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16. Report of the Sixty-fifth Session of the Finance Committee
16. Rapport de la soixante-cinquième session du Comité financier
16. Informe del 650 periodo de sesiones del Comité de Finanzas

16.1 Budgetary Performance 1988
16.1 Exécution du budget 1988
16.1 Ejecución del presupuesto en 1988

16.2 Level of Support Costs from UNDP and Trust Fund Programmes
16.2 Montant des frais de soutien venant des programmes PNUD et Fonds fiduciaries
16.2 Nivel de los costos de apoyo abonables por el PNUD y los Fondos Fiduciarios

16.3 Scale of Contributions 1990-91
16.3 Montant des frais de la contribution 1990-91
16.3 Escala de cuotas para 1990-91

16.4 Other Matters Arising out of the Report of the Sixty-fifth Session of the Finance Committee
16.4 Autres questions découlant du rapport de la soixante-cinquième session du Comité financier
16.4 Otros asuntos derivados del informe del 65 periodo de sesiones del Comité de Finanzas

17. Financial Matters
17. Questions financiers
17. Asuntos financieros

17.1 Financial Position of the Organization
17.1 Situation financière de l'Organisation
17.1 Situación financiera de la Organización

17.2 Status of Cash Flow
17.2 Situation de trésorerie
17.2 Situación del flujo de fondos

LE PRESIDENT: Messieurs les délégués, nous reprenons nos travaux.

Je vais demander au Président du Comité financier, l'Ambassadeur Bukhari, de bien vouloir présenter le point 16 de notre Ordre du jour, c'est-à-dire le rapport de la soixante-cinquième session du Comité financier. Après quoi, je demanderai à Monsieur Crowther de bien vouloir nous faire une communication sur les contributions.

La parole est à Monsieur Bukhari.

At if Y. BUKHARI (Chairman, Finance Committee) (Original language Arabic): Mr Chairman, the document under consideration is the Finance Committee Report (CL 95/8).

The Finance Committee met twice in 1989 since the last Session of the Council. It first met jointly with the Programme Committee from 30 January to 1 February 1989 for its 64th Session when the two Committees considered the outline of the Programme of Work and Budget 1990-91 submitted by the Director-General; this subject is being dealt with separately. Then the Committee met for its 65th Session from 8-17 May followed by a special joint session with the Programme Committee. Both Sessions, although heavily loaded with work were dealing with important subjects and were able to efficiently handle a large number of Agenda Items.

The Membership of the Committee changed at the 64th Session when Mr Coutts, representative of Australia, joined the Committee as the replacement for Mr Smart from the same country, and Mr Monroe, representative of the United States of America also joined the Committee to replace Ambassador Eckert.

Under Budgetary Matters the Committee reviewed the Summary Programme of Work and Budget for 1990-91 which I have already reported on separately.

With regard to Contributions to the General Fund, the Committee expressed its concern since contributions are still being received at a slow rate in spite of prior appeals for timely contributions made by the Council and the Conference. Member Nations were advised by the Director-General on 1 December 1988 of their obligations and of the fact that such assessed contributions were due by the 1 January 1989. You have now been informed of the current status of contributions in June 1989 under the prior item 17.1 as contained in CL 95/LIM/1.

At its 65th Session the Committee not only appealed to all Member Nations to remit their contributions at the earliest possible date but also appealed to all Member Nations to provide FAO with information on the expected dates and amounts of such contributions so as to permit the Organization to manage its resources and to establish cash flow projections. This information would help to avoid having recourse to borrowing arrangements. The Committee was particularly preoccupied with the risk that several Member Nations could lose their voting rights at the forthcoming Session of the Conference. Once again I must ask the Council to make a special appeal for early payments of contributions and mainly from those Nations at risk of losing their voting rights. Also, Mr Chairman, I wish to request the Council on behalf of the Finance Committee to ask Member Nations to provide information to the Director-General, as soon as possible, on the timing and amount of contributions to be paid during the remainder of the year. The timing is also very important in this respect·

The Committee considered the report on the accounts for 1988 which is the first year of the biennium 1988-89. It noted that careful management of its resources allowed the Organization to end 1988 with an excess of income over expenditure. It also noted that the Special Reserve Account had been partially replenished through payments by Member Nations of special assessments in the amount of $7.8 million, and with a credit of $3 million from savings on staff costs, achieved through the use of contracts for forward cover of Lire. The Committee also noted that the Working Capital Fund account had been replenished in 1988 to the level of $15.7 million, although it is still below its established level of $17 million for 1988.

