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Summary Programme of Work and Budget 1982-83 1

Basic Documentation

118. The Council noted that in addition to the Summary Programme of Work and Budget which had been finalized in January and circulated in March, the Council had before it two supplementary documents concerning additional cost estimates of $10.1 million and the effects of fluctuations in exchange rates.

Introductory Remarks of the Director-General

119. The Council noted the remarks made by the Director-General in his opening address con cerning the basic considerations, the policies and principles, the proposed programmes and priorities, the approach to implementation,. on which he had based his proposals, and the further points made by him in introducing the item. Concerning these, the Council noted his efforts to try to strike a balance between programme needs and resource constraints, taking into account the growth in population, the projections of ''Agriculture: Toward 2000'', the targets of the International Development Strategy, the low rate of programme growth of FAO in the last few biennia, and his hope that the proposals would be judged on their merits, and the past record of the Organization.

120. The Council commended the Director-General for the consistent application of the main lines of policy approved by the Council at its Sixty-ninth Session in 1976, and also his suggestion that the Organization should not become fixed in the same mould but must push forward with new ideas, initiatives, policies and programmes, as and when necessary and approved.

Views of Programme and Finance Committees

121. The Council welcomed the introductory statements of the Chairmen of the Programme and Finance Committees concerning the main points in the report of the Joint Session as well as of the separate Committees.

122. The Council agreed with the conclusion in the report of the Joint Session of the Programme and Finance Committees that the Summary Programme of Work and Budget gave a clear, concise and accurate description of the World Background and of the proposed activities , and provided a satisfactory basis for consideration by the Council.

World Situation

123. The Council concurred with the Director-General's perception of the world situation, particularly as it concerned food and agriculture. It agreed that this situation called for governments to reinforce their support of food and agricultural development, especially through FAO and other concerned international organizations.

124. The Council agreed that the Resolutions adopted by the United Nations General Assembly at its Thirty-fifth Session, including the International Development Strategy (Res. 35/56), and the resolutions regarding the Least Developed Countries and adversely affected regions, as, well as agreed regional strategies such as the Lagos Plan of Action, implied heavy additional responsibilities for FAO.

125. While recognizing the economic difficulties facing both developed and developing coun tries, and the need for economy in public expenditures everywhere, the great majority of members felt that these difficulties were far outweighed by the acute needs of the many people in the world who were hungry and malnourished.

Strategies and Priorities

126. Without prejudice to the views of several governments concerning the budget level (see paras 159-160 below), the Council fully supported the strategies and priorities pro posed by the Director-General and considered that they were consistent with the serious world food situation and in accordance with previous policy guidance by the Council and Conference. The Council endorsed the major programme proposals and the balance between them and reached a consensus in supporting the broad strategies. priorities and means of action proposed for 1982-83.

Programme of Work

127. The Council endorsed the programme activities under the Regular Programme as described in the Annex of the Summary Programme of Work and Budget. In the discussion, references were made to a number of individual programmes. Some members emphasized the importance of the Natural Resources Programme, especially as related to soil and water management, shifting cultivation, the environment, water resources planning, and conservation of water resources in rainfed - or rather, rain-sparse - agricultural areas.

128. Various members commended the programme activities relating to fertilizers and the International Fertilizer Supply Scheme.

129. Others specifically endorsed the Crops Programme, particularly the sub-programme on seeds. Several members, particularly from Africa, stressed the importance of FAO's live stock programme, and the control of animal diseases.

130. Many delegations emphasized the special importance of nutrition, agrarian reform and rural development and follow-up of the World Conference on Agrarian Reform and Rural Development (WCARRD).

131. Several delegations stressed the importance of the fisheries and forestry programmes. Particular reference was made to inland fishery development and aquaculture. Reference was also made to silviculture, especially in tropical forests. The importance of forestry in follow-up of WCARRD was also stressed.

132. Various members drew attention to the importance and effectiveness of the investment promotion activities of FAO, and commended the projects of the Investment Centre in their own countries. Satisfaction was expressed with the important contribution being made by the FAO/World Bank Cooperation Programme, and the emphasis which had been given by the World Bank and Regional Banks to agricultural and rural development generally, and to increased food production in particular.

133. Several members stressed the crucial economic importance of energy in their agricultural planning and the need for FAO assistance in harnessing available resources and finding new ones.

Special Action Programmes

134. The Council fully supported FAO's Special Action Programmes. Several delegations under lined the importance of the control of African animal trypanosomiasis and the control of both desert and migratory locusts. Preventions of food losses, support of food aid and the Food Security Assistance Scheme were considered key elements in FAO's assistance to member countries. The Council endorsed the views of the Programme and Finance Committees on the need for the replenishment of the resources of these programmes.

