106

45

151

General Service

520

(79)

441

Total FAORs

718

(55)

663

Total All Locations

International Professional

1,316

(101)

1,215

National Professional

106

98

204

General Service

1,772

(133)

1,639

TOTAL

3,194

(137)

3,057

Note: counts exclude Trust Fund posts

140. As shown in the preceding table, despite an overall proposed budgetary increase of 2.5% per annum in real terms, the overall Regular Programme staff establishment is projected to decrease under the RG reform proposal. The application of the new modalities for FAO’s enhanced decentralized presence entails provision of technical expertise by FAORs, with up to 30% of their time projected to be spent as part of a multi-disciplinary technical team in their sub-region. This will significantly improve effectiveness in the utilization of the Organization’s professional capacity at country level and help to achieve a reduction in the number of international professional staff. At the same time, the use of national professionals, who have already proved to be a cost effective source of human resource input to the Organization, will nearly double, in response to the important role they play in country-level activities.

141. It is recalled that the above table provides an overview of posts budgeted under the Regular Programme, of which 61% are at headquarters and 39% in decentralized locations. When looking more broadly at the utilization of human resources under all sources of funds managed by FAO, that is including extra-budgetary funding, the proportion located at headquarters falls to 47%, while the human resources in the field rise to 53%.

142. The combined results of the application of principles of universality in serving Members and reinforced country focus with selectivity in allocating resources to Members in greatest need, will yield a marginal overall shift in the proportion of Regular Programme resources from headquarters to the decentralized offices, as shown below.

Table 3: Regular Budget by Location

Category

2004-05 Programme of Work (US$ 000s)

% of Total Budget

Reform Proposal Change

2006-07 RG Programme of Work (US$ 000s)

% of Total Budget

Headquarters

564,877

67%

29,524

594,401

66%

Regions, Sub-regions and Liaison

123,533

15%

16,521

140,054

16%

Country

152,601

18%

8,046

160,647

18%

Total

841,011

100%

54,091

895,102

100%

143. The combination of a shift of resources from headquarters, and the net decrease in Regular Programme staff will enable a significant increase in the amount of non-staff resources to the decentralized offices, in line with the aim of the reforms to provide more flexibility in the means of action for delivering services to Members. As tabulated below, the proportion of non-staffing funding accessible to Regional, Subregional and Liaison Offices would rise to 43% while the corresponding proportion in country offices would increase to 66%.

Table 4: Decentralized Regular Budget by Location (including TCP)

Category

2004-05 Programme of Work (US$ 000s)

% of Total Budget

Reform Proposal Change

2006-07 RG Programme of Work (US$ 000s)

% of Total Budget

Regions, Sub-regions and Liaison 

Staff

83,707

68%

(3,716)

79,991

57%

Non-staff

39,826

32%

20,237

60,063

43%

Total Regions, Sub-regions and Liaison

123,533

100%

16,521

140,054

100%

Country

Staff

57,236

38%

(2,053)

55,183

34%

Non-staff

95,365

62%

10,099

105,464

66%

Total Country

152,601

100%

8,046

160,647

100%

Total Decentralized Resources

276,134

24,567

300,701

 

144. As evidenced in the following table, the de-layering of the management structure would contribute to a net reduction of 36 Director-level and above positions, with the result that such positions will account for a smaller portion of the overall post establishment.

Table 5: Evolution of Posts – post counts by grade

Grade Category

2004-05 PWB

% of Total Posts

Reform Proposal Change

2006-07 RG Reform Proposal

% of Total Posts

Director-level and above

197

6%

(36)

161

5%

International Professional

1,119

35%

(65)

1,054

34%

National Professional

106

3%

98

204

7%

Total Professional and above

1,422

45%

(3)

1,419

46%

General Service

1,772

55%

(133)

1,639

54%

Total

3,194

100%

(137)

3,057

100%

145. The proposed overall allocation of Regular Programme resources across the expenditure categories is provided below. Since the mix of posts will entail a higher portion of National Professional Officers and fewer Director-level, international Professional and General Service positions, overall staff costs under the reform proposals will be US$ 22.6 million lower than in the current budget despite the real growth increase in the Programme of Work of US$ 54.1 million, as tabulated below.