With regard to the situation in 1989, the Committee was provided with updated figures at 31 March 1989. The Members showed concern over the need for accurate cash flow Information and concurred in considering that it was essential for Member Nations to provide definite Information on amounts and timing of the payments of their contributions to make possible a reliable cash flow forecast to provide Information for management to make adjustments in light of the financial conditions where necessary·

In accordance with General Rule XXVII.7, the Committee reviewed the proposed scale of contributions for 1990-91 which since 1955 has always been derived from the United Nations scale of assessments. While expressing concern about the validity of the methodology used to determine the UN scale, it requested that such concern be conveyed to the United Nations so that the scale be based on balanced and up-to-date Information, the Committee nevertheless recommended to the Council that it submit for adoption by the Conference a Resolution aiming at the acceptance of the proposed scale of contributions for FAO for 1990-91.

The Committee reviewed the financial situation of the Terminal Payment Fund and noted that it would be receiving proposals from the Director-General on the further extension of coverage of the Fund.

In view of the heavy schedule of the Committee in its 65th Session it was not found appropriate to discuss the appointment of the External Auditor and the Committee agreed to defer such discussion to its September Session.

The Committee noted that the implementation of measures adopted to implement Conference Resolution 18/87 regarding distribution of the interest income element of the cash surplus could not have taken place since such a cash surplus had not yet arisen.

With regard to the level of support costs from UNDP and Trust Fund Programme the Committee was informed of the progress for developing the so-called "successor arrangement" which efforts are being taken by UNDP in collaboration with other UN organizations.

The Committee reviewed the financial statement of the Commissary for 1987 and approved the establishment of a Commissary Reserve Fund for the replacement of equipment.

Under Personnel Matters the Committee was apprised of the 14th Annual Report of the International Civil Service Commission to the UN General Assembly. It noted the recommendations regarding increases in childrens' allowances and education grant. It was also informed of current developments regarding the comprehensive review of conditions of service in the professional and higher categories and particularly of the decision of the two Staff Representative bodies to resume staff participation in the work of the ICSC. The Committee made a specific remark regarding the practice of supplementary payments and deductions by certain governments to their nationals working

in the UN system and considered the continuation of such practice would suggest that UN salaries were not competitive.

The Committee also was informed that the normal operation of the post adjustment system had been resumed with effect from 1 May 1989, and that the FAO Pension Fund contributions had been increased from 14.5 to 14.8 percent and would be raised to 15 percent effective July 1989.

Under Organizational Matters the Committee was up-dated on the current developments regarding Headquarter's accommodation and expressed appreciation for the generous contribution and support from the Italian Government in making available additional premises to the Organization. Mr Chairman, the Committee was informed that construction on the new project would begin this month. The Council has also heard assurances to this effect from the Ambassador of Italy last week.

The Committee reviewed the various UN Joint Inspection Unit reports regarding several subjects, as reported from paragraphs 3.89 to 3.100 of its Report.

With regard to the important project of computerization of the financial and administrative activities of the Organization called FINSYS/PERSYS the Committee reviewed a report submitted by the Secretariat, which indicated that considerable progress had been made in anticipating the implementation of the work programme and that the staff of the Organization has already being paid by the new system as from April 1989 with full success. It was noted that the target date for the implementation of the Phase II of FINSYS, regarding mostly the financial and accounting modules of the new system, was expected to be January 1990. The Committee noted that FINSYS/PERSYS seemed to have reached a degree of success since the representatives of several UN organizations have approached the Organization with a view to exploring the possibility of sharing the system and participating in the cost of its development.

Finally, the Committee adopted by consensus an amendment to its Rules of Procedure regarding the convening of special sessions as detailed in paragraphs 3.108 to 3.110.

With regard to the Items dealing with the World Food Programme, the Committee reported as usual on this matter separately to the CFA through the Executive Director to whom I have personally addressed a copy of that section of the report produced as a Finance Committee document. The Council will be apprised of appropriate actions and comments on this section of the report through the CFA, as has been normal procedure.

The Committee concluded its deliberations in agreeing upon the dates of its next session which will be 18 to 29 September in Rome.

This concludes my introductory remarks.

D.K. CROWTHER (Assistant Director-General. Administration and Finance Department): I would like to add a few words about the contributions and give a quick update.

The Council Members have before them a copy of CL 95/LIM/1, which shows the financial position of the Organization and the contribution matters. It shows there the amounts that have been received during the days from 8 May through 16 June. Since the Council began we have received a full payment from New Zealand; we have received a payment from Peru; we have received a payment from Bahrain, and we have been advised that a payment has been placed in banking channels from the Federal Republic of Germany, which we expect to receive very shortly. Taking all of these into account I think it is important for Council Members to know that, while there are 158 Member Nations of the FAO, at the beginning of the year assessments were made of US$ 240 920 000 to Member Nations. In order to compare the results of what has been received during the first six months of this year it might be important to look briefly at what occurred during 1988.

