V.J. SHAH (Deputy Director-General, Office of Programme, Budget and Evaluation): This item before you has quite a long history, is an item which has many implications, and is an item which has been progressively considered by our Governing Bodies. The document before you, C 93/17, gives all of this, but I am grateful that you will permit me to introduce the item because I would like to draw attention to certain aspects in a way which I hope will assist your deliberations and also permit you to consider whatever course of action you choose without repeating the points that the Secretariat has drawn to your attention or repeating the concerns that have been expressed by certain Member Nations themselves in the fora of the Council and the Programme and Finance Committees.
The first point is the history of this problem. The history of this problem of support costs reimbursement for our Trust Fund programmes goes back even before the last Conference in 1991. It is a problem which has been repeatedly drawn to the attention of the Finance Committee and the Council as regards the insufficiency of the reimbursements received in relation to the implementation of the Trust Fund Programme and its costs. During 1988 and 1989, there were documents submitted to the Finance Committee on this matter. The matter was finally drawn to the attention of the Conference in 1991, and the Conference at that time concluded that the Director-General should undertake a study of the matter and that the results of the study should be submitted to the FAO Council through the Programme and Finance Committees. The study which was undertaken in response to this directive to the Conference was submitted to the Programme and Finance Committees in September 1992 and to the Council in November 1992. The conclusion at that time was that the Council expressed appreciation for the prompt, thorough and transparent manner in which the study had been conducted and presented. In particular, it agreed with the Director-General's approach and in general with his objectives for any new arrangements. It felt that the study drew the attention of Member Nations to the key issues involved and generally welcomed the proposals of the consultant as a basis upon which new support cost arrangements might be developed. In the light of its debate, the Council invited the Director-General to submit his proposals for the implementation of a new support cost regime for Trust Funds through the Programme and Finance Committee at their May 1993 Session to the Council at its 103rd Session in June. The study was undertaken with the use of an outside consultant. The consultant's report was made available to all these Bodies, as well as a person representing the consultant, in order to answer all the questions that the Programme and Finance Committee and the Council might have on this matter. In response to the Council's directive of November 1992, the Director-General then presented his preliminary proposals for the new arrangement. These again went through the Programme and Finance Committees, and the Director-General deliberately kept them preliminary because he wanted to take into account all concerns expressed, whether of those Member Nations who contribute to Trust Funds or those Member Nations who do not contribute to Trust Funds but, after all, are members of this Organization, and of all Member Nations who benefit from
the Trust Fund Programme. The preliminary proposals of the Director-General to the Council in June resulted in the following conclusions. And I only deal with the conclusions, because the reports of all of these bodies speak for themselves. The Council concluded by indicating its general support for the Director-General's proposals, which would contribute to the revitalization and qualitative enhancement of the Organization's Field Programmes while balancing the financial contributions of the respective sources of funds. It requested the Director-General to review and revise his proposals in the light of the views expressed by the Council and to submit his revised proposals to the 27th Session of the Conference. They are, therefore, before you.
What are the issues and problems? First of all, FAO's role in Technical Assistance.-In order to keep my remarks short rather than repeating the issues and the points, I draw attention to the paragraphs 11 and 12 of the document before you. This really draws attention to what is important about the Field Programme, why importance is attached to it by you, the Member Nations and what are the links between the Regular and the Field Programmes? The second point is that the Field Programmes are essential to the membership of FAO. The Field Programme's links with the Regular Programme are drawn to your attention in paragraph 15 of the document. The third aspect is the aspect of quality, and this is not new also.
In fact, in the review of the FAO which took place in 1988-89, the Group of Experts who studied field operations said in their report that one of the reasons for a lack of good technical support is that insufficient resources are provided by UNDP and the Trust Fund donors.
Let me deal now with the resources problem. The problem of resources for the Field Programme in terms of the adequacy or inadequacy of the reimbursement received is linked to several key factors pertaining to the very nature of the Field Programme. First of all, the Field Programme, as we all realize, over the last few years has become more complex. For those of us who were involved in Technical Cooperation activities, including myself 25 years ago - a project of Technical Assistance at that time very often had a model of a number of experts provided for three or four years, a resident team with a fixed plan of work, and rather basic assistance in whatever field the assistance was required. The Technical Cooperation Projects of today are much more complex. The problems that they are addressing have become more difficult, more interrelated. This results in a different response given through the projects themselves. Secondly, the structure of reimbursement on a percentage basis - 13 percent as a basic rate - has become a problem because this reimbursement then declines when the percentage is applied to a reduced cost base. For example, if you have more national personnel on a project who are obviously going to cost much less than international personnel, the 13 percent applied to them gives the Organization a much lower reimbursement income. The third aspect is that the support costs incurred by the Organization are very specific. They are incurred essentially in Rome, and the inflation factor which applies to them is higher than the average international inflation rate.
Let me give you the same problem expressed in terms of dollars as we see it now. The cost measurement survey which was submitted to the Finance Committee showed that for 1992 the Regular Programme had subsidized the total Field Programme by US$71.1 million in 1992. Subsequent analysis has shown that out of this US$71 million, US$35.4 million is linked to the Trust Funds. Of this amount of US$35 million, US$17.7 million was reimbursed by donors, which has left a shortfall of close to US$18 million
to be funded by the Regular Programme. None of you will be surprised by this because we have talked about this problem not only over the years but also in the recent discussions on programme implementation and on the programme of Work and Budget. You are all aware of how we have had to reduce the establishment of support cost posts by some 300 posts. You are all aware of how the Director-General very reluctantly was obliged to request that a number of posts, essential posts related to the Regular Programme, be shifted from support cost funding to the regular budget. This is all related.
The next issue is that of image. By using a percentage rate of 13 percent, all of you, but particularly those who contribute to Trust Funds, had complained about the lack of transparency. What is the 13 percent used for? We have had concern expressed about accountability. Where and when are the services for this 13 percent delivered? In fact, the Director-General's proposals addressed these concerns head on. I will give you four examples. The publication of the rates from the verifiable cost studies using agreed methodology is the first aspect to increase transparency and accountability. Ex post facto reporting of actual costs - same objective. A clear capacity to enable you to compare FAO's costs with those in the market - same objective. The fourth aspect is a fundamental change which would require us to keep under ongoing review our administrative costs with a view to their reduction.
The proposed arrangements were requested by the Conference two years ago to be developed, taking into account the UNDP successor arrangements and at the same time to meet the needs and concerns of our Organization. Let me point out the similarities with the UNDP successor arrangements. The similarities are, one, that there is a clear distinction between technical support services and administrative and overhead services. The second aspect is that we have used the same consulting firm that the UNDP used, which gave us the benefit of having the same experience, the comparability of knowledge, and, if I may say, credibility. And thirdly, the work measurement surveys: This has provided us and you with consistent data between the studies and between different organizations.
The differences between the UNDP arrangements and the arrangements proposed to you now are that the UNDP arrangements, of course, are based on a basic assumption which you Member Nations laid down, that the UNDP arrangements will not cover the total cost. A part of it has to be borne under the regular budgets of all the organizations concerned. That is one difference. The second one is that the UNDP successor arrangements are only limited to five agencies in Rome, Geneva, New York, and Vienna. And, thirdly, by taking the averages for these different organizations, we are dealing with very different projects. For instance, it is very different to talk about the supply and installation of an industrial plant from talking about a rural development project.
This brings me, Mr Chairman, to what is proposed. Appendix A of the document gives you the details of the arrangements. These have been discussed so often that I will not read them out or comment on them. I will be open for all questions that may arise from the Commission.
Let me now deal, Mr Chairman, with the possible impact of these arrangements on the contributors to the Trust Funds. It can be seen, clearly seen, that there is a certain increase in reimbursement; but I hope it will also be seen that the arrangements deal with the improvement of project quality, cost transparency, accountability, and improved
efficiency. The technical support services are the aspect which deal with the quality of projects, and the key points to bear in mind there are that it is in the common interest of all contributors to Trust Funds, beneficiaries from trust funds, and the Secretariat, which is responsible for executing these projects, to constantly improve the quality, the technical quality of these services of these projects.
In terms of adequacy of quality, let me give some indication of what we see and where we are. The technical support services as a percentage of project inputs, was measured in the 1991 survey for UNDP at 12.7 percent. This was the result of the UNDP survey. This figure was confirmed at 12.56 percent in our recently completed 1992 survey. All of this is not charged or proposed to be charged to contributors to Trust Funds. Out of this amount, of 12.56 percent, the items which will not be charged to donors, to contributors, are the costs of project identification, which is equivalent to 1.6 percent of the above figure, and an estimate of general monitoring and backstopping, which is about 2 percent. This leaves just over 9 percent of project inputs as being chargeable. But in fact, Mr Chairman, a survey of TSS among FAO units has shown that over half of the support services are already being provided by project budgets. So, again, it is not a question of charging 9 percent additional. Half of it has already been provided by project budgets. It would be about 4 percent.
On the whole issue of technical support services, there is no aspect of imposition in the arrangements proposed. There is no imposition. What technical services you desire in the particular project are really a matter for the contributors to say as to what they would like to include in the project. It is for the recipient governments and countries to say whether they want these services and whether they accept them and, of course, the FAO Secretariat would be in an advisory capacity in this issue. When it comes to the administrative and operation of support costs, Mr Chairman, we have reported earlier, and I confirm today, that the impact on donors is fairly straight-forward, and we have admitted that there is a certain increase involved here. The analysis of 140 projects totalling a value of US$352 million shows that the average AOS rate of reimbursement should be 16.26 percent. However, it must be emphasized that this is only likely to be the average rate for the following reasons: Firstly, the exposure of our costs, the fact that we show our costs openly, puts us under an obligation to reduce them. This has already been demonstrated, for example, in procurement services when we noticed that our costs of procurement for projects were higher than those of other comparable agencies. We took action.
We asked the same consultant, "You who have done those cost studies, you who know these other organization, what is different in what we are doing? Where are we going wrong?" And he pointed out, in fact, that the procedures that we use and have used for procurement were much more detailed, involved much more consultation between many more units, and his advice was, "Is it really necessary in all projects?"
And we accepted that advice, and the result is that instead of there being procurement officers in every operations unit, we have centralized the procurement staff in the procurement unit in AFS, limited it, and we could reduce the number of staff by eight.
This is an example in the way of which the transparency in costs gives you the leverage on the Secretariat to say "Ah, this is where you should make
an effort and achieve something", and I am firmly convinced that we can show we can be responsive.
The next aspect is that in view of the arrangements proposed the costs, the administrative costs, will vary with the nature of the project. The average is 16 percent, but for certain projects it will be much more; for certain projects it will be much less. But this is, I think, good for all of us because it will show us what the true costs of projects are. Which are the projects that FAO can execute much more economically than others, where its competitive advantage comes much more into play? And the third point, Mr Chairman, while I have talked about 16.6 percent, this figure of 16.6 percent was based on our analysis, as I said, and it was based on the costs related to the delivery in 1990-91. As we have taken the delivery of the last full year, 1992, into account, we have found that the average comes down already from 16.6 to 15.4. 15.4 is a step in the right direction, but one which we must all constantly work on to reduce further while maintaining and increasing the work of the programme.
Now what is the impact on the Organization of all these proposals? An accurate estimate of the impact is difficult to give. However, using the 1992 survey, I submit the following conclusions: of the total 1992 cost of US$35.4 million related to these Trust Fund Programmes, the new arrangements, If accepted, would result in a reimbursement of some US$28 million, leaving a balance of just under US$8 million to be absorbed by the Regular Programme instead of US$18 million as is the case now.
