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17. With the benefit of the views of the Programme and Finance Committees, the Council examined the Programme of Work and Budget (PWB) for 1996-97, together with the Programme Implementation Report 1994-95 and the Medium-term Plan 1996-2001. Members indicated their intention to provide more detailed comments on the latter two documents during Commission II of the Conference.

18. The Council recognized that the Director-General had responded to the request of the Hundred and Eighth Session of the Council (Rome, 5-14 June 1995), by preparing the Programme of Work and Budget 1996-97 on a zero real growth basis and by proposing the additional absorption of cost increases since the stage of the Summary Programme of Work and Budget. It noted that additional cost increases to those already contained in the PWB proposal plus the currency adjustment for 1996-97 might reach US$28.6 million. It welcomed the Director-General's intention to absorb the additional cost increases of US$19.5 million to the maximum extent possible.

19. The Council noted that the PWB 1996-97 as proposed entailed a 10.64 percent increase in assessments for 1996-97 which was due essentially to two factors: the anticipated cost increases, and the return to the normal practice for financing the budget. It reiterated its full endorsement of this return to normal practice.

20. The Council bore in mind the just-concluded Ministerial Meeting on World Food Security (Quebec City, Canada, 14-16 October 1995), and Fiftieth Anniversary celebrations, which had highlighted the challenges facing the international community and the essential role of FAO with respect to food and agriculture. In this context of high demands on FAO services, the majority of Council members expressed its broad endorsement of the priorities contained in the Programme of Work and Budget 1996-97. The majority of members underlined in this connection the continued validity of all substantive programmes or sub-programmes of the Organization. The Council considered that it was important to preserve the core activities of FAO to meet the above expectations.

21. Recalling the multilateral character of FAO, the Council stressed again the need for all members to meet their financial obligations to the Organization in full and unconditionally and, in particular, to eliminate all arrears. Many members stressed the fact that no country may unilaterally determine the amount of its contribution. Respect for the rule concerning payment assessments by members was a prerequisite to the orderly implementation of the Organization's programme in an effective manner.

22. The Council welcomed the wide range of measures introduced to improve the efficiency of the Organization and reduce costs, stemming from its own decisions at its Hundred and Sixth Session (Rome, 30 May - 1 June 1994) and from other initiatives of the Director-General. It noted

that the resulting savings had been directed to meeting new initiatives and other high-priority activities of the Organization.

23. The Council also noted that the Programme and Finance Committees had considered a number of areas which could further enhance efficiency and effectiveness and reduce Regular Programme expenditures, including improved governance arrangements. The Council was informed of the limited savings which could be achieved without damage to the programme. It urged continuation of efforts to reduce costs and achieve further efficiencies, to the extent possible, without adversely affecting the technical and economic programmes of FAO.

24. As regards the level of the budget, the Council recognized that there was continued diversity of views, and the positions remained essentially unchanged from those articulated at the Hundred and Eighth Session of the Council (Rome, 5-14 June 1995) and subsequent meetings of the Programme and Finance Committees, namely:

a) The majority of members stressed that the zero real growth proposal embodied in the Programme of Work and Budget, which contemplated substantial absorption of costs and represented an increase in the effective working budget at the exchange rate of lire 1 665 to the US$ of only 3.7 percent, was the minimum necessary for FAO to continue to carry out its mandate in the light of its challenges and requirements for assistance of Member Nations. They, therefore, supported the budget level as proposed.

b) Other members stressed maximum absorption of cost increases with a view to minimizing the increase in assessments. They noted the potential for improvements in efficiencies and underscored the need for further streamlining of the Organization, as well as steps to reduce costs and the level of the budget, as per the proposals of the Programme and Finance Committees. Some of these members emphasized that the budget level that is agreed upon must be one which is fully financeable.

c) A few members recalled their expectation of a budget involving a substantial reduction in nominal terms to achieve a level based on a realistic revenue stream and maintenance of FAO's core mission.

25. Concern was expressed over the possibility of non-payment of contributions. Some members proposed that the Director-General hold payments to a level below that authorized by the Conference in order to avoid a cash flow problem.