During 1988 the same amounts of assessments were made of the Member Nations. At the end of the year 1988, 79 Member Nations had paid in full. 27 Member Nations had made part payments, and 52 Member Nations made no payments for current assessments during 1988. For current assessments we received just over US$ 184 million out of the US$ 240 million assessed; that runs at about 76 percent. That 16 substantially less than the amounts that we have been receiving for most biennia during th history of the Organization: we normally received 90 percent, 91 percent, 92 percent of the assessed contributions during the year of assessment. Frequently a percentage ranging from 7 percent up to 8 percent remains unpaid, and we collected amounts very close to that amount from the prior years' contributions. The same pattern seems to be occurring in 1989.

We have received thus far in 1989 US$ 103.8 million, or about 43 percent. By this time last year, and in 1987, we have received in excess of 53 percent. We are more than 10 percent slower in receiving assessed contributions this year than we have been in prior biennia. In addition to the US$ 103 million, we have received US$ 9.5 million in arrears. The arrears are at an all-time high

level, and I would like to spend a moment on the arrears after we have dealt with the current contributions. That means that in total we have collected US$ 113.3 million during the first six months of this year. In order for us to even be even with the amount that was received in 1988, we must collect an unprecedented amount during the last six months: we would have to collect a minimum of $ 127 million. That is not likely unless something very unusual occurs.

If we have to make a projection-and we do not have a great deal of Information upon which to make such a projection-but if we had to, we would probably indicate that we would collect somewhere between $ 85 million and $ 90 million, a long way short of the $ 127 million; and if the rate of collection of arrears continues at the same rate (we collected $ 9.5 million during the first six months), if we even collected another $ 10 million we will still be between $ 25 million and $ 30 million short of enough money to carry out the Programme of Work and Budget during this year.

I am saying this to appeal to all Member Nations, to add to the appeal that has already been made by the Finance Committee-and I must say that the Finance Committee members spoke more strongly and seriously about this problem during the May Session than I have heard them in a number of years. The cash receipt situation is becoming rather critical. The pattern of receipt of contributions is changing, and there are more and more Member Nations deferring until later on during the year. This is creating a major problem for the Organization, and I wanted to make certain that everyone is made aware of that problem.

If I may now say a word about arrears: it has only been a very few years ago that we have a total of about 8 percent, even 7.5 percent of current contributions in arrears. In 1986 this figure started growing. At that time there was about $ 14 million total for all the other years that were owed to the Organization, current year and prior years. That amount doubled in 1987; it doubled again in 1988; and on 1 January of this year the Organization was owed an unprecedented $ 109 million in arrears. If we add that $ 109 million to the $ 240 million that was assessed to Member Nations at the beginning of the year, we can see that the Organization was due about $ 350 million this year. It is not likely that we will collect anything like that amount.

Our concern is to collect enough contributions and/or arrears to be able to finance the current Programme of Work and Budget, and that is always the aim of the Organization. We were heartened by a number of statements made by several Member Nations during the beginning of the Council, and particularly that of the United States, to the effect that legislation is progressing and that the hope is that there will be full funding and a portion of the arrears from the United States paid this year. That certainly is positive and enlightening. Of the other large contributors, it is important to know that the patterns for some have remained the same-they have made early payments; but for others there have been further delays.

We are very concerned now about the second largest contributor. Legislation has been passed in that country, but we have not received any word as to when the Organization can expect that payment. That 16 an additional $ 31 million. It is important to bring this matter to your attention, because the life blood of the Organization and its ability to carry out its work depend upon the receipt of contributions. Every effort is being made so that we can manage with the precarious receipt of contributions month to month, and I must say that they are more erratic now than they have been in prior biennia. Trying to anticipate the number and amount of contributions is becoming more and more difficult.

In fact, the Director-General has asked me to pass along to you the fact that he personally has to spend an unprecedented amount of his personal time on the telephone, with telexes, and in personal correspondence with Member Nations about contributions. I won't discuss the untold amount of time that I have to spend in trying to encourage Member Nations to pay, and to pay as quickly as possible.