Mr Chairman, this may not satisfy everyone because we have heard from previous debates that some contributors to trust funds would prefer not to pay more but prefer the Regular Programme to bear the same share of costs as it does; and, on the other hand, we have also heard Member Nations who are concerned about the extent of the share borne by the Regular Programme. Well, these facts show you, Mr Chairman, that Trust Fund contributors are being invited to consider paying more, but at the same time they have the assurance that not everything is being charged to them. The Regular Programme will still take its appropriate share.
What is an appropriate share? There is no one answer I can give, Mr Chairman, but to give you an example, the proposals before you do not propose that the whole cost of Mr Mehboob's department be charged to the Trust Fund Programme as it relates to the Trust Fund Programme by no means. All that it proposes is that the costs of the procurement staff who deal with the Trust Fund Programme should be borne by the Trust Fund Programme as also the part of the Financial Services Division, which has a trust fund budget unit that should be borne directly under these arrangements.
This brings me to the point of the issues which were raised in the Council because the Council said to the Director-General, "Submit your final proposals to the Conference, taking into account the concerns that have been expressed in the Council". First of all the level of charges.
On this I will not repeat what I have just said. I hope it gives you an indication on how we have taken account of the concerns. Secondly, the complexity: Indeed, when we explained in the earlier submissions how project budgets would be developed, I can understand the reactions of those who say, "All this is very complex; how will it work in practice?".
Mr Chairman, the basic complexity of the system has been eliminated by suggesting that there be a fixed percentage. There would be a fixed
percentage of the project for the life of the project. This is the same system as far as the billing is concerned.
The structure of rates is maintained for the budgetary process, allowing the costs to be recognized and giving the necessary information to donors to justify the resulting percentage, but neither contributors nor beneficiaries need to be bothered in doing any complex calculations. In fact, for ourselves as well, for the Secretariat in developing project budgets, we have developed a prototype budget preparation system which would allow all this to be done on a normal personal computer. This kind of programme, a diskette, would be made freely available to all Member Nations, whether contributories to Trust Funds or beneficiaries, so that they can see how a project budget has been worked out.
The second concern which was raised was about cost efficiency and effectiveness. The concern over cost efficiency is recognized, as I have already pointed out. Here, Mr Chairman, let me briefly refer to a lot of discussion which took place in Commission II on the Programme Evaluation Report, because there was, I believe, unanimity in Commission II that the lessons of the Programme Evaluation Report as regards the Field Programme needed to be addressed. I said in my response to that debate that I would come back to it now, because what has been proposed under the item now is a direct response to what Member Nations want the Secretariat to do. I refer to paragraph 54 on page 96 of the English text of the Programme Evaluation Report. I will not read the whole paragraph. It says: "the conclusions we must work towards are a more multidisciplinary approach to project planning, design and implementation to enhance the coherence and cost effectiveness of response"; and that is addressed in the proposals before you. Secondly, "upgrading the skills of staff and consultants for project analysis, design, management" etc., is also addressed. Thirdly, "further improvement in procedures and process for programming, formulation, implementation and monitoring" is addressed. Fourthly, "greater selectivity in identifying, formulating and implementing projects in line with FAO's comparative advantage and with the existing technical and operational capacity of the Organization" has also been commented on. The fourth concern which was expressed in all the previous debates was about harmonization within the UN System. We should all work together, we should not be out of line, and we have heeded those concerns and your directives. First, let me point out that the degree of harmonization cannot be identical in all organizations because, as I explained, projects are different, costs are different, structures of the Organization are different, but also because of the nature of projects. The work of WFP would mean that in looking at the cost of projects and their implementation, one would look at the cost per ton shipped or the cost per ton air-lifted. Our projects, as you know, are so very different. Even the UNDP successor arrangements do not represent true harmonization as they affect only the five agencies who are concerned by these arrangements. However, the important thing is that we have worked and continue to work with our sister-agencies and organizations. The CCAQ, which is an inter-secretariat body dealing with administrative questions, concluded in its recent discussion that differences in costs incurred and in services provided make identical rates and rate structures impractical. It was thus particularly important for the costing methodology to be consistently applied. That, Mr Chairman, is what is important.
Where do other agencies stand? Many other agencies are working on the same proposals for support cost reimbursement. The International Telecommunication Union is the furthest advanced and has proposed a
structure which is essentially what we are proposing to you. UNIDO has a study underway and is in favour of the lump sum approach - the same aspects that we have used of the lump sum approach. ILO, Unesco and others have requested studies on the subject. UNDP, the Office for Project Services, which is about to be moved to the UN itself, has re-evaluated its management services agreements using the same costing methodology and, incidentally, the same accounting firm that we have used for our studies. The list could go on, but I think this gives you some feel of how much in harmony we are working with others.
I am almost at the end. I appreciate very much your patience. Other than the concerns of the Council, we have also taken particular care to hear the concerns of contributors to trust funds. We did this earlier on in June 1992. We had a first meeting to brief the representatives about what was being developed, and to listen to them and take their concerns into account. Since these documents to the Council in June were prepared, the Secretariat has shown itself open to them all to say, "if any of you want to come and discuss, please do, we are available", and we have had meetings with those who requested them.
One concern which has again come up in these latest discussions is that FAO might not appear competitive. We recognize the seriousness of the concern, but here I would point out two things: first, that when one looks at the actual costs of other organizations - and I have given information in earlier debates, information not generated by us but provided to us by our consultant about what the costs are in other organizations in a national context, whether in universities or in research institutions who undertake similar projects - those costs in a national context are considerably higher than those that we have displayed to you.
The second aspect is that when you look at competitiveness in terms of the reimbursement rate requested, it is rather dangerous to look only at a percentage figure because we all know that practices vary. For example, a consulting firm may add 80 percent as the reimbursement of the services they provide; they will build the costs into the cost of experts, the cost of equipment and the cost of training activities, with the result that you will never know what the real costs are. Similarly if an organization says "we will only charge 5 percent", I would very much challenge that figure and ask whether it is really 5 percent or whether the costs have been included in the project budget elsewhere.
The second concern which has been expressed - and I have never stopped listening to all concerns, whatever their source - is that all this is very well so far but perhaps we are not ready and we should take more time. In fact, Mr Chairman, I considered very seriously a suggestion made in recent days that the Director-General may wish to withdraw his proposals; Mr Chairman, that is not the case, and I say this with all respect and with all sobriety.
I hope that what I have said shows how carefully the problem has been studied, how carefully the proposals have been developed, how reasonably we have tried to put them to you, how open we have been in trying to respond to your concerns. I can accept and the Director-General can accept that when a proposal means requesting a contributor to a Trust Fund to pay more, nobody likes to pay more. Some may accept and some may find it difficult to accept.
On the issue of delay, Mr Chairman, let me just make these few points at this stage. Surely we all recognize that the problems are. Surely we all recognize that something needs to be done. We have been discussing this issue for over two years and I have explained all the care and the objectivity of the matter. What will more talking yield? The harmonization in the UN System is something which is being observed and developed. The cost is a calculated figure. We have given you the figures that we show, but I have also indicated that these costs can and will be reduced. The complexity issue has been largely taken out of the process, so this is where in all seriousness I put the matter to you.
The Director-General will be very interested in the response of your Commission to this debate, and I will try to respond in as constructive a way as I can, not only in answering questions but in providing, I hope, a response to the debates that you will have.
CHAIRMAN: Thank you, Mr Shah for a very lucid and, as usual, good presentation. As the delegates realize, this proposal has been under consideration for about two years. I hope that the speakers have studied all the previous documents, not just the documents presented here, and that their remarks will as much as possible be limited to practical suggestions or how this present document and the proposal of the Secretariat should be improved.
P.R. JANUS (Netherlands): I would like to start by saying that my delegation is grateful to Mr Shah for his long but useful introduction. As a major donor to the FAO Trust Funds, the Netherlands has taken a keen interest in-the subject of the support cost arrangements for FAO Trust Fund programmes. In 1992 the Netherlands contributed US$52.4 million on a voluntary basis. For 1993, our contribution might be even more substantial.
We have studied with great care the proposals contained in document C 93/17 and have come to the conclusion that the present proposals do not differ much from those presented earlier. On several previous occasions the Netherlands has expressed its concerns regarding those proposals. We did so, for instance, during the 103rd Session of the FAO Council last June.
Now the Secretariat proposes that the new support costs arrangements for trust funds take effect on 1 January 1994 and would apply to all new projects implemented after that date, including new phases of on-going projects.
It is in the opinion of the Netherlands delegation regrettable that prior to the formal submission of the document under consideration, no further consultations with most interested parties have taken place.
Although we acknowledge the merit of the proposed arrangements as an internal management tool, the Netherlands continues to have serious reservations concerning the new arrangements for support costs. Let me once again mention them in brief.
First of all, the newly proposed arrangements are too complex. Their acceptance would render donor appraisal and monitoring of projects more labour-intensive and time consuming regardless of the form of presentation to each donor.
Secondly, previous experiences with systems which include different percentage rates show that often they give cause to lengthy discussions and confusion because of differences in interpretation with regard to the required percentages.
Furthermore, during the execution of a project, adaptations in the project set-up may be required, which could further complicate matters.
Finally, and above all, the Netherlands advocates harmonization of procedures within the UN System. We would be very much in favour of one single arrangement applicable to all specialized UN Agencies. The introduction of an arrangement for FAO, which stands on its own, is from a managerial point of view undesirable.
As indicated, the Netherlands has serious reservations concerning the introduction of the proposals submitted by the Secretariat. It is our conviction that if the new proposed arrangement with regard to the Trust Fund Programme will be introduced without the support of major extra budgetary contributors, this will have a definite negative effect on the future availability of funds for the Trust Fund Programme and will jeopardize to a large extent the Trust Fund projects. To avoid such a dangerous development, a general consensus on this subject is essential. Suggestions and recommendations made during earlier consultations and during the June meeting of the Council do deserve fuller consideration and reflection before decisions are reached. Therefore the Netherlands would strongly suggest at least the postponement of a final decision concerning the introduction of a new arrangement in order to allow for further consultations among interested parties.
Lothar CAVIEZEL (Suisse): C'est avec intérét que nous avons écouté les propositions que vous nous avez soumises. C'est egalement avec intérét que nous avons examine le rapport sur les fonds fiduciaires et le remboursement des depenses d'appui.
En 1992, la contribution volontaire de la Suisse au Fonds fiduciaire de la FAO s'est élevée a 6,5 millions de dollars, ce qui place la Suisse parmi les dix plus importants donateurs de ce programme de terrain.
Dans ce rapport, le Secretariat nous soumet un tout nouveau systéme d'imputation des dépenses d'appui. Rappelons ici que le programme des Nations Unies pour le développement a lui-même introduit un nouveau système applicable aux grandes agences d'exécution en 1991. Le système est a l'essai pour une période de trois ans. C'est en 1994 qu'une evaluation approfondie du nouveau regime sera réalisee. Il est vrai que le remboursement des dépenses d'appui est un sujet qui a déja fait couler beaucoup d'encre au cours des dernières années. Mais il est aussi vrai que la communauté internationale, après plusieurs années de négociations, a finalement réussi à se mettre d'accord au Conseil d'administration du PNUD sur une nouvelle formule remplacant celle des 13 pour cent.
Mon pays attend avec beaucoup d'intérêt les résultats de 1'évaluation envisagee qui devrait permettre des simplifications de la méthodologie. Nous souhaiterions par consequent que la FAO attende elle aussi les recommandations de cette evaluation. La FAO risque en effet de mettre en oeuvre a elle seule un nouvel arrangement alors que d'autres organismes continueraient a opérer avec le nouveau systeme du PNUD.
Ma delegation est d'avis que le système des Nations Unies devrait se munir, autant que possible, d'un système unique de remboursement des dépenses d'appui et non pas laisser chacune des institutions développer son propre système. L'introduction d'un nouveau système pour la FAO nous paraît donc premature a l'heure actuelle. Il nous importe en outre que tout nouveau système contribue à améliorer la transparence, qu'il soit aussi simple que possible, et renforce la cohesion du système et la qualité des interventions de celui-ci.