FAO Representatives (FAORs) and Regional Offices

135. The Council gave close attention to the proposals concerning the FAORs and the Regional Offices. It was noted that 95 requests for FAORs had been received to date, and that, in addition to the 62 offices already authorized, it was proposed to establish .12 new offices by the end of 1983, out of which five could also cover a second country.

136. Several delegations while acknowledging the need for decentralization, called for a slowing-down in the establishment of further FAORs. Some delegations also suggested that there should be a special evaluation of the cost-effectiveness of the Regional Offices, and of the relations between them and the FAORs. One delegation suggested that this evaluation should also include the extent to which decision-making and execution responsibilities had been de centralized to the Regional Offices and the FAORs, and also include the relations between FAORs and UNDP representations.

137. The great majority considered, however, that the Director-General's proposals correctly implemented the policy of decentralization established by the Council in 1976 and reaffirmed by it subsequently. They noted with appreciation the contribution made by FAORs to the increase in delivery of extra-budgetary-funded programmes in the countries in which the FAORs were stationed.

138. In this connexion, it was also recalled that the establishment of Country Offices in developing countries had been launched by the use of savings and reductions in resources pre viously approved for Headquarters and Regional Offices. The Council considered therefore that the resources available for decentralization should not be reduced. Some members advocated increased resources for various Regional Office programmes.

139. The majority, considered that an evaluation would be premature, bearing in mind the con tinuing demand for new FAORs, and the continuing evaluation of the situation in the work of the Development Department arid in the forthcoming Review of the Regular Programme.

Prospects for Field Programme - UNDP

140. The Council expressed serious concern regarding certain negative prospects for the Field Programmes financed from extra-budgetary funds, particularly through UNDP. It felt that measures were essential to minimize the impact of the crisis on developing countries, and that economies should be equally shared by all components of the UN development system, including the UNDP administrative structure, taking all necessary steps to avoid duplication of efforts and utilizing more effectively the competence available within specialized agencies such as FAO.

141. In this connexion, the Council also noted with concern that the reduction of UNDP support costs with effect from 1 January 1982 might result in an increased proportion of total support cost's being borne by the Regular Programme. 2

Trust Funds

142. The Council welcomed the fact that at present the resource prospects for Trust Funds were less negative. Several members cited increases in their contributions of extra-budgetary funds and stated their hope of making further contributions in future.

143. In this connexion, many members stressed the need for further and continued support to the Special Action Programmes which had their roots in the Regular Programme, attracted extra- budgetary resources from a variety of sources, including developing countries, and provided in valuable help to member countries in high priority areas.

New Dimensions

144. The Council noted and welcomed the facts given in the Programme Committee's report concerning the Director-General's reorientatlon of field programme activities to give effect to the ''New Dimensions'' in technical cooperation activities, whereby the capacities of developing countries themselves were increasingly being utilized in FAO project execution. It urged continuing efforts in this direction.


145. The Council also noted with satisfaction the progress made by the Director-General in applying the recommendations of the Buenos Aires Plan Of Action for Technical Cooperation among Developing Countries (TCDC), and the concept of Economic Cooperation among Developing Coun tries (ECDC).

Emphasis on Africa

146. The Council welcomed the emphasis given, without prejudice to the pressing and legitimate needs of other regions, to programmes and activities in and for Africa through out the Director-General's proposals. it agreed that this thrust was fully in accord with the Lagos Plan of Action and the Africa Food Plan, which would provide a basis for FAO's future activities in that region.

Technical Cooperation Programme (TCP)

147. The performance of the Technical Cooperation Programme was singled out by the Council for its efficiency and effectiveness in meeting the purposes for which it had been established. One member however called for changes in the Criteria under which the TCP operated. Many members expressed regret that an even higher proportion of the Director- General's proposals for 1982-83 had not been allocated to the TCP, since it has proved to be of great value in helping to meet the urgent and often unpredictable needs of member countries, especially the Least Developed Countries (LDCs) and developing countries in the other special categories where the development needs and problems were greatest.

Objects of Expenditure

148. Concerning objects of expenditure, the Council noted with satisfaction that the per centage of staff costs had been significantly reduced, to about 61 percent of the total proposed level. The Council also appreciated the economies achieved by the Director-General in reducing administrative Costs. Some members felt that further efforts could be made in this direction in order to redistribute allocations or make savings in the budget level.

Cost Increases

149. The Council supported the addition of US$10.1 million in cost increases as proposed by the Director-General 3. A few members indicated that their attitude on this matter would have to be determined in the light of their overall position on the budget. One mem ber expressed his Government's disagreement with the additional cost increases.

150. In this connexion, it was noted that the cost increases had been calculated at Lit. 820 : US$1 and thus would have to be adjusted in due course to the Lire-US dollar currency rate adopted by the Conference (see also para. 162 below).