I believe that the message that I would like to leave with you is that, firstly, we encourage all Member Nations to pay the balance of their contributions as quickly as possible; secondly, for those of you who are planning to pay your contribution during the next six months of the year, it would be most helpful if you could communicate with the Director-General and advise him of the expected amount and timing of that payment. We are trying to project precisely what we will be able to work with and where the funds will come from in the next six months-so if you can advise us when you Members would likely pay, it would be most helpful, so that we can plan our cash expenditure.

LE PRESIDENT: Je remercie M. Crowther de sa communication. Il ne fait aucun doute qu'il s'agit là de questions très importantes et je suis persuadé que les délégués sont tous conscients de la nécessité de promouvoir le financement régulier de l'Organisation et ne manqueront pas de se faire nos interprètes auprès de leurs gouvernements pour répondre à cet appel du Directeur général.

Amin ABDEL MALEK (Liban) (langue originale arabe): Je voudrais tout d'abord remercier M. Bukhari, Président du Comité financier, de même que H. Crowther, de la présentation des deux documents portant sur le Rapport de la soixante-cinquième session du Comité financier et la Situation financière de l'Organisation. Nous les remercions des données assez fouillées qu'ils nous ont présentées bien que lesdites données ne soient pas véritablement encourageantes surtout concernant le paiement des contributions par les Etats Membres et la situation financière de l'Organisation en général.

La délégation libanaise est heureuse d'annoncer que, malgré sa situation financière fragile, le Liban s'est acquitté des sommes dues au titre de 1988. Nous nous efforçons, en outre, de nous acquitter des sommes dues pour 1989 et je suis certain que notre contribution arrivera avant novembre 1989, car nous avons en effet une profonde conscience de la nécessité pour l'Organisation d'avoir les revenus indispensables pour lui permettre de s'acquitter de ses tàches. Monsieur le Président, je voudrais saisir cette occasion pour formuler le voeux de voir les Etats Membres payer leurs contributions pour permettre à l'Organisation de poursuivre ses activités.

Kota HIRAMURA (Japan): As in the past, Mr Saouma made a statement on the opening day of this Ninety-fifth Council Session. That statement touched on the financial situation of the Organization, and mentioned that the payment of both current contributions and arrears is considered to be unsatisfactory. He especially singled out the two largest donors, by saying that their contributions together account for 38 percent of the total budget and that he did not know either when or how they intended to settle their obligations. Although he did not specifically mention the names of those two largest donors, it is obvious to anybody with any common sense that those two nations are the United States of America and my country, Japan.

In this regard, my delegation feels strongly that ve must explain the current position and the intention of the Government of Japan concerning the payment of contributions in 1989 in order to attain a clear and proper understanding not only of the members of this Council but also of the Member States of this Organization.

The fiscal year of the Government of Japan begins in April and ends in March of the following year. As far as the payment of contributions to this Organization in 1989 is concerned, the Government of Japan submitted its plan of budget for 1989 in January 1989 to the Japanese Diet. Although usually the plan of budget is approved by the Japanese Diet in time for the implementation of budget in and from April, this year the plan of budget was approved only on 27 May 1989, nearly two months later than usual, for internal political reasons, etc.

The Japanese delegation stresses that the Japanese Diet has given its approval for the appropriation and the payment of contributions for 1989. This delay might be considered as one of the reasons which might inevitably cause the late start of the administrative procedures to exercise the payment of the contribution for 1989. Although the Government of Japan has begun the necessary procedures, another unpredictable situation has arisen, that is, the drastic change in the currency situation between the Japanese yen and the United States dollar.

Over the period of time for the preparation and submission of the budget plan to the Diet up to the present, the Japanese yen has weakened by approximately 20% against the dollar. Bearing in mind this position, the Government of Japan is currently making every effort to pay the 1989 contribution at the earliest possible date. My Government is opposed to external borrowing and is aware of the dangers of cash flow problems which may be caused by delay of the payment. Therefore, the Government of Japan is committed to taking measures to pay the contribution for 1989 in such a timely fashion that should not cause a negative impact on the financial situation of this Organization.

Mr Chairman, we would like your permission to make further comments later on the Report of the Finance Committee.

R.G. PETTIT (United Kingdom): I would like to thank Mr Bukhari for his report on the Finance Committee. We are grateful to him for the work done, and would like to thank him and Mr. Crowther for their further impressions this morning. We have a few comments and questions on the subjects raised by the Committee in the context of substantive observations on support cost issues, which I take it are best dealt with under this item. As with my intervention on Agenda item 15 I will try

to deal with the points in the order of reference in Document CL 95/8, Part III· This is not according to the list of sub-items 16.1 to 16.4, but if I may I will identify the sub-item in case it helps us to structure the report appropriately.