Pour ce qui est des propositions du Secrétariat, je me permettrai de faire les remarques suivantes à ce stade.
L'arrangement propose risque, à notre avis, de couper les activités financées par le budget ordinaire de celles financées par les fonds extrabudgétaires, alors que l'examen de la FAO fait il y a six ans déjà avait attaché un très grand prix à la symbiose nécessaire entre le Programme ordinaire et les activités de terrain de notre institution. Nous nous posons la question de savoir s'il est réaliste de résoudre les problèmes budgétaires impliqués par le seul biais du remboursement des frais d'appui dans le cadre des fonds fiduciaires.
Les démarches entreprises par la FAO en vue d'aboutir à la proposition du Secretariat ont déjà permis d'obtenir les premieres reductions de frais d'appui. A notre avis, il y a encore moyen de rationaliser les procédures administratives et opérationnelles et d'obtenir ainsi des réductions substantielles. Nous encourageons fortement le Secrétariat a continuer ses efforts dans ce sens.
Dans le cadre de la cooperation suisse au développement, les decisions de financement de projets au fonds fiduciaire de la FAO sont prises par nos collègues qui s'occupent de projets bilatéraux. Un imputation substantielle des frais d'appui aux projets découragerait vraisemblablement nos collègues pour financer de tels projets, en particulier lorsque ceci est realisé aven un système plus lourd et plus cher que dans les autres agences d'exécution du système des Nations Unies. Ceci pourrait ainsi r^duire le nombre de projets et, par consequent, penaliser des pays beneficiaires.
Nous sommes d'avis que la proposition de Secretariat a encore besoin d'etre revue et qu'elle devrait ainsi etre repoussee a plus tard. Ceci permettrait alors au nouveau Directeur general, Jacques Diouf, d'en prendre connaissance et d'y apporter les modifications en vue d'obtenir un consensus parmi les membres de notre Organisation.
Enfin, nous aimerions savoir si ce nouveau système devrait également s'appliquer au Programme de cooperation technique de la FAO.
Bo WILÉN (Sweden): Sweden gives its support to the Secretariat's proposal as formulated in the document C 93/17 on a new system for Support Costs Reimbursement for FAO Trust Funds.
I fear I will be a little repetitive in the following as Sweden, since the introduction of the issue two years ago, has been in favour of the bearing ideas and of the methodology chosen of the proposed system for support costs reimbursement.
Thus Sweden is in agreement with the principles of the system, that is:-that the costs of support services will to a reasonable degree be borne by
the Trust Funds themselves, meaning that the subsidies from the Regular Budget be minimized; that the remaining Regular Programme support for the Field Programme will only concern indirect central support services. According to my delegation this is a fair approach, keeping in mind that the Regular Programme benefits from the activities carried out within the framework of the Field Programme.
Furthermore, the present proposal is in line with the spirit of the UNDP support costs arrangement. Moreover, it is built up in such a way that it will promote cost efficiency, transparency and accountability, and will hopefully also result in more accurate budgeting of the Trust Fund Programmes.
Mr Chairman; the principle that the costs of support services primarily will be borne by the Trust Funds themselves is important for my delegation. We have difficulty in accepting the arguments for the present system's justification, that is that all Member Nations contribute in a way to the payment of costs which could be considered as a sort of consultancy fees for FAO's participation in activities, and very often pure bilateral arrangements concerning which Member Nations have no say in whatsoever. Sweden thinks that also in the future FAO will have a role to play as consultant in development cooperation. But the different services should in principle be offered to their real values only keeping in mind, as already said, the interaction between the Regular and the Field Programme.
It is the belief of my delegation that the proposed system will contribute not only to the revitalization of the Field Programme but also to the development of it in order to meet tomorrow's demands and challenges. The introduction of the separate facilities for technical support and for administrative and operational support are welcomed, as well as the in-built components to enhance the quality of the provided services.
In the document before us the Secretariat has tried to address the concerns raised by Member States during the Council debate in June. Some changes of the proposed new system have also been introduced which my delegation, with some reluctance, could accept. However, with reference, for example, to paras 59 and 61 of the document, it must be absolutely clear that the modifications suggested therein do by no means imply the reintroduction of "percentage thinking" in the support costs system.
From a technical point of view the present proposal may appear complicated, especially if compared with today's reimbursements at basic rate of an "undefined" 13 percent. However, the many advantages of the new proposal make it worthwhile to be introduced, as proposed by the Director-General. But, according to my delegation, it is important to keep an eye on the system at different control stations, as proposed by the Director-General, in order to rectify eventual unwanted consequences and to further streamline the model.
Amin ABDEL-MALEK (Liban) (Langue originale arabe): Monsieur le Président, pour commencer je voudrais remercier M. Shah de son introduction au document.
Le programme de terrain est un aspect essentiel du travail de 1'Organisation au service de ses Etats Membres non seulement à travers la fourniture d'assistance technique aux pays en voie de développement, mais aussi parce qu'il permet d'appliquer aux réalités concrètes de chaque pays
les résultats des analyses et de l'approfondissement des concepts menés par le programme ordinaire.
Le problème, tel que nous le voyons, est que la qualité des activités de terrain, et donc les benefices directs qu'en retirent les Etats Membres, et aussi la qualité du programme ordinaire, sont gravement menaces par le manque de ressources adéquates pour recouvrir le coût réel des opérations et des services d'appui technique.
Le coût du programme de terrain a été mesuré par des consultants indépendants de réputation internationale, d'une part au titre des nouveaux arrangements du PNUD et, plus récemment, grace à des études spécifiques demandées par la Conference. Les faits sont clairs. Le coût total de l'appui technique, administratif et opérationnel dépasse 30 pour cent, alors que les remboursements pour frais de soutien et les provisions pour services techniques inscrites au budget ordinaire, ne représentent que la moitié.
Nous ne pouvons pas faire semblant d'ignorer cette anomalie. Ce faisant, nous nuisons aux programmes de terrain. Un niveau insuffisant de ressources ne peut que réduire la qualité et allonger les délais en cours d'exécution. Le choix est soit d'allouer une proportion plus grande des ressources du budget ordinaire à ce titre, soit d'augmenter les frais de soutien facturés aux projets.
Nous appuyons donc les propositions du Directeur general, simplement parce qu'il n'y a aucune alternative valable. Le programme de terrain est essentiel au succès de la FAO et la proposition en cours d'examen est une des clés pour maintenir la viabilité de ce programme.
Lars-Henrik WORSOE (Denmark): I have listened with great interest to the previous interventions, and Denmark shares many of the points raised in that statement.
Last year Denmark's voluntary contribution to the FAO Trust Fund and Field Projects amounted to US$13.1 million, which placed Denmark as the third largest donor to the programme. Our contribution this year will be at the same level and we have, therefore, naturally taken a keen interest in the proposed new arrangement put forward by the Director-General.
Like others we have studied the proposal intensively, and our conclusion is that the document before us does not differ in any substantial way from the documents submitted previously by the Director-General on this matter.
During the 26th Session of the FAO Conference in November 1991 we stated in a comment on the Director-General's first proposal for a new support cost arrangement that it was essential to Denmark that the burden-sharing between the donors and the FAO remain unchanged. We added that we would be unable to accept any arrangement whereby reimbursement for support services would exceed 13 percent on average for executed Trust Fund projects.
We have also stated on several occasions that a new arrangement for FAO in our view must be more in line with the new UNDP arrangement. Otherwise we shall soon see proposals from other special agencies, each claiming specific needs and requirements, in an area where we as donors seek transparency.
The proposed new approach claims to follow the general outline of the UNDP successor arrangements, but at the same time it is maintained that the specifics of FAO's Trust Fund activities and organizational structure must be taken into consideration, thereby necessitating a number of special measures. This, in Denmark's view, leads to a very complex proposal that in fact bears only marginal resemblance to the UNDP arrangement.
Furthermore, if the present proposal is accepted, the reimbursement rates we shall be asked to pay in the future may well be close to double the rates we pay today. A calculation of reimbursement rates, if the proposed new system were to be applied to ongoing projects financed by Denmark, shows that the new system will lead to reimbursement rates varying between 16 and 27 percent. These figures have been confirmed last month by the FAO.
If such figures are seen in the context of the Danish comments during the 26th Conference, which I have just mentioned, it will be clear that a proposal as the one we are discussing today will not be acceptable to Denmark. Accordingly, Denmark has informed the FAO that should this proposal be approved by the 27th FAO Conference, it will most likely mean that Denmark would have to terminate all future Trust Fund cooperation with FAO.
One of the main reasons for executing field programmes, whether financed by the Regular Programme or by Trust Funds, must be that it is one of the ways of consolidating the Organization's comparative advantage. This goes for the FAO as well as for any other UN special agency.
When approving the UNDP successor arrangements donors generally agreed that the new system should motivate the special agencies to concentrate on projects in the areas of their comparative advantage and to stop competing for financing of an ever-growing number of projects. We fear that this proposal will work contrary to the intentions behind the UNDP decision and not lead to a concentration on projects in the areas of FAO's comparative advantage.
We have informed the FAO previously that we recognize the financial problems the Organization, along with other agencies, is facing. These problems, however, should not be solved through the support cost arrangement for the Trust Fund programme.
Individual arrangements for specific United Nations agencies is contrary to the entire spirit of the UN reform process. In our view there must be common criteria for all agencies. Denmark therefore suggests that the proposal before us be withdrawn or, as a minimum, that a decision is deferred.
It would then be possible to start a new consultation process with a view to establishing a system based on common criteria for all special agencies of the UN system.
Such consultations, in our view, should take place in New York, and Denmark would be an active participant in the process.
Pekka HUKKA (Finland): Finland gives support to the proposals as they are formulated in the document under discussion.
My delegation wants to endorse the principle for Support Cost Reimbursement along the lines stated earlier in the intervention made by Sweden. That is that the true costs for delivering technical assistance must be identified, budgeted and reimbursed within the framework of the Field Programme. Finland shares the principle that, in FAO as well as in other UN agencies, the Trust Funds have to bear these costs themselves.
We want to emphasize that the true administrative cost of any Trust Fund operation should be identified in order to have a realistic picture of total administrative costs of the whole organization.
My delegation feels that the new system should not be implemented strictly following a step-by-step formula, but in close collaboration and consultation with the recipient countries comparing the expected costs against the expected benefits and also appraising alternatives that could be used in underlining the national execution of development activities.
We expect this reimbursement modality to contribute considerably to improving transparency and accountability, cost awareness and ultimately to the overall impact of the activities financed through Trust Fund arrangements.
In conclusion my delegation wants to highlight the importance of a careful follow-up in order to streamline the new model or to make modifications if they are deemed necessary, also taking into account the views of the new administration.
Takafumi KOJIMA (Japan): My delegation wishes to express our appreciation to Mr Shah for his lucid introduction, as usual.
Japan has been greatly interested in this agenda item since the Director-General submitted the proposal of the revised regime, and we have studied it carefully.
We understand that the FAO Field Programme has a significant role as a means to implement FAO Headquarters policy and plans, which have been established based on the consensus of Member Nations, through providing technical support to developing countries. On the other hand, the accumulated data and information in the field projects support the Regular Programme and make policy extended by FAO Headquarters more practical, wealthy and constructive.
In this regard, paragraph 15 of the document C 93/17, which described clearly and briefly the close relationship between the Regular and Field Programme, is critical.
In this context, Japan has increased its voluntary contribution to the FAO Trust Fund Programme. We are convinced that some degree of cost sharing is reasonable and acceptable in view of the benefits to the Regular Programme activities from Trust Fund projects and programmes concerned.