151. Several members, while noting that the Programme of Work and Budget had, in accord ance with previous practice, presented figures at the rate of Lit. 820 = US$1 in order to facilitate comparisons, felt that in view of the wide disparity that already existed between that figure and the current level of rates (which was also likely to prevail at the time of the Twenty-first Session of the Conference), it would be more convenient for member governments if the Director-General were to prepare the full Programme of Work and Budget on the basis of a more realistic rate.


152. Two delegations pointed out' that if. the revised base were calculated at current prices, the programme increase was approximately 8 percent. The Council noted that the Summary Budget had employed the method of comparison previously approved by the Conference; that in accordance with this, after the addition of US$10.1 million in further estimated cost increases, the programme increase would be reduced to 5.8 percent; and that other methods of comparison could be used to show an even smaller programme increase in percent age terms.

153. The majority supported the view expressed by the Programme and Finance Committees concerning the restraint of the Director-General's proposals for resources, particularly as regards the cost of established posts which had again been significantly reduced to about 60 percent of total resources, and stressed that the proposed programme increase was very modest.

154. The Council noted that the growth of the FAO budget had been very restricted in recent biennia, taking into account the effects of programme cuts. It was also noted that the growth in FAO's budget had been modest in comparison with that of some other organizations in the UN system.


155. Several members explained the economic difficulties they were experiencing nationally, the cuts they were having to make in public expenditures, and the reasons for their advocacy of a policy of ''zero growth'' in the budgets of international organizations, in cluding FAO, in the next few years. They felt that this could be achieved while maintain ing and even expanding essential programmes, by judicious changes in some priorities and redistribution of resources, and by making further economies.

156. Among the changes suggested by these countries were reduction or deferral of increases in FAORs, the Regional Offices, Field Support Programmes, Food and Agricultural : Policy, and Administrative Services. Two members also suggested cuts in the Technical Cooperation Programme. Some of the countries referred to in para. 155 above felt, however, that adjustments to priorities and redistribution of resources should be entrusted to the Director-General, who was in the best position to judge where Cuts could be made without any real damage. They urged that he should make such reductions in presenting his final proposals to the Conference.

157. In view of the urgency of the world food situation, the great majority of members considered that the approach of zero-growth, if applied to FAO, would be doctrinaire and rigid and was unacceptable. They noted the high priority accorded to agriculture by governments of both developing and developed countries and emphasized the importance of giv ing parallel recognition to FAO's record and needs in assessing the relative priorities among the activities in the UN system. They considered therefore that the concept of zero-growth should not be applied to FAO. A number of these countries proposed larger in creases in certain programmes. The great majority strongly emphasized that the proposed programme increase was a bare minimum.

Level of the Budget

158. The Council acknowledged and appreciated that the Director-General had made consider able efforts to achieve a realistic balance between proposed programmes and resources. It also commended the Director-General for the economies he had achieved in previous biennia in his administration of available resources, and the further cuts now proposed in admini strative costs.

159. Developed country members drew attention to the serious economic situation confront ing them in their countries, which had obliged them to introduce significant and in some cases far-reaching reductions in public expenditures. While they had always actively Supported the UN system including FAO, and would continue to do so, they were persuaded that a permanent and sustained effort had to be undertaken by all Organizations in the UN system to achieve an increasingly rational utilization of the financial resources which were at their disposal. They therefore stressed the need for evaluation of programmes, to achieve concentration on high priorities, the reduction or elimination of less important activities, and the achievement of economies in execution, especially in administrative costs.

160. Some of these members believed that Organizations in the UN system could hot be considered exempt from corrective action and that the time had come for a pause lasting several years in the growth of budgets. Some considered that this pause should include not only zero-growth of real resources, but also absorption of the effects of inflation and exchange rate fluctuation. Among these members, some stated their inability to support the budget level proposed by the Director-General and called for reductions. Others, while shar ing some of these preoccupations, reserved the position of their governments at this stage, expressing the hope that subsequent developments, including a suggested review by the Director-General of some of his proposals, would make it possible for them to support the final Programme of Work and Budget in the forthcoming Session, of the Conference.

161. The great majority of members, while acknowledging the present economic situation and the additional burden any increases in the budget would place on them, supported the budget level proposed by the Director-General owing to the high priority they accorded to agriculture and to FAO's work. Most of these members considered it to be the minimum necessary in view of the urgency, severity and magnitude of the problem confronting mem ber countries. They rejected the argument that the World economic difficulties justified reducing the level of the budget, and recalled that the rule of proportionality in the payment of contributions, based on objective criteria, equally distributes the burden of these difficulties among member countries.