First (this will come under sub-item 16.4) paragraph 3.10 which deals with a Special Reserve Account. The Director-General indicated in his budget document that he did not intend to seek another special assessment to bring the accounts to the authorized level of 5% of the budget. We trust the restoration to the approved level will be achieved by the use of arrears and the gains which have been made on staff cost currency variances. At some stage when we consider alternative ways of promoting the budget, usually from changes such as the adoption of a split-currency budget, we will need to consider the future of the Special Reserve Account.

Still on 16.4, as regards the request in paragraph 3.26 for the provision of Information with reference to payment of contributions, the pattern of payment by the British Government within the year take account of the financial situation of the Organization. Continuation of the cash position is required to enable us to continue to make payments early in the year as resort to external borrowing is not acceptable when dealing with the financial figures of the Organization.

We note that the balance of the working capital fund, now built up to near the level fixed by the Conference, as stated in paragraph 3.27 will probably be needed at the end of the biennium partly to offset the carry-over deficit in the general fund. We note there are no proposals for a further assessment. We are of the view none would be justified.

As to the scale of contributions dealt with in paragraph 3.45 and following, this is under Agenda Item 16.3-we agree that the scale for 1990-91 should derive from the United Nations scale despite the continuing doubts of some members, mentioned by Mr Bukhari this morning, about the validity of the methodology. This latter point is something to be pursued in another place. We agree that the draft Resolution should be submitted to the Conference. But it occurred to me that in other years it might not be possible to take some account of the views of countries which have recorded assessments based on data relating to a period some years ago-in the present case data ending in 1986. The United Nations assessment seems to be agreed for three-year periods, so every third biennium-our biennium-there is likely to be an FAO year which is based on an assessment scale one year behind the United Nations recommendations.

Thus, if there is a United Nations scale of assessments for the three years 1995, 1996 and 1997, if my understanding is correct and if we continue our present practice, in the biennium 1994-95 we should still be basing our assessments for both those years on the UN scale for 1992/94 which is based on data ending in 1989, as the same countries will point out. If this suggestion meets in some way the points made by the member countries which have these reservations, may I ask the Secretariat-would there be difficulties in 1993 in approving assessments for the eight years or the biennium based on UN scales in the years 1992/94, and secondly, on the possibly unknown rates for the period 1995/98? This would mean passing a budget with the assessment unknown for the second year, but at least two other agencies pursue this practice under the authorization of their Directors-General, and calculate the assessment based on the fundamental decision of the General Assembly.

I should add that this situation will not apply to the next two biennia because our current practice means we would be in phase with the United Nations. Had it been applied to the present biennium, we should now be paying in 1989 on the basis of the UN assessment for the period 1989/91 and not the previous one, as is the case.

The next section can again be classified as Item 16.4 of the Agenda. As regards the potential cash surplus dealt with in paragraph 3.58 we insist that any such surplus be dealt with strictly in accordance with the rules and conference resolutions, including Resolution 18/27 which deals with the interest element of any cash surplus.

I now come to the question of support costs covered in paragraphs 3.59 to 3.64, which we identify as Item 16.2 for discussion. The narrative in paragraph 2.16 to 2.20 of the Director-General's Summary Programme of Work and Budget is also relevant. Difficulties have been caused to the European-based agencies in the years up to 1987 due to the decline of the dollar, the currency in which the project money is supplied against the European currency in which supervision costs are carried out. In the years in which dollar appreciation was such as to trigger the relevant decision, FAO and other such agencies benefitted by an increase in the support costs of 14% from the now standard level of 13%. As regards 1987, an exceptional amount was agreed retrospectively on the understanding that for this one time the concession would lead to improvements in delivery quality and accountability.

The comments of the Director-General in the Summary Programme of Work and Budget document, paragraph 2.17, refer to the retention of the momentum of programme delivery and therefore an increased workload, but to lower performance in timeliness and quality in the implementation of

projects. This good delivery has been maintained and ve are grateful to those who are working harder or longer hours, but it is not satisfactory to plan for a reduction in timeliness or quality in field projects financed by the UN system.

In the next two years, 1990 to 1991, the current arrangements continue. It has always been accepted-or at least until hitherto-by the International community that specialist regular budgets should bear a share of the support costs for projects financed by UNDP and similar organizations. This is the case with other agencies with a development remit. It is the job of FAO to maintain and supervise field projects adequately and if necessary to see that other projects receive greater flexibility than projects financed from other sources. No improvement can be expected in terms of support costs for 1988 since the dollar decline was arrested that year and no change will occur before 1992.