Regarding the proposed arrangement, Japan as one of the Trust Fund donor countries, is seriously concerned that the proposed arrangement would discourage donors' voluntary contributions against their will, and thus activities of this Organization would be negatively affected notwithstanding that it should tackle important issues.
Consequently, my delegation would like to express our view that the proposed measures should be reconsidered.
Therefore, we support the proposal made by the delegate of Netherlands.
Roland PARFONRY (Belgique): Le problème qui nous concerne aujourd'hui est d'une importance fondamentale pour le programme de terrain. Dans sa collaboration avec la FAO, la Belgique attribue à ce programme un rôle catalytique de première importance. De ce fait, elle a mis sur pied un programme de coopération substantiel financé par des fonds fiduciaires. Vous comprendrez dès lors, Monsieur le President, que le projet qui nous est soumis a mobilise toute 1'attention de nos autorités.
Lors de la cent troisième session du Conseil, il avait été décidé d'aménager la précédente proposition de manière à tenir compte des vues de certains pays membres. Nous regrettons vivement de ne pas avoir été consultés lorsque de nouvelles modifications ont été mises en oeuvre. Bien sûr, nous avons été sensibles aux efforts entrepris par le Secrétariat pour répondre aux objections avancées lors de cette cent troisième session du Conseil. Malheureusement, nous devons constater que certaines de ces reserves formulées restent entières.
Notre position se basait sur le fait que le système proposé était, selon nous, terriblement complexe.
Bien sûr, on propose de fixer un taux par projet mais, si nous avons bien compris les informations fournies par le document et par M. Shah, ce taux serait le résultat moyen de différents taux appliques a divers types de services fournis pour la conception, la mise en oeuvre et le suivi de ce projet. De plus, son application nécessiterait le besoin simultané d'une amelioration de la capacité de formulation de 1'Organisation et d'une adaptation significative à cette nouvelle méthode de gestion comptable. Aucune assurance n'est fournie à ce sujet par la FAO sur l'engrenage administratif que risque de produire la proposition que nous examinons.
La fixation d'un taux unique par projet pour toute sa durée nous semble constituer un progrès reel par rapport a la version précédente de la proposition pour autant qu'il soit établi sur la base de standards convenus avec les donateurs.
Dans le document C 93/LIM/17, on reconnaît á certains endroits (les paragraphes 53, 57, 58 et 103) que 1'introduction de ce système exigerait, de la part de la FAO comme des pays donateurs, une révision des méthodes de travail. A ce stade, aucun signe ne laisse croire que l'echeance du ler janvier 1994 - date prévue pour l'entrée en vigueur du nouveau système - puissse être respectée. En aucune manière, la Belgique n'est opposée à une augmentation des remboursements des dépenses d'appui, mais nous voudrions avoir la garantie que cette augmentation contribuera à 1'amélioration de la qualité des services à fournir. Or le nouveau document n'apporte que peu d'apaisements à cet égard. Le Secrétariat pourrait-il peut-être nous préciser comment les dispositions contenues au paragraphe 59 sur le fonctionnement des dépenses d'appui (ce qu'on appelle le taux SAO), s'intègrent au tableau de l'annexe A qui se trouve en fin du document.
Le paragraphe 37, qui avance l'idée que la réforme envisagée devrait améliorer la capacité de formulation des projets, ne nous a pas convaincus. Il nous semble au contraire que ce système, lie à une logique de
comptabilité, pourrait exercer des effets négatifs sur la qualité des projets et de leur formulation.
Nous comprenons qu'un ajustement de ces remboursements soit nécessaire afin que le programme d'activité générale et les activités financées par des fonds fiduciaires puissent se développer. Si une augmentation de ces remboursements devait intervenir, nous voudrions avoir la certitude que cette augmentation contribue à l'amélioration de la qualité des services à fournir.
Nous souhaiterions également rappeler que l'objectif de la révision du système de remboursement des dépenses d'appui était d'instaurer un système unique pour le remboursement de ces dépenses, valable pour tous les projets de développement au sein du système des Nations Unies. La Belgique reste attachée à cet objectif. Il n'est pas sûr que les choix opérés actuellement par la FAO garantissent ce résultat.
Il serait en outre regrettable qu'une competition s'instaure entre les diverses agences sur ce terrain spécifique du remboursement des dépenses d'appui, alors que l'on s'accorde de manière unanime à recommander une meilleure coordination et une complémentarité des agences dans le respect de leur mandat.
En ce qui concerne les petits projets, la philosophie développée aux paragraphes 70 à72 n'emporte pas notre accord. Même si nous voyons des avantages à recourir à de l'expertise locale, il serait dommage de priver ces types de projet d'une consultation extérieure en raison de son coût prohibitif.
Nous sommes très attaches aux activités opérationnelles de la FAO, qu'il s'agisse du PCT ou des fonds fiduciaires. L'apport de la Belgique à ces fonds fiduciaires s'élève actuellement à un montant équivalent à celui de sa contribution ordinaire.
Nous regrettons de ne pas pouvoir marquer notre accord à cette proposition dans son état actuel, et nous serions d'avis de reporter toute decision définitive sur ce sujet à un examen ultérieur, après que les parties les plus intéressées à ces fonds fiduciaires aient été dûment consultées.
Inge N0RDANG (Norway): The issue of a new support cost arrangement is regarded as a very important matter by Norway. It is an issue with far-reaching implications for the UN system and Bilateral Trust Fund financing of projects and programmes in developing countries. For our part, we have expressed concern about the present proposal all the time, since the publication of the consultancy report which analysed the situation in FAO, and whose recommendations are at the basis of the proposal before us.
We do not feel that the proposal made is answering the concerns that we and other major Trust Fund donors have raised, and Norway shares the main points already made in other interventions, in particular those of the Netherlands and Denmark. Hence, I shall not repeat many of the points already raised. However, I would like to make a few additional comments.
The document refers to UNDP's Support Costs arrangement, and I share the view of my Danish colleague that the present proposal bears only marginal resemblance to the UNDP arrangement. The process leading to the establishment of the UNDP arrangement was also completely different. In
UNDP, the governing bodies of the Organization had a very close and active part in the whole process, including the establishment of expert groups to guide the governing bodies' continuous discussions on the issue over a considerable period. Such a collective process involving all concerned members of the Organization was important in order to reach a consensus decision. Such a collective process would also have been beneficial in order to reach consensus on a new Support Costs arrangement in FAO. The proposal before us cannot be looked at as a specific concern only for FAO. All UN special agencies face similar problems and challenges of sound financial arrangement, as a presently valid 13 percent support cost arrangement is based on a system by decision and modification of the arrangement. A modification of the arrangement is also a system-wide concern. In order to achieve a viable solution, a process involving broad participation of members will be required, probably under the auspices of ECOSOC, not the administrative machineries of the UN system. I feel that it is necessary to state some obvious observations on the purpose of Trust Funds. The basic objective is to support development objectives of developing countries; hence, as much as possible of such appropriations should benefit the developing countries themselves. An allowance for reasonable and realistic coverage of administrative costs is of course required, but we need a continuous assessment of what is reasonable and realistic. When up to more than one-quarter of a given allocation to certain types of projects under the proposed FAO arrangement will be used to cover administrative costs, this is neither reasonable nor realistic. It means that only 75 percent of the allocation will be used for the direct benefit of developing countries themselves. To make a comparison, the World Bank will charge an administrative fee of 10 percent for Technical Assistance projects, leaving 90 percent of the allocation for the direct benefit of developing countries. It is my duty to inform you of the practical implications of the proposed decision as concerns Norway's Trust Fund cooperation with FAO. If the proposal is adopted, we shall not be able to enter into any new commitment, not because we do not want to maintain cooperation with FAO, but because the conditions are not in accordance with our present agreement with FAO. The Norwegian Parliament has ratified this agreement, and the Parliament will have to consider any new arrangement before any further commitment can be entered into. In conclusion, therefore, I would urge Members to consider a further collective discussion among Members in order to reach a consensus before a decision on the proposal for a new support cost arrangement is made. I am certain that it will be possible to reach a consensus. I am convinced that a postponement will be in the best interests of FAO as well as for the beneficiaries of Trust Fund financing and the UN system at large.
Christian BERGER (France): Le document qui nous a été soumis sur le remboursement des dépenses d'appui est intéressant car il permet à la Conference de mieux cerner les types de dépenses encourus par la FAO pour la mise en oeuvre de son programme de terrain et de mesurer les conséquences pour le budget ordinaire de la "subvention" indirecte en faveur des opérations financées par des fonds fiduciaires.
L'analyse qui sous-tend ce document repose sur deux principes essentiels auxquels la délégation française adhére sans réserve, ainsi qu'elle l'a déjà indiqué à plusieurs reprises:
Il s'agit tout d'abord de la transparence qui conduit à un système de remboursement basé sur des paramètres issus d'une identification plus précise des coûts reels.
Le mécanisme proposé relève d'une approche budgétaire de la situation actuelle et offre incontestablement davantage de transparence; il permet, de ce fait, une appréciation plus fine de la "subvention" du programme ordinaire vers le programme de terrain. Enfin, cette transparence est indispensable pour adapter les procédures internes de l'Organisation, dans l'optique de contenir les coûts de ses prestations.
Nous sommes heureux que M. Shah ait insisté sur ce point dans son exposé introductif.
Le deuxième principe est celui selon lequel tout service doit être payé à un juste prix. Ce principe est garant d'une politique de qualité.
Celle-ci doit toutefois s'appliquer à 1'ensemble des activités que mène la FAO, tant sur le terrain qu'au Siége. Comme la grande majorité des membres de cette Organisation, la delégation française considère que le programme de terrain fait partie de la substance même de la FAO et qu'il est essentiel à son action. C'est pourquoi la "subvention", que j'évoquais à 1'instant, ne nous paraît pas anormale. Toutefois, son montant ne doit pas être accru, car cela conduit à une réduction du programme ordinaire et des grands programmes (Agriculture, Forêt, Pêche...) de 1'Organisation. On devrait même, selon nous, chercher à en réduire l'importance.
Permettez-moi, Monsieur le Président, de m'attarder un instant sur ce dernier point car l'avenir du programme de terrain est aussi un peu l'enjeu de notre discussion.
Sans celui-ci, la FAO serait en quelque sorte unijambiste et nous voulons une Organisation qui marche sur deux jambes!
Mais on doit se garder de deux écueils:
- d'une part, que le programme de terrain prenne un poids exagéré par rapport au programme ordinaire. Notre sentiment est qu'on a actuellement atteint la limite qu'il ne faudrait pas dépasser;
- d'autre part, et c’est le second écueil, il faut éviter que les orientations du programme de terrain soient par trop décidées par les donateurs.
Notre crainte, de ce point de vue, est qu'une Organisation, dont nous savons qu'elle est à la recherche de financements, soit conduite à accepter de mener des actions en dehors de ses priorités essentielles.
La FAO doit donc maîtriser ces deux dangers, faute de quoi, comme la délégation française l'a souvent indiqué, elle deviendra une agence fonctionnant "à la carte", et cela n'est pas souhaitable.
Le Secrétariat se souviendra qu'à l'avant-dernière session du Conseil, au mois de juin dernier, nous avions émis un grand nombre de réserves quant aux modalités d'application de la réforme proposée du calcul des coûts d'appui et à ses consequences. Nous avions, en outre, expressément demandé un dialogue avec le Secrétariat avant la parution du document pour tenter de lever ces réserves.
Sans doute avons-nous été victimes d'un oubli puisque le document C 93/17 évoque à plusieurs reprises les discussions qui ont eu lieu avec les
donateurs. Mais d'autres donateurs semblent également regretter ce manque de consultation et cela, je le crains, ne peut suffire à nous rassurer.