162. Many members pointed out the very small magnitude Of the entire FAO budget in relation to the problems with which FAO was expected to cope. In this connexion, the Council noted the statement of the Director-General that at current rates of exchange, the budget; level would be in the region of only US$365 million, which was already US$50 million less (i.e. more than double the proposed programme increase) than the total as presented at Lit. 820.

163. Some members drew attention to the great disparity which existed between expenditures by Member Governments on armaments and those for humanitarian and development goals Such as those of FAO.

164. Many members stressed that the low average rate of real growth of FA0'S Budget over the last six biennia, and the record of the Organization in efficiently and economically providing vital assistance to member countries, demonstrated the increasing cost-effectiveness of the Organization and its management.


165. The Council recommended that the Director-General should prepare his final proposal for the Programme of Work and Budget using the Summary as a fully acceptable basis, and taking into account the viewpoints expressed in paras 158 - 164.

Other Budgetary Matters 4

Budgetary Performance 1980

166. The Council took note of the Director-General's Annual Report on Budgetary Performance to Member Nations as attached to the Report Of the Forty-seventh Session of the Finance Committee (27 April - 8 May 1981).

Budgetary Transfers 1980-81

167. The Council took note of the Budgetary Transfer effected from Contingencies to Chapter II for the purpose of Covering the cost of the unprogrammed Ad Hoc Working Party 6n Preparedness for Acute and Large-Scale Food Shortages.

Financial Position of the Organization

Contribution Matters 5

(a) Status of Contributions to the Budget

168. The Council was informed of contributions outstanding at 30 June 1981, as shown in Appendix E to this report. The summary of the status of contributions at 30 June 1981, as compared with the same date in 1980, was as follows:

1981 a 1980 a
(for comparison)
Amounts outstanding at 1 January
Amounts payable in current year 137 293 919.37 137 287 493.10
Contributions in arrears 22 053 748.23 4 628 404.07
159 347 667.60 141 915 897.17
Receipts to 30 June
Amounts payable in current year 55 023 706.82 b 84 045 675.96
Contributions in arrears 10 278 303.05 c 1 650 496.08
65 302 010.77 85 696 172.04
Amounts outstanding at 30 June
Amounts payable in current year 82 270 212.55 d 53 241 817.14
Contributions in arrears 11 775 444.28 d 2 977 907.99
94 045 656.83 d 56 219 725.13

a Excluding amounts payable by instalments due in future years under various conference authorizations.

b Including distribution in January of surplus of 1978-79 Biennium; US$ 2 269 696.22 (1.65 percent of 1981 assessments).

c Including distribution in january of surplus of 1978-78 Biennium; US$ 2 075 934.78.

d See Appendix E.

(b) Current Contributions

169. The Council agreed with the view expressed by the Finance Committee that the situation of current year's assessments collected was critical.

170. The percentage of current assessments collected at 30 June 1981 was 40.08 percent compared to 61.23 percent at the same date in 1980 and 46.64 percent in 1979, as shown in the following graphic presentation.

171. The Council considered it indispensable that Member Nations meet their obligations as quickly as possible.

(c) Contributions in Arrears

172. The Council was advised that arrears of contributions at 30 June 1981 amounted to US$ 11 775 444.28, an amount significantly higher than at any comparable date in the past ten years.

173. The Council noted with serious concern that nine Member Nations (Bolivia, Central African Republic, Chad, Comoros, Grenada, Haiti, Honduras, Iran and Paraguay) were in danger of losing their voting rights as the coining Session of the Conference in accordance with Article III.4 of the Constitution.

174. The Council urgently appealed to those members with contributions still outstanding, and particularly those whose voting rights at the Twenty-first Session of the Conference were in question, to make special efforts to remit promptly amounts due and overdue.

Coverage of Unbudgeted Costs - Withdrawal from the Working Capital Fund 6

175. The Council recalled that the cost estimates for the 1980-81 budget were finalized in early 1979. By the time the Twentieth Session of the Conference met in November 1979, it was fully evident that the estimates in the budget would not cover the total costs arising during the course of 1980-81, Moreover, no provision had been included for the cost of increases in the General Service salaries and allowance recommended by the International Civil Service Commission (ICSC) during 1980 and approved by the Council in December 1980.

176. The Council noted that on the basis of an analysis of expenditure and the trend of developments up , to the end of May, it was now estimated that unbudgeted extra costs for the biennium could reach approximately US$18.5 million.

177. As regards covering this amount, the Council noted with satisfaction that the Director General had already imposed cuts in the Regular Programme which were expected to yield some US$7 million over the biennium (equivalent in amount to more than half the real programme increase approved by the Twentieth Session of the Conference), but that the Special Reserve Account, established under Conference Resolution 27/77, provided for the financing of unbud- geted extra cos,ts due to unforeseen inflationary trends, to the extent that such costs cannot be met through budgetary savings, only up to an amount equivalent to 2 percent of the total effective working budget for the biennium, i.e., US$5.575 million.