Member countries will wish to ensure that successor arrangements take account of the desirability of protecting the supervision of field programmes from the effect of currency changes. This was the acknowledged weakness of the current deal. If the Secretariat is not avare of it, I would commend the work being carried out in UNIDO to seek solutions to the problem in the next deal. There are some ideas here which should be used.

The report mentions the very welcome FAO input into the development of the successor arrangements for support costs. We can understand the noted intention of FAO, mentioned in paragraph 3.63

"to seek maximum reimbursement for all support costs incurred in a manner which would be both comprehensive and practical to apply."

This is not a view to which member countries could subscribe. To do so would be to create a misunderstanding of the purpose of the support costs study. The intention of this exercise which was most active in framing the Terms of Reference, was to establish a regime which leads to the best possible use of the skills and capacities of the Specialized Agencies in United Nations technical cooperation. The question of how much of this funding cooperation would be through the Regular Budgets or through the funding bodies UNDP and FPA and so on, is a matter for the International community to decide. The support costs study team are required to produce figures ranging from the net contribution made, support costs from the funding agency-in our case FAO-which would be allied to costs being covered by UNDP.

I was somewhat depressed by the remarks of the Director-General on the subject when it was raised on the Programme Committee item. I was depressed because he gave the impression that the new deal is looked at as one which is more or less an endorsement for support costs, let's say were the deal based on 20 percent, our approximate full costs at the moment, or 14 percent as it was a few years ago, or 13 percent as it is now. This is not the point. But even if it were, the advantage to the agencies would not simply lie in the size of the contribution from the funding agency. Support costs are real costs which have to be met by governments out of one pocket, by UNDP or similar bodies or from another, through the agency regular budget. It is hardly conceivable that if the new deal brings substantial relief to agencies by paying full costs, the International community will not wish to vie between the contributions to the executing agencies and the funding agencies to assure the retention of the status quo-except, of course, if they consciously wish to correct some weakness in the present arrangements. Similarly, if an arrangement is chosen which is substantially less financially attractive to the agencies, the membership would expect to take appropriate action as regards their contribution to regular agency budgets and to UNDP. 1 say this because support costs are a very large part of many agencies' finances. In some cases they are equivalent to as much as nearly half the regular budget. I repeat, therefore, it is not a question of going for more or less from the outside funding body. This is too simplistic an approach. It is necessary for the support cost group and the international community to find a financial relationship which does not determine or even misdirect the service which agencies such as FAO provide to developing countries, but which facilitates it. There should be no inbuilt incentive to execute a project rather than to provide specific advice, no disincentive to transfer the management of projects to governments or to outside bodies, no unreasonable pressure to maintain a flow of projects.

The agencies' contribution to capacity building and assistance to coordination and to development planning should be acknowledged in the financial arrangements eventually agreed. FAO should feed all its ideas on these matters into the support cost study, not just its wish for another percentage. Finally, on this subject my delegation considers that more thought needs to be given to the handling of the subject by the governing bodies than is evidenced in paragraph 3.64.

The International communities' decisions on the successor arrangements will be made in the February 1990 meeting of the UNDP Governing Council. Members will take account of their interests as members of the agencies in the discussion in UNDP. To ensure this, the propositions contained in the experts' group report on support costs will need to have been discussed from the FAO point of view in the November meetings of our governing bodies. A reporting to the governing bodies of the conclusions reached in UNDP's Governing Council so that, in the Director-General's words in

paragraph 2.20 of CL 95/3, they can "pronounce themselves" ls not really to the point. We can pronounce ourselves or grumble or rejoice, but the decisions will have been taken. We can only decide what this means for our budget, what instructions we should give about taking on UNDP financed projects, and what we should do about Trust Funds. We need more participatory action before the decision time of next February.

That is the end of my remarks on the support costs. I just have three more certain points on the report, then I will stop. These are on agenda item 16/4 again, "Other Matters".

Paragraphs 3.71 to 3.75 deal with the problem of salaries and the remuneration and retention of staff based in Rome and in the field. There are certainly problems here, particularly affecting field staff originating from high-income countries. It may be that the international character of multilateral assistance will be adversely affected if the ICSC is not able to make acceptable recommendations. We must rely on the results of the present study. The practice of making supplementary payments mentioned in paragraph 3.76 is an unacceptable alternative. As regards the JIU reports covered in paragraphs 3.89 and 3.90, I wonder if I may have an answer to the question I posed in the discussion of the Programme Committee that we did not get then, because we were concentrating, naturally, on a new item then. Since the Finance Committee also looked at these reports, may I ask, was the Committee satisfied that all action which was appropriate was being taken by the Secretariat to learn from or to implement those parts of these reports which have relevance to FAO's work?-except, of course, on the evaluation of the United Nations Technical Cooperation Evaluation Systems, JIU/REP/88, which I gather will be discussed when the ACC comments are available.