Au-delà d'une certaine frustration, cela explique aussi que la délégation française maintienne certaines réserves quant aux modalités d'application des principes qui ont dirigé cette étude. Le système qui nous est proposé, bien que légèrement simplifié par rapport à celui que l'on a déjà eu l'occasion d'examiner lors de deux réunions du Conseil reste encore trop éloigné de nos préoccupations opérationnelles et conduira à de nombreuses difficultés de mise en oeuvre: les difficultés de sa gestion par le système FINSYS actuel, les risques de contestation, le risque de provoquer la disparition de très nombreux petits projets, notamment, nous conduisent à ne pas nous prononcer en sa faveur.
Si nous apprécions la méthodologie générale, il reste que certains paramètres doivent être reconsidérés, comme ceux, par exemple, qui aboutissent à des coûts prohibitifs pour les actions de formation où pour le recrutement de consultants: qui acceptera de payer 12 700 dollars de "frais de dossier" avant tout recrutement, même de courte durée!
Ces considérations, ainsi que les propos tenus par plusieurs délégations qui se sont exprimées avant moi, doivent nous conduire, Monsieur le Président, à la plus grande prudence. En effet, il ne faut en aucun cas mettre en place un système de remboursement qui risquerait de mettre en péril le programme de terrain, s'il conduisait d'importants donateurs à s'en détourner. Or, il faut que chacun en soit conscient, cela est bien l'enjeu d'aujourd'hui.
A ces aspects purement opérationnels s'ajoutent des préoccupations humaines. Monsieur le Président, les représentants du personnel nous ont dit hier, à cette même tribune, combien ils étaient inquiets des décisions que nous pourrions prendre sur ce point de l'ordre du jour. Plusieurs pages du bulletin de l'association du personnel de terrain y ont été consacrées. De ce côté-là aussi, il faudra communiquer davantage.
Il nous paraît donc nécessaire de se hâter lentement et de poursuivre la réflexion sur les variables identifiées. Et, plutôt que de pousser à tout prix le choix d'un système propre à la seule FAO, pourquoi ne pas commencer par chercher à faire valoir l'intérêt de réformes identiques dans plusieurs organisations, voire dans l'ensemble du système des Nations Unies?
Poursuivons la réflexion sur ce sujet en attendant, notamment, les résultats de l'examen que fera le PNUD, en 1995, du système de remboursement des coûts qu'il a récemment mis en place, ainsi qu'en sollicitant l'avis d'une session conjointe du Comité financier et du Comité du Programme.
Miss Fatimah HASAN J. HAYAT (Kuwait) (Original language Arabic): 1 am very grateful to Mr Shah and the Secretariat for the lucid document which has given us a clear view of the problem faced by FAO. Mr Chairman, we are fully aware and appreciative of the difficulties faced by FAO with regard to extending valid technical assistance expected of it due to the insufficient funds extended by the UNDP and other donors feeding the Secretariat funds. There is no doubt that further control resulting from increased costs and new structures and arrangements increase the difficulties which impede the improved quality for technical support. Yet, I regret to say that I cannot possibly digest the proposed arrangements
which state that all direct costs, all direct additional costs borne by the Organization, should be financed by fees and allocations imposed on the required projects. In all honesty, Sir, I feel rather worried and sceptical, although I may not be one of the major or even minor donor countries. And yet, I feel concerned and preoccupied, since these burdens which may weigh on the shoulders of the donor countries may lead to increasingly limited donations on their part; and this concerns me and worries me since this would indeed lead to impeding the activities of the Organization in this respect. Despite the fact that we wholeheartedly support field programmes and technical projects for the developing countries, yet we believe that burdens should be equally shared by donor countries on the basic of special arrangement. This does not mean that such an arrangement should be at the expense of the ordinary programme of the Organization or should lead to depriving the priorities we allotted to the ordinary programme or its projects at any cost. Here, justice should be their criterion, both for the donor countries and for the beneficiaries. We should guarantee the technical quality of the programmes; and, at the same time, we should well use the resources and allocations and guarantee the agreement between FAO and the donor parties in order to guarantee the liquidity of the incoming funds, and the arrangements engendered by FAO should be in keeping with those of other agencies in order that they may be in harmony with the objectives desired.
We are certain that your appreciable efforts within FAO are well capable of arriving at arrangements which would be satisfactory to both beneficiaries and donors and, at the same time, would not lead to draining the available resources for the ordinary programme. I fully support the distinguished Representative of Sweden in suggesting that the problem should be examined in the light of the requirements of each project and in agreement with both the donors and beneficiaries and not in a way that would affect the efficiency of application.
I hope that we may not be made to be understood that we do not support the policy adopted by FAO in this respect, but we do not wish to arrive at any solutions that would not be beneficial to the beneficiary countries, namely, the developing countries for whom we always speak. We believe that the fact that two years have lapsed in the examination of the matter; and, after having listened to the previous speakers, maybe two more years would lapse or this would affect the benefit and efficiency of the programme, and this is not in the interest of any party.
In conclusion, I should like to address a question to the Secretariat. What will happen during the period of transition, namely, during the time when satisfactory solutions for everyone would have to be re-examined and reconsidered? I shall limit myself to this, Mr Chairman, and I should like to stop here.
Suliman KARBUJ (Syria) (Original language Arabic): I should like to refer, briefly, that the new proposed system to reimburse Support Costs for the projects financed by the Trust Funds and the idea of the increase in the implemented projects of developing countries should seek to benefit fully from these projects to the least possible increase, but this increase would negatively reflect on the successful implementation of projects in the case where there is a certain percentage of increase of those costs. We fully appreciate the fact that there are certain financial burdens borne by the Organization, but what we aim for is that these arrangements and procedures
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be adopted following consultation between the organs concerned and that this be decided in the forthcoming summer session.
Paolo Vincenzo MASSA (Italy) : With the contribution of over US$80 million in the biennium 1992-93, Italy is at present the second largest donor in the Trust Fund Programmes. It is therefore quite understandable that this matter is of the utmost interest for us and we are following it very closely. Indeed, when the matter came under discussion at the June Session of the Council, we stated that the proposal deserved to be examined with interest and that we were fully aware that the existing system of Support Costs Reimbursement, which is based on a fixed 13 percent rate, does not reflect the real costs as they are now, and we declared that we were disposed to look into new arrangements, even if they implied an overall increase on our part, provided there was a parallel effort from the part of the FAO to achieve two main objectives which are, one, simplify the system of calculation of the support costs, which in the first draft of the proposal was indeed very complex and would have posed very serious difficulties for donors; and, two, reduce as much as possible administrative costs in order to obtain the most favourable cost-efficiency ratio.
In subsequent meetings with the FAO Secretariat, we have been presented with the updated version of the proposal which now stands in front of us in document C 93/17. We have noted with satisfaction that some of our observations have been taken into account and that in many areas a substantial improvement has been made, namely, on the mechanism for the calculation of support costs on a project-by-project basis and the reduction of the list of items.
We also appreciated the fact that in certain fields the exercise of cutting down costs appeared to be successful, but we still found that some other costs remained too high. As an example for all, I will cite recruitment while, in our opinion, there was room for further reduction through rationalization and streamlining of administrative procedures. Mr Chairman, without going too much into detail, our position was then, and it is now, that while in line of principle we can be favourable to the new proposal, it still needs some refinement before it can meet our final approval.
We would like, therefore, to join other delegations in asking a postponement of the decision with a firm commitment to keep on working together in order to achieve a final result which could be most satisfactory to the Organization, to the donors, and to the recipient countries.
In substance, Mr Chairman, we do not say: "Give us more time to examine and decide whether we like the proposal or not", but, rather, "Let's take a bit more time to work together and make the new proposed system as efficient and productive as possible".
There are times, like the ones we are experiencing now, when "fairly good" is not good enough. In hard times a quest for excellence becomes a must. Being faced with a serious financial situation, most donor countries, and mine for sure, will find difficult not only to increase but even to maintain the present level of their contributions to development.
In this situation, we all must strive in order to optimize the results within the limits of available resources, that is to say that the less the
costs are, the more we will be able to actually convey in the field to help all those who need it so badly. All we want is to work together to achieve this goal.
Harald HILDEBRAND (Germany) (Original language German): Mr Chairman, I would first like to thank Mr Shah for giving us, as usual, a very detailed and instructive introduction to this certainly complex subject. In particular, I would like to say to him that we are very impressed by the patience and the hard labour with which for two years now he has been trying to get the thing sorted out and explained to us, and knowing also how to use personal computers!
On this subject, I think there is no doubt that the new arrangements that are being proposed do take into account the interests of all those involved - donors, beneficiaries and FAO. We certainly must take into account all those three groups of interest and we must find a compromise. Therefore, the focus of our thinking must be still to see to what extent the regular budget should bear costs which are not otherwise refunded to the Organization from the Trust Fund projects in question.
The second point that we must all clarify and bear in mind is whether under the new arrangements FAO would continue to be competitive as compared with other institutions, that is to say, whether the costs to be reimbursed or subject to reimbursement are really justified by the quality of the delivery.
This revised proposal from the Secretariat that we now have before us in document C 93/17 does try to take into account a number of issues raised in the report of the 103rd Session of the Council. There were a number of comments and reservations formulated by Member States at that time. They are taken into account in this proposal and this proposal goes into them. It also proposes that the new arrangements should start operating form 1 January 1994. The German delegation find in paragraph 50 and following paragraphs a number of issues that are responded to and that we raised in June at the 103rd Session of the Council. We find that there is indeed a response to those issues.
These refer to the practical application, without additional costs, of transparency and identification of individual costs or groups of costs. We welcome the clear intention, in spite of existing differences between FAO and other specialized agencies of the United Nations as regards a few programmes, to achieve as broad a degree of harmonization as possible in relation to the reimbursement of administrative and operational support costs.
Nevertheless, in the view of my delegation there are still some questions that are still open in the present proposal. For instance, if you turn to paragraph 3(a) our question there would be, could we have a bit more of an explanation as regards the rate to be applied to the cost of contracting and procurement? In paragraph 39(b) my comment is that for local staff, if we look at Appendix A we see that the rate is 19.3 percent of delivery. This seems to be a very high proportion. Could this proportion not be reduced if your Headquarters were to delegate to country offices the contracting of local staff?
To go on with paragraph 39(f) our comment there is that normally in-service training is carried out within the framework of a project by the project
staff themselves and is to be regarded as a matter of course as a component of the project. This being the case, why do we need a separate line to cover the cost of this, as is being proposed there? In our view, we think that any costs arising in this connection could be covered by technical support services.
Mr Chairman, my delegation would like to express recognition to the Secretariat for the efforts that have clearly been made to really face up to this problem of Support Costs Reimbursement for Trust Funds with new arrangements which would reduce the burden on the Regular Programme of the Organization resulting from the costs of administrative and operational support. We are, however, also aware of the implications that this has for donor countries. We wonder whether the introduction of the new arrangements can take place on 1 January 1994. It seems to us a little bit doubtful, also because of what we have been hearing in today's debate here. A whole lot of reservations from a number of countries have been formulated here today and in particular also because there will be need for technical arrangements to be made for the new system both on the part of the donors and on the part of the FAO Secretariat.
My delegation in any case would propose that these new arrangements should be the subject of a reassessment after a period of two years at which time, and as required, adjustments could be introduced into them and those adjustments could then perhaps also move further in the direction of having a uniform system for the reimbursement of support costs throughout the United Nations System, so that we would the best possible harmonization, which is what we would have preferred in any case.
Nedilson RICARDO JORGE (Brazil): I have heard with great interest the preliminary remarks made by Dr Shah and I thank him for his clear explanation. I have also listened with great interest to previous interventions.