178. The Council recalled that it had previously authorized withdrawals from the Working Capital Fund to finance unbudgeted costs on several occasions in the past (Resolution 4/52 in 1969, Resolution 5/55 in 1970, and Resolution 3/57 in 1971). It accordingly agreed that the most appropriate way to cover the unbudgeted costs, remaining after programme reductions, was to make full use of the provision in the Special Reserve Account to cover unbudgeted extra costs up to 2 percent of the total effective working budget and to withdraw the remainder of approximately US$6 million from the Working Capital Fund.

179. The Council noted that resort to the Working Capital Fund would be required to meet only the balance remaining after full use of the current 2 percent provision of the Special Reserve Account the measures effected by the Director-General, and the effects of any favour able developments before the end of the year. The amount to be actually withdrawn would of course be only the minimum required, which would be reviewed again by the Finance Committee at its Autumn Session, and in due course in finalizing the Accounts. One member could not support this proposal, believing that any unbudgeted costs other than those arising from the increase in General Service salaries, decided by the ICSC and approved by the Council at its Seventy-eighth Session in December 1980, should be met by further programme savings. Another member could not support the proposal if it were to involve additional assessment on Member Nations.

180. The Council accordingly adopted the following Resolution:

Resolution No. 1/79



Noting that the unbudgeted extra costs arising from unforeseen inflationary trends are estimated to amount to US$18.5 million for the 1980-81 biennium,

Conscious of the need to maintain, the integrity of the Programme of Work approved by the Conference,

Recalling that the Director-General has already introduced economy measures which are expected to yield savings amounting to US$7 million,

Noting that the application of the provision in the Special Reserve Account established under Conference Resolution 27/77, to finance unbudgeted costs up to an amount equivalent to 2 percent of the effective working budget would provide US$5.575 million,

Noting further that it is estimated that after taking the aforesaid actions unbudgeted extra costs amounting to US$5.925 million remain to be financed,

Authorises the Director-General in accordance with Financial Regulation 6.2(a) to withdraw an amount of up to US$5,925 million from the Working Capital Fund to finance this additional expenditure.

181. With regard to reimbursement of the Working Capital Fund, the Council noted that, if members paid their contributions in good time and the present high, rates of interest continued for the remainder of the biennium, total miscellaneous income could reach some US$22 million compared with US$7.6 million in the approved budget. After meeting any shortfall in the pay ment of contributions, this surplus would be used firstly, to reimburse the Working Capital Fund and secondly, to replenish the Special Reserve Account.

Scale of Contributions 1982-83 7

182. The Council, agreeing with the recommendation of the Forty-seventh Session of the Finance Committee, proposed that the Conference adopt for 1982-83 the Scale of Contributions given in Appendix F to this report, which was based on the United Nations Scale of Assess ments for 1981, subject, however, to any adjustments from the admission of new members in the Twenty-first Session of the Conference.

183. The Council accordingly recommended the following draft resolution for adoption by the Conference:




Having noted the recommendations of the Seventy-ninth Session of the Council,

Confirming that as in the past FAQ should follow the United Nations Scale of Assessments subject to adaptation for the different membership of FAO,

1. Decides that the FAO Scale of Contributions for 1982-83 should be derived directly from the United Nations Scale of Assessments in force in 1981,

2. Adopts for use in 1982 and 1983 the Scale as set out in Appendix F of this report.

Proposed Modifications to the Special Reserve Account of the Regular Programme 8

184. The Council recalled the request it made at its Seventy-eighth Session that the Finance Committee and, to the extent necessary, the CCLM examine the current validity, application and effectiveness of the provisions of the Special Reserve Account as established by Conference Resolution 27/77.

185. The Council noted that the situation under which the Organization was operating had become more acute:

  1. the continued weakening of the Lira had had a further serious impact on inflation, which was already over 20 percent per annum. Unbudgeted extra costs were now expected to amount to some US$ 18.5 million by the end of the biennium;
  2. the UN rate of exchange for the Italian Lira had moved from 800 in January 1980 to 1 190 (a movement of some 49 percent) at the time of the Council Session. It was estimated that if this rate continued for the remainder of the biennium, currency gains gains credited to the Special Reserve Account could reach some US$ 18 million;
  3. high interest rates continued to be a major component of anti-inflationary measures. If Member Nations paid their contributions in good time and the current level of interest rates prevailed, Miscellaneous Income could amount to some US$ 22 million compared to US$ 7.6 million in the approved budget.
  4. thus, compared with a total of unbudgeted costs of US$ 18.5 million total only credits of approximately US$ 32 million were accumulating in the Special Reserve Account and Miscellaneous Income;
  5. nevertheless, the programme had to be cut by an amount now estimated to reach US$ 7 million by the end of 1981, since under the current provisions of the Special Reserve Account, only US$ 5.575 million (2 percent of the 1980-81 effective working budget) could be withdrawn to cover unbudgeted extra costs.