Table 6: Regular Budget by Expenditure Category (in US$ 000s)

Category

2004-05 Programme of Work

Reform Proposal Change

2006-07 RG Reform Proposal

International Professional Staff

377,423

(22,279)

355,144

National Professional Staff

8,276

7,907

16,183

General Service Staff

168,181

(8,199)

159,982

Total Staff

553,880

(22,571)

531,309

Other Human Resources

142,965

43,936

186,901

Other Non-staff

144,166

32,726

176,892

Total Non-Staff

287,131

76,662

363,793

Total Programme of Work

841,011

54,091

895,102

Percentage non-staff

34%

 

41%

146. Consequently, a higher percentage of resources will become available for non-staff expenditures, which would increase from 34% of the overall Regular Programme-funded work to 41%. The provisions for Other Human Resources would increase by nearly US$ 44 million, or 31% to provide needed latitude in acquiring specialized expertise as, when and where needed. Further efforts would be made during the implementation cycle to shift resources to this more flexible category of human resource expenditure as well as to other important non-staff expenditures such as travel, to provide staff the necessary operational funds to carry out their work more effectively.

An integrated presentation of FAO’s budget

Total resource projections for the Organization

147. The following table summarizes the projected resources at the disposal of the Organization through a combination of Regular Programme and extra-budgetary resources.

Table 7. Estimate of 2006-07 Programme of Work and Trust Fund Activities by Chapter

(All amounts in US$ 000)

 

Regular Budget

Trust Fund

All Financing

Chapter

RG 2006-07 Programme of Work

Direct Support to Programme of Work

Other Voluntary Contributions

 

1

Corporate Governance

21,838

0

0

21,838

2

Sustainable Food and Agricultural Systems

224,152

94,561

423,397

742,110

3

Knowledge Exchange, Policy and Advocacy

226,534

37,495

54,353

318,382

4

Decentralization, UN Cooperation and Programme Delivery

245,685

0

59,239

304,924

5

Management and Supervision Services

143,100

0

783

143,883

6

Contingencies

600

0

0

600

8

Capital Expenditure

13,195

0

0

13,195

9

Security Expenditure

19,998

0

0

19,998

Total

895,102

132,056

537,772

1,564,930

Percentage by Source of Financing

57%

8%

34%

100%

148. The Regular Budget Programme of Work in the preceding table comprises those activities to be funded from assessed contributions from Member Nations, and from other income comprising voluntary contributions available to execute the Programme of Work because they are at the disposal of the Organization and/or are managed closely with the Regular Budget Appropriation (see the table following paragraph 263 in the main PWB document). Trust Funds are voluntary contributions other than those included in the Programme of Work that provide direct support to implementation of activities planned under the Programme of Work, and other voluntary contributions that support technical and emergency assistance to governments.

149. In recent biennia, the total of voluntary contributions to Trust Funds and Special Funds has been at around the same order of magnitude as that of the Organization's Regular Programme (RP) assessed contributions. Direct support to the Programme of Work has been a steadily rising proportion of voluntary contributions to Trust Funds, due in part to the mobilization of increasing resources through Strategic Partnership Programmes with donors. Examples of direct support to the Programme of Work include the Sustainable Livelihoods Programme, the funding of participation of Members from developing countries in negotiations such as for the International Treaty on Plant Genetic Resources for Food and Agriculture, and implementing the Voluntary Guidelines on the Right to Adequate Food.

150. In programming the use of RP resources for 2006-07 the proposals take due account of the contribution that is expected to be made to the achievement of the Organization's objectives by Trust Funds (TFs) and Special Funds, although they are difficult to forecast by nature. The preceding table therefore provides the Secretariat’s best forecast by Chapter of what is likely to evolve as the extra-budgetary funded programme for 2006-2007 in the framework described below, and inevitably reflects not only the demands from Members but the policies of donors, which often correspond to geographical and sectoral preferences.