The document presented to us is certainly welcomed by my country. I must commend the FAO Secretariat for the initiative taken in studying this important subject and preparing a comprehensive document like C 93/17 which contains a review of the situation, including current practices and requests made by donor and recipient countries, as well as a whole new set of proposed arrangements for Support Costs Reimbursement of Trust Funds.
FAO has again proved its leading role in tackling the crucial question of international technical cooperation, as the first specialized agency to propose the application of modern mechanisms of support cost reimbursements in Technical Cooperation Projects. I am sure that FAO's initiative will also lead international specialized agencies in preparing similar proposals.
Having said that, however, I would like now to proceed to an analysis of some specific points of the document, bearing in mind two main concerns, namely unilateral trusts funds and national execution.
First, I will refer to the administrative and operational support services that begins in paragraph 39 on page 9 on the document. Brazil thinks that there should be an explicit mention of a reduction of costs in projects that are nationally executed. For instance, costs of contracting, costs of local general services personnel and national consultants and experts can be borne and executed through the national administration and therefore be
excluded from FAO's administrative and operational support costs. This procedure may also increase FAO's competitiveness in regard to other agencies providing similar activities.
In paragraph 44, the methodology for calculation of support costs budget rates is, in our opinion, in agreement with UNDP guidelines. The methodology, however, is rather complex and we will have specific comments on it only after seeing it used in practice. Therefore, I reserve the final position of my country for future FAO Conferences.
Paragraph 47 makes reference to two circumstances under which rates can be subject to a reduction: (1) where a donor directly reimburses certain expenses, and (2) when specific cost reduction exercises have been undertaken and implemented since the budget was developed. Here I would like to suggest that a third circumstance be included in the form of an explicit reference to specific situations where there are unilateral trust funds under national execution, with corresponding reduction in administrative costs.
In regard to paragraphs 74-79, which refer to unilateral trust funds, we would prefer to avoid sentences containing confusing concepts like "where such countries are amongst the poorest nations", in paragraph 74, and "some of which are relative wealthy" in paragraph 75. The concept of wealthy and poor countries is not easily defined in the document and must be treated with great care in order to avoid sterile discussions on it. We think that all unilateral trust funds of developing countries should receive a preferential treatment of cost sharing. It may also be useful in this regard to verify the position of other Agencies.
In any case, I again insist on this important issue: Brazil thinks that either in this part of the document, or in paragraph 47, there should be an explicit reference to the special conditions of unilateral trust funds under national execution, with concessional rates to be defined, at least as a result of the decrease in administrative costs.
Paragraphs 83-85 refer to national execution. We take note of the Director-General's confidence that the new arrangements will support the gradual assumption of national execution responsibility by national governments. However, there are many unclear situations, such as Trust Funds financed by multilateral institutions through loan agreements. Paragraph 84 in that regard mentions that "the introduction of the new arrangement would not alter the Organization's policy concerning national execution, bearing in mind that Trust Funds Programmes channelled through multilateral institutions usually emphasize the use of international expertise and inputs, while projects for national execution tend to be funded bilaterally." We are not in total agreement with the last point of this paragraph. The resources from such loan agreements are payable by the national governments and not by FAO. It is possible then to have national execution, depending on the activities established in the loan agreement and in the project, as well as the national capacity and national technology. Therefore we think that this possibility should have been considered and mentioned in this section of the document.
Now I turn to paragraphs 86-89, under the heading "Competitiveness, Quality and Quantity of the Field Programme" and to paragraphs 90-97 under the heading "Harmonization of Support, Cost Arrangements in the UN System." My government supports those paragraphs and FAO's concerns regarding the improvement of the quality of projects and the harmonization of procedures.
Brazil shares FAO's concerns. FAO is certainly taking a pioneering initiative in proposing these new arrangements but, at the same time, FAO must be careful not to lose competitiveness in regard to other Agencies, particularly at the regional level.
Concerning Section VIII, "Procedures for implementation" in paras 98-106, Brazil would like to hear a careful critical analysis from FAO Secretariat concerning the real possibility of implementing such arrangements from 1 January 1994, particularly the ability of FAO to execute its own internal adjustments necessary for these new arrangements.
In general, the document reflects some major concerns such as national execution (although insufficiently), improvement of the quality of projects and country-programme approach, in order to enhance international cooperation. The concrete proposal presented to this Conference can become a milestone in harmonizing procedures within the UN system. However, we have found the proposed arrangements and methodology quite complex and difficult to evaluate at this stage, and to know how they will affect projects in the next biennium. For instance it is unclear whether this methodology will cause a loss of competitiveness for our Organization. In this regard, Brazil believes that national execution is exactly the best way to attain a reduction of costs that will allow the achievement of a significant comparative advantage to FAO. However, we are aware of the fact that nowadays few countries are able to nationally execute projects. Instead of dismay, this fact should bring an even stronger promotion of national execution as it is the best means to improve international technical cooperation.
In sum, due to the uncertainty of the results of the new arrangements and the comments I have just made, Brazil is not a position to fully endorse the Director-General's proposal in the present Conference. On the other hand, Brazil supports the general principles of the proposal, and we will be therefore prepared to support the application of the proposed arrangements on an experimental basis, in the next biennium, followed by a report to be presented to the next Conference in 1995, containing the practical effects occurred and a critical evaluation of these arrangements.
J.C. MACHIN (United Kingdom): I have to say frankly that before this debate started I had not really seen the need to make a long intervention. The UK views on this subject have been set out very clearly, particularly at the 102nd and 103rd Council Sessions, but I have listened to the debate extremely carefully and particularly the self-evidently strong reservations of the Trust Fund donors to the proposals before us.
What I was going to say was that the views set out by my delegation at previous meetings, the statements in part made by our Swedish and Italian colleagues about the substantial improvements in the new proposals - the proposals are clearly by no means perfect - but I agree with Italy they are a substantial improvement on what we have seen before. They have resulted in cost reductions, or they will we hope, although having said that I do agree that there is room for further improvement and we would like to see more cost reductions.
The principles of the new arrangements were very well adduced by the Swedish delegate in terms of minimizing subsidies from the Regular Budget, an equitable approach, the benefits to the Regular Programme from Field
Programme activities, transparency, harmonization and so on. These are basic elements of the proposals with which I think we all agree.
Like many people in the room, I too am very concerned by the comments made by the Trust Fund donors who have spoken about what could be - how shall I say - a bleak resource climate if the proposals before us are not modified in a way that satisfies their governments on the basis of consensus. It is obviously for sovereign governments perfectly up to them to decide where they are going to put their money into the UN system and the arrangements on which their resources are used. As far as the British governments is concerned, the Trust Fund arrangements we want to see are those which are sound, which benefit both the recipients and the Organization, and cost competitiveness is an issue that we have mentioned before and which has arisen consistently in our discussion this afternoon.
On that basis we have been ready to acquiesce in these proposals. They do not go far enough. As you know my delegation has consistently argued for full cost reimbursement and that is the objective which we will continue to seek. We also accept, as I have just said, the need for refinement and to do more, particularly in terms of cost reduction, and I could not agree more with my Brazilian colleague who absolutely rightly referred to the fact that national execution is evidently the best way to reduce costs, and certainly to improve international technical cooperation. As he also said, we are not there yet, not all countries have the capacity to do that, and therefore we need some of the arrangements which have been discussed this afternoon.
I am not entirely sure where we go from here. We can acquiesce in these proposals provided - provided - and I think it is an initiative process, we want to see them improve, we want to get experience of how they work in practice provided they are considered and considered fairly quickly. A lot of time and effort have gone into these proposals as the German delegate said. More time is clearly going to be required for the main interested parties to discuss them and to find a way forward. If that is to be done in the context of a budget review next year, that is fine by my delegation. What I think is not fine is to suggest that our debate in FAO should somehow be extended to New York or ECOSOC. I do not think that is the way forward. I think harmonization is clearly something we have to take on board, and when UNDP publishes its review in 1995, the results of that evaluation will clearly be important to FAO and to all United Nations Agencies.
Meanwhile I do express the plea that FAO and its membership, particularly those who provide these funds, can please come to some early agreement.
Ms Teresa D. HOBGOOD (United States of America): Like other delegations we express appreciation to Mr Shah for his helpful introduction.
The United States has carefully reviewed the information contained in document C 93/17. We appreciate FAO's efforts to respond to numerous issues raised at the 103rd Session of the FAO Council with regard to the operational effects of the proposed Trust Fund support arrangements.
The United States is facing a dilemma. On the one hand, we have sought full recovery of all overhead costs, including indirect administrative expenses, incurred by Trust Fund donors. In this respect, we note that according to para. 3.58 of CL 104/4, though not all overhead costs will be fully
recovered under the new arrangements, the ratio of support cost resources as a percentage of delivery is expected to increase from 19 cents for each US$1 dollar of delivery to approximately 33 cents.
This would alleviate some, though not all of the inexorable demands placed on Regular Budget resources to subsidize extra-budgetary activities.
On the other hand, the proposed new arrangements represent a step in the right direction. Transparency, cost-efficiency and improvements in the quality of services are all laudable goals to achieve in any new support cost management. In the absence of new arrangements, the overall subsidy from the regular budget for technical backstopping of Field Programmes funded from Trust Fund donors is likely to increase.
Thus, we see scope for changing the current arrangements along the lines proposed in document C 93/17 at this Conference.
With regard to the issue of harmonization, we listened with great interest to Mr Shah's remarks regarding the proposals for consideration in other UN System Agencies. In our view, harmonizing support cost arrangements for Trust Fund donors should occur when practicable and feasible to do so to avoid costly mistakes, and workable arrangements could ultimately harm intended beneficiaries.
Ultimately, harmonizing support cost arrangements among Un agencies will remove many of the distortions currently affecting the system and its capacity to deliver quality development assistance.
Chrysanthos LOIZIDES (Cyprus): Allow me to thank Mr Shah for the very useful introduction to the subject and the Secretariat for the documentation in front of us.
My delegation, cannot speak on this issue, neither as a donor nor as a recipient country. However, we are strongly in favour for maintaining a strong Field Programme, and this applies I think to the majority of the Member Nations.
The issue of support cost reimbursement is not a new one. It has been widely considered even recently by the previous Conference and, later on, by the Programme and Finance Committees as well as the 102nd and 103rd Sessions of the FAO Council.
We do agree that the validity of the current arrangements for support cost reimbursement needs to be examined in the light of the fact that the nature of the services that are being sought from FAO has changed very significantly as stated in para. 21.
For this reason, we believe that the proposed arrangements described under Chapter VI are reasonable and should be carefully examined with the spirit of goodwill and necessity, especially by the countries contributing to the Trust Funds, and taking into consideration the need for maintaining a strong Field programme as well as the role of FAO for technical assistance and the need for increased efficiency and competitiveness of FAO.
However, we also believe that all efforts should be waged in order to reach a consensus decision on this issue.
Soumaila ISSAKA (Niger): Je voudrais remercier M. Shah pour la présentation du point qu'il a faite, comme à son habitude, de façon très claire et très pondérée.
En tant que pays bénéficiaire des activités du fonds fiduciaire, je voudrais aborder la question sous cet angle. Nous avons non seulement examiné le document dont la Conférence est actuellement saisie, mais également suivi tout le processus qui l'a précédé, les discussions entre les Etats Membres. Nous voudrions donc souligner deux aspects positifs de tout le processus et des propositions qui nous sont soumises pour examen.
L'un des aspects est l'utilité des propositions et de la méthodologie comme outil de gestion des opérations financées à partir du fonds fiduciaire, en ce sens que-la méthodologie et les propositions apportent une certaine clarté, une transparence (cela a déjà été dit) ainsi qu'une meilleure programmation, une meilleure planification des projets et un meilleur suivi de la part de l'Organisation.