Finally, paragraphs 3.105 and 106 discussed the suggestion that payments for the services of FINSYS and PERSYS systems might be put away in a fund to use to extend the system. We will, of course, be interested in the recommendation to be made by the Committee in September, but our initial inclination is to look with distaste at the creation of a special fund for this purpose and would expect receipts to be ordinary revenue.

As I have mixed opinions with questions, I had better just remind Ambassador Bukhari of the questions; there were two-one about assessments for 1995 and the other about JIU reports.

Hartawan ADANG (Indonesia): My intervention will be brief. Referring to the appeal of His Excellency, Ambassador Bukhari, the Chairman of the Finance Committee, as well as the Assistant Director-General of the Administration and Finance Department of FAO, especially with regard to the concerned timing, since there is a cash flow problem at FAO, my delegation is pleased to inform FAO that the Indonesian contribution is in process within our Ministry. My delegation believes that at the latest by the end of July, the Secretariat of FAO should have received the whole amount of our obligation. That is the areas of contribuìtion of 1988, amounting to US$ 91 744 plus the contribution of 1989, amounting to US$ 408 544, all in all amounting to US$ 500 288. Before my departure to Rome we sent a note to the agencies concerned regarding our contribution to the Working Capital Fund.

Achille RAMARISON (Madagascar): La Délégation malgache voudrait d'abord féliciter Son Excellence l'Ambassadeur Bukhari, Président du Comité financier, et M. Crowther pour la présentation très claire et satisfaisante du point soumis à notre examen.

Lorsque, traitant de la situation financière de l'Organisation dans son discours d'ouverture, le Directeur général a déclaré: "Dans ces conditions, nous ne sommes pas en mesure de dire comment va évoluer la situation des liquidités d'ici la fin de l'année, tout dépendra des versements que nous recevrons", tous ceux qui ont à coeur une bonne programmation des ressources et qui insistent, chaque fois que l'occasion se présente, sur une gestion rationnelle desdites ressources, devraient s'inquiéter et se poser la question de savoir si leur responsabilité n'est pas engagée dans cette situation paradoxale de l'Organisation.

En effet, ceux-là même qui ont exigé que l'on procède à l'examen de la FAO pour lui garantir plus d'efficacité, plus d'efficience, ont tendance à la plonger-que dis-je-à la jeter plutôt dans le gouffre de la paralysie.

Le montant des contributions impayées avoisine la moitié du budget, précise encore le Directeur général dans son discours. Comment, dans ces conditions, peut-on demander honnêtement à la FAO de répondre aux besoins pressants des pays en matière de sécurité alimentaire, d'assistance dans la mise en oeuvre des mesures d'ajustement structurelles. Comment peut-on aussi encourager la FAO à renforcer les domaines dans lesquels elle excelle, et qu'elle souhaite davantage compétitifs par rapport aux autres institutions, lorsqu'elle est obligée de réduire l'assistance aux Centres AGRIS et CARIS, de suspendre des publications si précieuses pour nos pays comme Unasylva, Cérès, la Revue Mondiale de la Zootechnie.

Combien d'entreprises patiemment élaborées et prometteuses de riches espérances devra-t-on encore démanteler ?

Peut-on encore parler vraiment à ce stade de la situation financière passant de la phase critique à la convalescence? En fait, pourquoi ne peut-on pas espérer ce passage salutaire dans la mesure où les principaux protagonistes sont représentés ici au Conseil ?

Je suis convaincu que les honorables délégués se feront un devoir d'atteindre le consensus sur ce point vital pour l'Organisation. Ce n'est ni la majorité, ni plusieurs délégués qui vont lancer un appel vibrant auprès des Etats Membres pour le règlement de leurs contributions en cours et des arriérés, mais c'est plutôt le Conseil dans sa totalité.

De bonnes paroles ont été prononcées par certain gros contributeur. Pourvu que lesdites paroles soient suivies sans tarder de réalisations effectives.

Le Conseil devra sonner l'alarme, car la FAO ne pourra pas continuer à vivoter et à consacrer son temps précieux à régler les difficultés financières volontairement provoquées par certains, alors que la FAO doit redoubler d'efforts pour assister les petits agriculteurs, les paysans sans terre et tous les groupes pour lesquels la FAO a été créée.