151. In addition to making resources available to the Organization through their payments into the Regular Programme and voluntary contributions, many governments also offer substantial assistance in kind to facilitate the work of the Organization. For example:

FAO budget in the context of global investments for agricultural
development and hunger reduction

152. Meaningful yardsticks against which the planned biennial resources at the disposal of the Organization, summarized above, could be related include various assessments of global investment requirements for agricultural development and hunger reduction. FAO is instrumental in catalysing such investments through its long-standing cooperation with financial institutions.

153. Through its extensive programme formulation work and strategic analyses undertaken largely from its regular budget, the Organization can also apprise Members of practical orders of magnitude of requirements for agricultural development, rural poverty and hunger reduction. An overall assessment of the investments needed to achieve the World Food Summit goal was provided in the “Anti-Hunger Programme” – the final version of which was released during the FAO Conference in November 2003. This indicated that the incremental public sector investments required to halve hunger by 2015 would be about US$ 23.8 billion per annum, broken down as follows:

Purpose of expenditure

Amount (US$ billion p.a.)

  • improving agricultural productivity in poor rural communities
  • developing and conserving natural resources
  • expanding rural infrastructure and market access
  • developing capacity for knowledge generation and dissemination
  • ensuring access to food for the most needy
2.3
7.4
7.8
1.1
5.2

154. Around half of this amount was foreseen to be met by increases in Official Development Assistance (ODA), with the rest coming from national budgets and non-concessional loans.

155. Whether such resources will be mobilised depends on the commitment of developing country governments and of the international community. A most encouraging step was taken by African Heads of State in the Maputo Declaration of July 2003 in which they pledge to increase the share of budgetary funds allocated to agriculture and rural development to 10% of the national budgets within 5 years – a commitment which the Organization is monitoring on behalf of the African Union. Also of great relevance has been the G8 Gleneagles Summit of June 2005 at which leaders agreed to double aid to Africa and to eliminate some US$ 40 billion of debts owed by 18 of the poorest countries to the International Financing Institutions.

156. The Organization is encouraged by signals of a growing commitment by individual countries and by Sub-Regional Organizations to increase their investments in food security. By mid-2005, forty countries had expressed their intention to move forward with national-scale food security programmes. These have already been formulated in 11 countries, involving total investments of about US$ 1.2 billion. In addition some 20 Regional Economic Organizations have formulated regional agricultural and food security strategies and three of these (UEMOA, CARIFORUM, PIF), involving projected investments of some US$270 million, have begun implementation.

157. Within the framework of NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP), formulated with FAO’s assistance, the Investment Centre has undertaken a major exercise to assist 51 countries in Africa to formulate National Medium-Term Investment Programmes (NMTIP) and associated Bankable Investment Project Profiles (BIPP). Similar complementary agricultural investment programming work is being initiated for the Caribbean countries by FAO in collaboration with CARICOM to complement the Caribbean Regional Programme for Food Security (CRPFS), and in the Pacific through collaboration with CROP (Council for Regional Organizations in the Pacific) Agencies.

158. The reform proposals will advocate and catalyze the application of further resources for agricultural investment at global, regional and country levels, from public and private funding sources and ensure technical support for this at a requisite level. Two key elements are the placing of investment in the new department of Economic and Social Development, and the prominence given to the International Alliance Against Hunger and associated activities through a consolidated department. Other features which will also underpin this effort are enhanced inter-disciplinarity and partnerships, including with governments themselves, other organizations (UN and non-UN), International Financial Institutions (IFIs) and civil society.

159. At the national level, FAO will act within the framework of coordinated UN system action and in close collaboration with governments, to assess potential for investment, including agricultural sector reviews, and develop national policy frameworks which are an integral part of poverty reduction strategies. The department on Outreach Programmes will spearhead the formulation of comprehensive national and regional food security programmes that provide a basis for translating initial estimates of investment requirements at global level into more precise country-level resource needs.

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