Le deuxième aspect positif que nous voyons à ces propositions et à toute la méthodologie proposée, c'est que cela nous montre la nécessité d'un ajustement des remboursements des dépenses d'appui. Nous sommes en faveur de ce réajustement dans la mesure où cela contribuerait à une meilleure performance des opérations financées à partir de ces fonds-là.
Mais nous sommes attachés à ce que l'appui que nous donnons au principe de réajustement fasse l'objet d'un large consensus entre les Etats Membres, aussi bien les contributeurs aux fonds fiduciaires que les pays bénéficiaires. Ceci est un principe important pour nous et nous le soulignons particulièrement.
Nous soulignons donc que toute nouvelle proposition doit être largement partagée par les Etats Membres. A cet égard nous suivons avec intérêt le débat qui se déroule actuellement et qui se poursuivra certainement; et nous souhaitons pour notre part que l'accent soit mis sur un certain nombre d'éléments dans l'évolution ultérieure de cette question. En effet, nous avons l'impression que les propositions qui sont faites n'accordent pas une place assez centrale à certains aspects de la question. Nous pensons notamment que la question des avantages que trouve l'Organisation en termes de savoir, d'expérience et de compétence dans les opérations financées par les services d'appui ne sont pas entièrement repris en compte dans l'étude de cette question. Nous pensons que ce capital de savoir que l'Organisation acquiert au travers de la mise en oeuvre de ses opérations de terrain doit être mieux reflété dans l'approche de la question du remboursement des dépenses d'appui.
L'autre élément qui ne nous semble pas tout à fait pris en compte est le facteur d'accélération de l'exécution nationale au niveau des opérations financées par ces fonds fiduciaires. Sur ce plan nous apprécions tout particulièrement les commentaires de la délégation du Brésil et nous pensons que cette nécessité d'accélération de la capacité d'exécution nationale, à laquelle tous les systèmes des Nations Unies poussent et à laquelle les pays bénéficiaires attachent de l'importance, doit être mieux intégrée dans les facteurs d'analyse d'une meilleure approche des taux de remboursement.
Enfin, un troisième point ne nous semble pas suffisamment être pris en compte, car nous avons le sentiment que l'équilibre à rechercher entre les coûts des dépenses, les coûts des services d'appui et les remboursements
n'est pas assez étudié sous l'angle unique d'un accroissement des taux de remboursement, et nous pensons qu'il fallait également pousser l'analyse dans le sens d'une meilleure performance de l'appui que la FAO apporte dans l'exécution de ses opérations. A cet égard, nous pensons qu'une meilleure consultation avec les pays bénéficiaires, pour planifier les appuis fournis par la FAO à l'occasion d'opérations précises, devrait être mieux prise en compte afin de minimiser les coûts que cela entraînerait pour l'Organisation. Et nous pensons sur ce plan qu'il est effectivement possible d'améliorer les choses.
Voilà les quelques points que nous voulions indiquer en ce qui nous concerne, et nous souhaitons que la réflexion qui va se poursuivre sur ce sujet puisse mieux prendre en compte ces quelques éléments.
Si je synthétise ce qui se dégage de tout ce que nous avons écouté avec un grand intérêt, je pense qu'il faudrait certainement envisager la poursuite de cette réflexion afin d'arriver à une décision plus à même de rallier l'ensemble de tous les pays membres de l'Organisation.
Iain MacGILLIVRAY (Canada): We have a comprehensive and important document before us and I would like to commend the Secretariat and Mr Shah for its preparation and introduction. It is indeed clear that the issue of Support Cost Reimbursement has been developed and debated for a number of years, with considerable detail provided in each successive iteration, and it is appropriate that we give recognition to FAO for the work it has done on this important subject.
My delegation is pleased to provide comments on the revised proposal submitted to Conference to implement new reimbursement arrangements on Trust Fund projects. Our views will confirm those expressed by Canada on previous occasions in the Programme and Finance Committees, and more recently at the 103rd Council Session of June.
Canada has been a long-standing advocate within the FAO of the principle of full cost recovery from extra-budgetary Trust Fund field project activities. We have consistently been concerned, as has this Organization, with the continuous erosion of Regular Programme funds through their substantial use as a subsidy to cover Field Programme costs. Indeed, we have learned that in this biennium the subsidy jumped by another US$11 million in respect of Support Cost posts, and is now to be institutionalized as an annual subsidy beginning at US$9 million in the upcoming biennium.
Might I add, that we have also in a tireless fashion reiterated our concerns for a strategically directed nexus between these Trust funded activities of the Field Programme and the priorities of the Regular Programme, which as Members we so conscientiously reviewed and approved at this very Conference.
In essence, there has been growing dependence on the Organization's Regular Programme resources to enable the proper functioning of Field Programme operations. Without any doubt, field-project-driven activities have been eroding the very core of this Organization, the assessed contributions it requires to function and to carry out its mandate.
It is within this context that we are supportive of the Secretariat's efforts of bringing to the attention of its Members that change is required
in the application of extra-budgetary contributions from donor Members. We believe this will strengthen, not weaken, the excellence of the world's leader on food and agriculture.
We recognize, in reaffirming the principle of full cost recovery, that the measures proposed fall short of this aim. We nonetheless signal our general agreement and recognize the importance of these new arrangements to accrue maximum cost recovery of Regular Programme expenditures.
We also recognize, in recalling the debate at the last Council and from recent discussions with some delegates, that the proposed arrangements imply an acceptance by extra-budgetary donors to compensate more fully a share of the costs - and I would emphasize that they are not asked to compensate total costs - for services this Organization is being asked to provide. In so doing, this can only enhance the credibility of FAO and its competitiveness by choice. We suggest that FAO and its Members deserve this image. But it is disconcerting to hear, as appears to have been articulated today by many delegations, that donors are not prepared to pay a fair share of costs and that they indeed can only continue to consider using this Organization if we are prepared to provide a high subsidy for services rendered. Mr Chairman, we are not aware of competitive offers for free lunches being offered anywhere.
As we stated at the 103rd Council, we believe that these new measures are a step in the right direction. Of equal importance, they could make a useful contribution to the management of funds, improve project quality, provide transparency and disclosure of costs, and allow for more appropriate burden sharing. Through these arrangements more comprehensive service rates to equate more closely actual costs will be borne by the funding source. We continue to support these measures.
We trust that the initial inevitable complexity brought on by these arrangements - in most part a result of the variety of projects and the diversity of donor administrative requirements - can still permit their smooth implementation, given the organizational and procedural changes required.
In closing, we support the special consideration given to unilateral Trust Fund projects whereby developing countries finance their own technical assistance activities, and the Associate Professional Officers scheme. In the case of unilateral Trust Funds, we continue to posit that further thought could be given to the development of criteria to grant priority favour to the most disadvantaged developing countries, as is done in other organizations. As to APOs, we fully identify with the valuable net input of human resources they provide to this Organization and its Members.
V.J. SHAH (Deputy Director-General, Office of Programme, Budget and Evaluation) : Recognizing the importance of the debate that your Commission has had and also the manner in which you conducted the proceedings in terms of discipline and time, I will offer to give my response basically in two parts. The first part of my response will attempt to deal with what I have heard and where we could go from here. I have some suggestions to offer. The second part of my response will deal with specific questions that have been raised. The summing up, of course, I leave to you, Mr Chairman, in terms of weighing, measuring the outcome. Having heard not only the 20 distinguished members, but having heard all the nuances, all the shades of opinion which they expressed, I would begin my overall response by saying
that surely you seem to recognize and to agree that the problems relating to Trust Fund Support Cost Reimbursement call for an urgent solution. The problems are real; they have been explained to you. You have considered them over a number of years. You are well aware of them, of their magnitude, of their scope and of their implications. It also seems to me that in general you and the speakers who addressed these issues have recognized that the proposals of the Director-General have been prudently developed over a period of two years. That is a fact, if I may say. It has been accepted that these problems are addressed by the proposals he has put forward in terms of aiming at an improvement of the quality of the Trust Fund Programme, making more equitable the relationships between Trust Fund contributions and the relevant related contributions of the Regular Programme, and enhancing the transparency. Nobody has questioned that, achieving improved accountability and making an impact on the reduction of administrative costs while at the same time aiming at a greater efficiency. At the same time, neither you nor we in the Secretariat can ignore the concerns expressed by a number of contributors to the Trust Fund Programme relating to the difficulties they have in accepting the proposals as submitted. At the same time, it seems to me that these contributors have accepted the need for corrective action to be taken but requested that more time be given to work out acceptable solutions. In all the interventions, there has been a recognition of the principles of these proposals and general support for them, the proposals as regards the methodology and the principles underlying them. However, in the light of the views expressed -and this is my response to your debate which I would request you to consider - in response to the views expressed, I can agree on behalf of the Director-General that the implementation of the proposals should not take effect from 1 January 1994.
I hope those who have expressed concerns will recognize the import of this statement. In response to your debate, the Director-General - and now we are talking, of course, in terms of the Director-General, but in practice it will be the Director-General who takes office from 1 January 1994 - the Director-General could be requested by you to pursue consultations with those who have expressed their concerns with a view to arriving at an overall solution which maintains the principles of the proposals but takes account of the difficulties indicated. You might consider requesting the Director-General to report on the outcome of these consultations with the consequential amendments to the proposals to the Council no later than November 1994. I say no later than November 1994 because although it is under consideration by the Conference, and the Plenary will pronounce on the matter in due course, that there will be an additional session of the Council in 1994 - in view of the nature of the concerns expressed and the nature of the further adaptations which may be required, the matter could go as you decide, but from the Secretariat's point of view, I use the term "no later than November 1994". And if you so recommend, if that is your wish and decision, you might then consider authorizing the Council to take the final decision on the matter on your behalf, on behalf of the Conference. This is the first part of my response.
Turning now to the second part, and that is the specific questions raised, let me start off by saying that when individual Member Nations have very different positions that you clearly explained, we in the Secretariat, of course, take note of these positions, but then it becomes very much a matter among Member Nations. To take one issue, on the one hand we hear some Member Nations say 13 percent is the limit. We will not accept anything over that. Fine. That is their firm position. On the other hand, another Member Nation has a representative who says we would aim at full
cost recovery. At the same time, those representatives who have referred to their aim of full cost recovery have also indicated with varying nuances their readiness to consider that this is a process which evolves, which may take time if it is ever to reach their objective, and in the meantime they are prepared to work with a varying balance. I think this is the first precise reply I would give, that when you start and when you maintain such different and precise positions, if any solution is going to be reached it will need a great measure of mutual understanding and a determination to come to a common solution which may not be satisfactory to every individual member but which may be accepted in your common interest. Related to that is the precise question about arriving at a solution in harmonization, and where. We have not worked on these proposals in isolation, as I said at the beginning, and I would re-emphasize. We continue to work, and we will strengthen our coordination, our efforts at coordination with our sister agencies, to work in harmony at arriving at a solution for each organization vis-à -vis their Governing Bodies which is acceptable to all Member Nations. But these arrangements on Trust Fund programmes are not identical to the UNDP successor arrangements, as you well know. In 1981 when the UNDP governing council decided to lower the rate of support cost reimbursement from 14 percent to 13 percent, at that time the UNDP governing council recommended that that same base rate be applied by each organization to their Trust Fund Programme. You member Nations made that decision, and that decision of the UNDP governing council was then accepted by the United Nations General assembly, was accepted in our case by you, the FAO Conference. The situation now is radically different. When the successor arrangements of the UNDP were decided upon by the Governing Coucncil, they specifically excluded any impact on Trust Fund arrangements. They said this is a matter between Member Nations in the different organizations. I think this was a very important clarification which I want to emphasize. Certainly, you seek harmonization, and we respond to that wish. But it is not a matter which can be left to New York, as somebody suggested.