26. In conclusion, the Council reiterated the desirability of consensus approval of the Programme of Work and Budget by the Conference. It invited further dialogue in order to seek to bridge the gap between the above diverging expectations on the budget level. The Council underlined that the paramount concern of the membership was to sustain the ongoing effort of revitalization and search for increased efficiencies.

(ROME, 4-15 SEPTEMBER 1995)

27. The Council reviewed the reports of the last sessions of the Programme and Finance Committees. It considered the portions of the Committees' reports concerning the Programme of Work and Budget 1996-97, Programme Implementation Report 1994-95 and Medium-term Plan 1996-2001 during its debate on Agenda Items 12, 10 and 11.

28. The Council endorsed the Finance Committee's recommendation contained in paragraph 3.40 of the Report with regard to the application of the contributions made by former constituent

republics of Yugoslavia (Bosnia and Herzegovina, Croatia, Slovenia and The Former Yugoslav Republic of Macedonia) for the last quarter of 1993 against the contribution payable by Yugoslavia for that year.

29. The Council was informed that the results of the Incentive Scheme to encourage prompt payment of contributions had not produced the desired effects and that its cost in terms of reduced Miscellaneous Income had been considerable. However, since there was not a general consensus in support of the Director-General's recommendation to discontinue the Scheme, the Council considered that it would be appropriate that the Director-General's recommendation be referred to the Conference for consideration and decision.

30. In considering the recommendations of the Joint Meeting of the Programme and Finance Committees regarding further efforts to achieve savings and efficiencies in governance, the Council recommended that it be instructed by the Conference to systematically pursue this goal in the 1996-97 biennium, beginning with the Hundred and Tenth Session of the Council (Rome,

3 November 1995) and report back to the Twenty-ninth Session of the Conference on progress achieved.

31. The Council also endorsed the recommendation of the Joint Meeting of the Programme and Finance Committees (Rome, 11-12 September 1995) that a detailed Management Review be undertaken to determine the appropriate staffing levels, and staffing structure of the Organization as such, in relation to the agreed Programme of Work and priorities. It stressed that this review be conducted systematically and that it take fully into account the actions already taken by the Director-General.

Financial Position of the Organization:

- Collection of Assessed Contributions (Outstanding and in Arrears)

- Status of Contributions to the Budget5

32. The Council considered the financial position of the Organization at 16 October and noted that the receipt of current assessments was comparable to the other years in consideration and that 63 Member Nations had paid their current assessments in full. A further 21 members had made partial payment whereas 85 had made no payment towards their 1995 assessment. The largest contributor informed the Council that its contribution for 1995 may be between 10 and 20 percent less than the full amount assessed and that for administrative reasons it would not be made for at least another month. The Council, while noting the often difficult financial situation of some countries, underlined the responsibility of all members, to honour their financial commitments towards the Organization.

33. Concern was expressed over the high level of arrears outstanding and the fact that

34 members owed arrears in such amounts as could cause them to lose their right to vote at the Conference. In this regard, the Council recalled the recommendations of its Hundred and Seventh Session (Rome, 15-24 November 1994), which would be considered by the Conference.

34. The Council, noting the Director-General's appeals to Members for payment of contributions due, once again urged all Member Nations to pay their outstanding arrears and current assessed contributions in full as soon as possible, in order to enable the Organization to continue to fulfil its mandate.

1C 95/8; CL 109/4 paras 2.5-2.9 and 3.5-3.9; CL 109/PV/1; CL 109/PV/2; CL 109/PV/4.

2 C 95/9; C 95/9-Corr.1 (French only); CL 109/4 paras 2.10-2.22 and 3.10-3.12; CL 109/PV/1; CL 109/PV/2; CL 109/PV/4.

3C 95/3; C 95/3-Corr.1; C 95/3-Sup.1; CL 109/4 paras 1.1-1.11, 2.23-2.76 and 3.13-3.22; CL 109/PV/1; CL 109/PV/2; CL 109/PV/4.

4CL 109/4; CL 109/PV/3; CL 109/PV/6.

5CL 109/4 paras 3.34-3.39; CL 109/LIM/1-Rev.1; CL 109/PV/5.

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