186. The Council considered this situation to be paradoxical and anomalous. In this connexion, it noted that the full programme approved by the Conference in several recent biennia had not been achieved owing to the impact of programme cuts which had had to be made to meet unbudgeted costs. The Council considered that such situations should as far as possible be avoided in future and that further and more flexible measures were necessary to try to maintain the integrity of programmes once approved by the Conference.

187. The Council accordingly considered the following amendments to the Special Reserve Account to render it more effective and responsive to the needs of the Organization:

  1. the level of the Special Reserve Account be increased to 5 percent of the effective working budget;
  2. the limitation on the use of the account to cover unbudgeted extra costs (presently 2 percent) be removed; and
  3. approval for withdrawals in respect to unbudgeted costs be entrusted to the Programme and Finance Committees.

188. The Council noted the comments of the Finance Committee. It noted further that subject to some drafting changes which it had proposed, the CCLM had agreed that the draft Conference Resolution was acceptable from a constitutional and legal point of view.

189. A few members of the Council could not support the proposals, believing that the current provisions were reasonable and provided adequate safeguards. Some other members, recognising that the current provisions were inadequate and too restrictive for the efficient implementation of the approved programme of Work, supported more flexible arrangements, including an increase in the level of the Special Reserve Account to 5 percent of the effective working budget. Most of those members, however, considered that the use of the the Account to cover unbudgeted costs should be limited to 4 percent, in order to ensure a cushion against exchange rate fluctuations, and that the present arrangements for approval of such withdrawals concerning budgeted costs should be retained, i.e. should remain with the Council. Some members urged the Director-General to consider an approach that might ensure unanimity on this issue at the Conference.

190. The Council noted that para. 6 of the proposed draft resolution implied that in certain circumstances additional assessments could be necessary,but that with the continuation of present trends, it was very Unlikely that this would be the case.

191. The large majority of members, however, fully supported the proposals, which they considered to provide flexible, prompt and practical means to protect the integrity of the approved programme against unbudgeted inflation and currency instability which were beyond the control of the Director-General.

192. The Council accordingly proposed the following draft resolution, which incorporated the suggestions of the CCLM, for approval by the Conference:



Recalling its Resolution 21/77, whereby a Special Reserve Account was established, as of 31 December 1977, to assist in protecting the Organization's Programmes of Work against the effects of unbudgeted extra costs that may arise in the 1978-79 biennium or in any subsequent biennia,

Conscious of the need to ensure that adequate cash resources are available to the Organization to finance the Programmes of Work approved by the Conference for any given biennium,

Recognizing that the implementation of the Organization's approved Programme of Work and Budget should not be placed in jeopardy due to unbudgeted extra costs arising from adverse currency fluctuations and unbudgeted inflationary trends,

Taking into account the experience gained with respect to the magnitude of currency fluctuations and unbudgeted costs in comparison to the effective working budget total,

Noting that up to 30 September 1981 US$ had been credited to the Special Reserve Account as savings on staff costs arising from currency fluctuations and that, provided the rate of exchange for the lira did not change substantially in the remainder of 1981, further amounts would be credited to the Account,

Considering that, provided Member Nations pay their contributions in good time, a cash surplus is expected,

Having examined the recommendations of the Council at its Seventy-ninth Session 1/ on measures to ensure the financing of such unbudgeted extra costs as may have to be met,

1. Authorizes the Director-General to use the funds in the Special Reserve Account:

  1. whenever the Working Capital Fund is insufficient to finance budgetary expenditure pending receipt of contributions from Member Nations to the budget; such advances to be reimbursed from subsequent receipts of contributions as soon as possible;
  2. to finance unbudgeted extra Costs due to movements of currency exchange rates;
  3. subject to prior review arid approval by the Programme and Finance Committees , to finance unbudgeted extra costs of approved programmes due to unforeseeen inflationary trends, to the extent that such Costs cannot be met through budgetary savings without impairing the implementation of such programmes.

2. Directs the Director-General to Credit to the Special Reserve Account any savings on staff costs arising front favourable differences between the lira exchange rate used in calculating the budget and the effective United Nations rate, applying an appropriate statistical formula for the purpose.

3. Decides that any balance of funds remaining in the Special Reserve Account at the end of the 1980-81 biennium and Of each biennium thereafter Shall be carried forward into the Special Reserve Account for the respective subsequent biennium, up to an amount equivalent to 5 percent of the total effective working budget for the respective subsequent biennium.