Let me now turn to the question from the distinguished representative from Switzerland about whether the proposed arrangements apply to the TCP. Now the TCP at the moment does not have the same arrangements as for Trust Funds because the TCP, after all, being legally a part of the Regular Programme, being a part of the Regular Programme of Work and Budget, it is a question of activities under the Technical Cooperation Programme, funded by the Regular Budget and then the Regular Budget being used to siphon off to different parts of the Organization the cost involved. So it is an entirely different matter. In fact, the cost of implementing TCP projects, direct operating costs, are identified and are included in project budgets, and this amount goes only to the operating units involved. But I have taken the question in the most positive way, and certainly this is a matter which we would keep in mind to see how these arrangements could be applied to the TCP, even though in that case we are talking only about the Regular Budget.
Then there was a question from the distinguished representative of Norway about administrative costs and operational costs and how they compare with rates elsewhere. The information which we have obtained from external consultants is that when you take the FAO rates and compare them to the rates elsewhere, in private research institutions in the United States of America, the figure we were given is 59.26 percent.
In Public University Research Institutions, it is 47.49 percent. In the US Federal Department of Agriculture, 33.3 percent. In regional sectoral organizations and non-governmental organizations, 28.5 percent. This is for
full services, technical elements. And, when you come to the US Department of Agriculture at the State level, the administrative and operational services is 17.6 percent.
The distinguished representative of Germany asked about, in relation to paragraph 39(a), what was included in "procurement and contracts". The rate, Mr Chairman, as shown in Appendix A is 11.9 percent, as you see, but this is the rate based on the 1991 delivery; and with the improvements we have made that rate will come down.
His second question was in relation to the costs of General Service Personnel. "Why is the rate as high as 19.3 percent?" Mr Chairman, the rate is related to the cost of the delivery, and as the cost of local delivery is, of course, much lower, the 19.3 would be on that much lower delivery cost; so in dollar terms it is not at all as high as the international rates involved.
His third question was about the costs of group and in-service training and why they appeared so high. Based on our analyses, the costs we incur can be broken down as follows: 56 percent for the technical units who arrange the training activities - this is for the technical content. Thirty-nine percent for the FAO Representative Offices because they are involved in the handling of the trainees, and 5 percent in the case of the Regional Offices where these training activities involve their participation.
A question has been raised by the distinguished representative of Brazil: whether implementation of these proposals would not be hard. In fact, as I said, the development of the budget - we have already undertaken the budget module; we have the capacity. Accounting and billing uses the existing capacity which is already in place. There is no change in the system. I do note the difficulties raised by the Distinguished Delegates of Norway and the Netherlands regarding their agreements. This is a separate matter, I must admit.
Finally, the distinguished representative of Canada referred to the post transfer to the Regular Programme. These posts would not be included in the cost of supporting the Field Programme because they relate to the Regular Programme, and that is why they were transferred; but I take careful note of his concerns on the issue as a whole.
There were a number of specific questions about how the system would operate in practice. With your permission, since, if I am right, the sense of the debate is not to implement the system immediately, I will take the liberty of not responding to these questions now. All right? We will come back to those Distinguished Delegates and certainly provide the clarifications they seek.
So, Mr Chairman, I thank you for your patience and for giving me the floor, and I hope that the first part of my response may be helpful to the Commission in arriving at the conclusion to this very sensitive debate.
Mrs Elena ASKERSTAM (Estonia): Mr Chairman, Estonia's is the voice of a recipient country which at the same time is not classified as a developing country; and, as such, we have not yet succeeded in benefiting from an FAO Trust Fund project. Estonia has listened with concern to some of the views of the major donors.
The Organization is at this time at a point where there is frequent reference to the need for locating additional funds for its increased family of members, this in order not to reduce the funding devoted to its present programmes and receiving countries. There is also constant reference and, hopefully, support of the pressing needs of the countries in transition for the mostly relatively short period which is needed to bring these countries to a level where they are able to join the community of donor countries. I am not in a position to suggest solutions. I should just like to express our concern and to urge the greatest caution before deciding on actions which may lead to results which will lead the Organization in the opposite direction from what it is claiming to try to achieve. Also, at this point in time, Estonia requests that FAO's incoming Direction should be given the possibility to review this most important question.
Ato Assafa YILALA (Ethiopia): I would have to request to you, following your indulgence, because I will have to go into some length because of some of the concerns that were expressed by some of the countries in my group and in my region. First of all, I would like to thank Mr Shah for the introduction that was just made for the Secretariat for the document on the support cost reimbursement in relation to the Trust Fund. I would also like to recall the decision of the Conference on the need of revised regime for reimbursement of support clause in respect to the Trust Fund projects. This present document and its contents are outcome responses to the decisions of the governments of this Organization and direct response for the needs that were realised earlier.
Without going into great detail let me voice my agreement on the need for change, and "the present proposals that we have before us are in line with a change that could be desired and accepted by our delegation. This change will, however, require a consultation with all those who are either directly or indirectly affected because we do feel that such a change could only be brought out through mutual understanding and consensus. Even though the issue of consultations was pointed out in the document, we have heard a number of the representatives of the Trust Fund donor countries voicing the inadequacy of the consultations that were made so far. On the other hand, we do not consider it to be appropriate to postpone a decision on this matter just because of this reason, even though we fully share the concern of having to consult with the authorities of the countries concerned before making commitments. In a situation such as this the need of balancing the concerns of the donor countries with that of the Organization becomes essential.
It is in this context that I would like to pursue the matter further. It is clear that any postponement, whether small or large, would create a gap in the flow of resources, hence affecting Trust Fund-operated projects by diminishing them or causing interruptions. The affect of this is felt more in the developing countries where projects are being implemented, and the projects are established for the benefit of those developing countries which are going to be affected. Even though the need for further consultation could be a matter for acceptance, it is important to note that the time required for such consultation should be brought to a minimum so as to minimize the gap which is or could be apparent during the process. Furthermore, we are faced with the transitional situation in which the incoming Director-General will have to face this situation of a gap, thus reduce resources. None of us would like to place in such a situation and,
therefore, would not like to place the new Director-General in such a situation.
Considering all of the above, we would like to propose the following, which is very much in line with the proposal which was just indicated in the first part of Mr Shah's recommendation. In forwarding this proposal we are faced with the constraints of time to make adequate consultations and also going into length, and we are not going to go into the details and, therefore, go directly into the proposal. One, we are fully convinced of the need of adequate consultation between donors, recipients, and the Secretariat in a very clear and transparent manner. Therefore, steps should be taken toward satisfying those needs of consultations. Two, to avoid interruptions of gaps in the implementation of Trust Fund projects, the need of continuing with a slightly increased support cost arrangement could be ideal because the need for change has already been realized by the Conference almost four years back. Failure to realize this awareness might force this august body to continue as in the past, in which case decisiveness could emerge. Three, the need of making decisions as soon as possible so as to minimize the gap in project implementations should be seen and considered very urgently. In this connection I would like the Director-General to propose a recommendation after consulting with all those concerned. We feel that the recommendation of the Director-General could be presented to the special Session of the Council, the special Council Session that was already recommended in the Plenary in connection with the Programme of Work and Budget restructuring at the beginning of this week. This matter of support costs could also be combined and the Council, a special Council, could be mandated to make decisions on this matter. Four, in the interim between now and the time when decisions are being made, we would like to see flexibility and facilitation of the required study and preparation being made with utmost urgency. Five, we would also like to request the Trust Fund donors to speed up the decision-making process and realign linkages of harmonization with other UN Agencies because we have no authority over the work of other agencies, even though the idea of harmonization could not be objected.
In this connection, we understand that the further study being undertaken will be remitted to those itineraries which are being questioned rather than the whole area, so as to save time and resources. This screening in the area of study is required because of the fact that there is a general acceptance of most of the contents of the study that we have before us.
In talking about support cost arrangements, it is important to note that some of the projects implemented are also funded by the developing countries themselves, which are referred to as UTF or unilateral Trust Fund projects. The increase in support cost arrangements on such projects might discourage developing countries from using the accumulated know-how of the Organization. We therefore feel that the examination should also include this aspect of the Trust Fund, and we would like to see a concluding study with regard to the sense of the message that is relayed in paragraphs 74 and 75 and earlier referred to by the delegation of Brazil.
Michael KIMA TABONG (Cameroon): I will be very brief, for two reasons: first of all, because the interpreters who have done so well for us want to be away, secondly, because I too want to be away because I am getting chilled here. The House is becoming colder than outside.
That said, Mr Chairman, the Cameroon delegation appreciates the very comprehensive introduction earlier on by Mr Shah of this very important topic and his very able response to issues that2 have been raised by the distinguished delegates of this Commission.
We would say straight away that this is a very crucial issue, since we cannot imagine the FAO without Field Programmes financed by the Trust Funds. Mr Chairman, we have taken very careful note, and with great interest, of the constraints of document C 93/17 on the Reimbursement of the Trust Fund Support Costs, and we have also listened very attentively to the views very clearly expressed by delegations of the major donor countries towards the trust funds. In our view, this document partially answers some of the requests raised by many Member countries for more transparency and accountability of FAO activities. The Cameroon delegation appreciates all the positive impact of these new arrangements by the Secretariat, the donor community and the beneficiaries of the Trust Fund activities which have been highlighted by Mr Shah in his introduction.
However, we note also that these arrangements will have some negative impact on some of the activities - for instance, training and some small projects. Mr Chairman, my delegation supports the partnership principle by which the Regular Budget should bear a certain level of Support Costs resulting from the Trust Fund activities. However, Mr Chairman, the bottom line of all these discussions is that we are entering a new era with a new Director-General who will have to review the projects of the Trust Funds and who will find it absolutely necessary to consult with the major donors, without whom, as we have said earlier on, most of the Field Programmes will remain on paper.
The Cameroon delegation therefore favours postponement. What we may ask now is for how long such postponement should be - one year, two years? The importance and the priority of some of the projects should be taken into consideration. Mr Shah has suggested that it should be no later than November 1994. We leave that open too.
CHAIRMAN: After I have made my brief statement, I will give a word later on to the Secretary about the arrangements for the next meeting. Since I am the Chairman, not a delegate, I have to set a good example about brevity. I am going to be very brief.
The first point is that we have this paper which we have been working on for two years, but it is obvious that it has not been worked on long enough. In particular, the donor countries are unhappy with some points of it. My suggestion therefore is - and this will be in our draft final report - that the Secretariat take into consideration the comments made by all the 23 speakers, where appropriate, and prepare a new document as soon as possible, distribute the draft document to the representative of the countries here in Rome who can then pass it on to their governments for comment; their comments will then be consolidated in another paper and hopefully some consensus will be reached. That paper, if appropriate, will then be presented to the Programme and Finance Committees and, if necessary, to CCLM, and then presented to the Council, which as far as I know is now going to take place in May, for consideration and, if found appropriate, for approval for a trial period until the next Conference.
Richard M. STEIN (Secretary Commission III): I shall be very short, I promise you. First, as the representative of Cameroon, I have also been feeling very cold in this room and I wish to inform you that before lunch I asked that something be done to increase the temperature a bit, because when one walks out of the door it is just like summer out there. They did some work over the lunch hour, but I think it was only partially successful, and I shall renew the request again this evening.
There are two very important things which will interest all of you or other members of your delegations. The first is concerning Commission II. The next meeting of Commission II will take place on Monday next at 15.00 hours for the approval of their report. Subsequently - I hope not over optimistically, but I am assured that I am not being over optimistic - this Commission, -Commission III, will meet immediately thereafter and it is scheduled for 17.00 hours on Monday next for the approval of our report. Thank you, and I wish you a very pleasant weekend.
The meeting rose at 18.30 hours.
La séance est levée à 18 h 30.
Se levanta la sesión a las 18.30 horas.