4. Further decides that, notwithstanding the provisions of Financial Regulations 6.1(b), such portion of the Cash Surplus in the General Fund at the end of 1980-81 and of any subsequent biennium as is required to bring the level of the Special Reserve Account to 5 percent of the effective wdrking budget tor 1982-83 and for any subsequent biennium shall be withheld and credited to the Special Reserve Account.

5. Authorizes the Directors-General, in the event that a cash surplus should not arise at the end of any biennium adequate to bring the Special Reserve Account to the level specified in paragraph 4, to apply to the Special Reserve Account, notwithstanding Financial Regulation 6.1(a), any sums received in the subsequent biennium in payment of arrears of contributions for previous biennia

6. Requests the Director-General, in the event that the Special Reserve Account, replen ished in accordance with the foregoing paragraphs, should not attain the aforesaid level of 5 percent of the total effective Working budget for the subsequent biennium, to submit proposals to the Conference, through the Finance Committee and Council, concerning the ways and means of bringing the Special Reserve Account up to the level of 5 percent of the total effective working budget for the subsequent biennium.

7. Further decides that arty balance at the end of 1980-81 or any subsequent biennium in excess of the amount referred to in para.3 above shall not be Used for any purpose other than provided for in this resolution and shall be returned to the General Fund and allocated in accordance with Financial Regulatidn 6.l.(b).

Other Programme, Budgetary, Financial and Administrative Matters:
Work of the Fortieth Session of the Programme Committee and the Forty-seventh Session
of the Finance. Committee
(27 April - 8 May 1981)

Appointment of External Auditor 9

193. The Council agreed to re-appoint the Comptroller and Auditor-General of the United Kingdom for a further period of two years commencing with the audit of accounts for the year 1982 and adopted the following resolution:

Resolution 2/79


Noting that the Finance Committee recommends the re-appointment of the Comptroller and Auditor-General of the United Kingdom as External Auditor of the Organization,

Recognizing the effective services of the External Auditor,

Decides to re-appoint the Comptroller and Auditor-General of the United kingdom as External Auditor of the Organization for a further period of two years commencing With the audit of accounts for the year 1982.

Personnel Matters 10

194. The Council noted the comments of the Finance Committee oil the Sixth annual report of the International Civil Service Commission (ICSC). In particular, it noted the changes in the system of adjustment of pensionable remuneration, the consolidation of 30 points of post adjustment into base salary, the improvement in the scale of reimbursement under the provi sions of the Education Grant and the measures taken for duty Station having adverse living and working conditions.

195. The Council noted the decisions that had been made by the ICSC in developing common standards Of job classification for Professional posts. It also noted that the ICSC had published the Master Grading Standard (Tier I) which was to be applied in grading Of P-l through D-2 non-project posts located in Headquarters and established field offices, and that this should be progressively implemented from 1 January 1981.

196. The Council agreed with the concerns expressed by the Finance Committee concerning various aspects of implementation of the ICSC Master Standard and endorsed the recommendation of the Finance Committee that the Director-General should proceed with caution ill implement ing the ICSC Master Standard. For the period ahead, he should apply it only when the need for a classification decision on individual posts was requited; the plan for future implementation by an overall or segmented approach should not be decided prematurely but should be studied carefully; and the views of the Finance Committee might be Sought at its next session or the Session thereafter, before submission of any plan for implementation to the ICSC.

Headquarters Accommodation 11

197. The Council noted the recommendations of the Finance Committee, as outlined in the Committee's report of its Forty-seventh Session. It was also informed of the development regarding this long-standing problem, since the last session of the Finance Committee (April/ May 1981).

198. The Council fully shared the Director-General's views, which emphasised:

  1. the loss of efficiency and waste of resources through overcrowding and the Headquarters premises being split in two locations;
  2. the need for immediate interim measures to relieve overcrowding and permit the carrying out of urgent repairs in Building E; and
  3. the need for progress on the part of the Host Government to see to the legislative steps and allocation of funds for implementing the new building; project.

199. The representative of the Host Government expressed the Government's positive inten tions regarding the construction of the new building complex as well as the interim measures proposed by the Director-General. In the representative's views such measures should be of a temporary nature and should not involve a large financial commitment. The Council was further informed that the matter would be presented to the new Government which was expected to be formed shortly, with a view to taking the necessary legislative action to implement the measures, and that a report on such action would be made at the next sessions of the Council and Conference in November this year.

200. The Council unanimously adopted the recommendations of the Finance Committee as Outlined in the Committee's report of its Forty-seventh Session and requested the Director-General:

– to pursue as a matter of urgency the interim measures outlined in paragraph 3.96 of the Finance Committee's report (CL 79/4);
– to pursue vigorously with the Italian authorities the proposal for the new building com plex, as the only permanent solution to the accommodation problem provided, however, that the construction of such a complex would not cause an increase in the Regular Programme budget;
– to report further developments to the Council's Eightieth Session with a view to bringing the matter to the attention of the forthcoming Conference.

Abolition of Audited interim Account 12

201. The Council recalled that although the financial period of the Organization was two calendar years, the current Financial Regulations provided for the submission of interim accounts to the External Auditor for audit. The Council considered that in the context of a biennial programme of work and budget cycle, the Usefulness of auditor interim accounts was limited. In addition to placing a considerable burden on the administrative resources of the Organization, the detailed preparation of the financial accounts arid the carry for ward of the accounts' balances into the following year took some three months, creating a hiatus in the production Of accurate and up-to-date financial information to senior management at a crucial period in the biennium. The Council rioted thik the United Nations, ILO and WHO, which also followed a biennial budget cycle, had already abolished the requirement for audited interim accounts. The Council Was informed that the External Auditor saw no objection.

202. The Council endorsed the proposal that, in order to take full advantage of biennial budgeting possibilities and to reduce expenses, the requirement for audited interim accounts be abolished, subject to the possibility of audited interim accounts being prepared in exceptional cases or where the nature of the account so warranted.

203. The Council therefore recommended that the Conference approve the amendments to the Financial Regulations as Set out in the following draft resolution:



Noting that, although the financial period Of the Organization was two calendar years, the current Financial Regulations provided for the Submission of audited interim accounts to the External Auditor at the end of the first year of each biennium,

Recognizing that in the context of a biennial programme of work and budget the usefulness of audited interim accounts was limited,

Noting the Report Of the Seventy-ninth Council Session on this question,

Decides that the Financial Regulations be amended as follows by deleting the words in square brackets [ ] and adding the Words underlined:

Regulation X

Internal Control

10.3 The Director-General may make such ex gratia payments as he deems to be necessary. A statement of such payments shall be submitted with the final [and interim] accounts.

10.4 The Director-General may, after full investigation, authorize the writing-off of losses of cash, supplies, equipment and other assets, other than arrears of contributions. A statement of all such losses written off during the financial period shall be submitted to the External Auditor with the final [and interim] accounts.

Regulation XI

The accounts

11.2 Besides the final accounts for the financial period, the Director-General shall prepare,where the nature of the accounts so warrants, or in exceptional cases as decided by the Finance Committee, interim accounts at the end of each of the intervening years.

11.4 The final and any interim accounts of the Organization shall be presented in United States dollars. The accounting records may, however, be kept in such currency or currencies as the Director-General may deem necessary.

11.5 The final and any interim accounts shall be submitted to the External Auditor not later than 31 March following the end of the period to which they relate.

Regulation XII

External audit


12.10 The External Auditor's reports shall be transmitted through the Finance Committee, together with the audited financial statements, to the Council in accordance with any directions given by the Finance Committee. The Council shall examine the financial statements and the audit reports and shall forward them to the Conference with such comments as it deems advisable. The report on [the] any interim accounts shall be submitted to the Finance Committee,

Annex I


5. The External Auditor shall certify the financial statements in the following terms: "I have examined the financial statements of the Organization- for the [year] financial period ended 31 December ...... I have obtained all the information and explanations that I have required, and I certify, as a result of the audit, that, in my opinion, the financial statements are correct"; adding, should it be necessary, "subject to the observations in my report."

Revised Calendar of 1980-81 Sessions of the Council and of Those Bodies which report to the Council 14

204. The Council approved the revised Calendar of Sessions for 1980-81 of the Council and of Those Bodies which report to it, as given in Appendix G to this report,

1 CL 79/3; CL 79/3-Sup.l and Sup.2; CL 79/4; CL 79/PV/7; CL 79/PV/8; CL 79/PV/9; CL 79/PV/10; CL 79/PV/16; CL 79/PV/17

2 CL 79/4, paras 2.23 and 3.12.

3 CL 79/3-Sup. 1.

4 CL 79/4; CL 79/PV/14; CL 79/PV/17

5 CL 79/4; CL 79/PV/14; CL 79/PV/17

6 CL 79/4, paras 3.63 - 3,65 and Appendix C; CL 79/PV/14; CL 79/PV/17

7 CL 78/REP, para. 158; CL 79/4; CL 79/5; CL 7.9/16; CL 79/PV/14; CL 79/PV/17

8 CL 79/REP, paras 184-192

9 CL 79/4;CL 79/PV/6; CL 79/PV/16

10 CL 79/4; CL 79/PV/6; CL 7 9/PV/16

11 CL 79/4, paras 3.93 to 3.100; CL 79/PV/6; CL 79/PV/16

12 CL 79/4; CL 797PV/6; CL 79/PV/16

13 See Financial Regulation 12.3

14 CL 79/8; CL 79/PV/15; CL 79/PV/17

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