Gerhard LIEBER (Germany, Federal Republic of): I would like to express my appreciation to Ambassador Bukhari and the members of the Finance Committee for the report ve have to discuss this morning. Right away, I can inform you that ve agree with the main thrust of this report and that we have no difficulties with the decisions to be taken under this item. Nov I would like to make just a few remarks on some points of the report. We agree in general with the considerations of the Committee on the Programme of Work and Budget, reserving, however, as usual, our final position until the examination of the full programme which we will receive in proper time. I am glad to confirm to you what Mr Crowther mentioned already, that ve vere able to complete payment of our contribution for the current year. However, the picture of contributions and arrears is certainly preoccupying. We urge, therefore, all member nations to fulfil their obligations to the Organization. We welcome the proposed position on the scale of contributions for the coming biennium which follows, as in the past, the United Nations scale of assessments. This is a procedure which we favour.

We take note that the level of support costs from UNDP is under review and that FAO is actively involved in this process.

As far as government trust fund programmes are concerned we tend to agree with the Committee that FAO should, at least in principle, be reimbursed as far as possible to compensate in full for the support costs incurred without, or with as little as possible burden to the Regular Programme.

We thank the Committee for keeping us closely informed about the personnel matters of the Organization, and we stress the importance and the financial implications of this very important sector which calls for continued monitoring, which we expect from the Finance Committee in the future as well as we have had the benefit in the past.

Finally Mr Chairman, we are glad to take note of the progrese that the Headquarters accommodation negotiations have made, and we join the Committee in expressing our appreciation and thanks to the Italian Government for its contribution for the construction of the much needed additional premises.

Igor MARINGER (Suisse): Avant d'entrer dans le sujet de notre ordre du jour, j'aimerais remercier le Gouvernement italien pour l'organisation de l'excursion d'hier à Arezzo et Loro Ciuffenna. Les excursions de ce genre facilitent les contacts informels entre délégués, ce qui est une bonne chose. J'aimerais également remercier le choeur de la FAO de son excellente prestation.

Je remercie M. Bukhari de son introduction du rapport de la soixante-cinquième session du Comité financier. Mes remerciements vont également à M. Crowther pour ses explications concernant la situation financière. Les questions examinées dans le Comité financier sont de très grande importance pour le travail de notre Organisation, car il s'agit d'assurer la meilleure utilisation des ressources dont dispose la FAO.

J'ai une première observation concernant le paragraphe 3.5 du rapport du Comité financier.

Le Comité y donne son appréciation du Sommaire du Programme de travail et budget. Lors du débat sur l'examen de la FAO vendredi dernier, le Directeur général a suggéré que le Comité financier examine les coûts éventuels des recommandations de réforme lors de sa prochaine session.

Ma Délégation a déjà exprimé, à plusieurs reprises, qu'à notre avis les économies et les coûts supplémentaires pourraient s'équilibrer. Si cependant le Comité financier partage l'avis préliminaire du Directeur général que les réformes pourraient nécessiter des ressources budgétaires supplémentaires, ma Délégation propose que le Comité financier examine la possibilité d'un "core"-budget pour le Programme 1990-1991, de sorte que le budget total pour cette période puisse rester dans les limites discutées jusqu'ici. Dans ce contexte, le Comité financier devrait à notre avis, proposer au Directeur général de donner, dans la version complète de sa proposition du Programme de travail et budget 1990-1991, une information détaillée des dépenses 1988 et des estimations de dépenses pour 1989, ceci pour les programmes et les sous-programmes.

Mon deuxième point concerne la situation de recouvrement des contributions.

Dans le paragraphe 3.24, le Comité financier déplore la lenteur persistante du recouvrement des contributions et se déclare particulièrement déçu que plus d'Etats Membres n'aient pas répondu aux appels très énergiques lancés par le Conseil et la Conférence en vue de les inciter à régler rapidement leurs contributions en 1989. M. Crowther souligne encore ce point dans son introduction.

Mon pays appuie la position exprimée par le Comité financier à ce sujet. Il est effectivement important que la FAO puisse aborder des réformes dans une situation financière saine et prévisible. Malheureusement, le Comité financier est dans une certaine contradiction avec lui-même dans cette question, et nous regrettons que seulement quatre des neuf pays membres soient en situation régulière en ce qui concerne les contributions. Le Comité aurait pu exprimer son regret de cette situation.

Paragraphe 3.35: nous remarquons que les dépenses et engagements non liquidés du PCT en 1988, se sont élevés à seulement 9,4 millions de dollars. Ceci suggère que le Secrétariat utilise ce Programme avec soin et prudence. Cette situation est cependant remise en cause par l'assurance dans ce même paragraphe que les crédits PCT pour 1988-89 seront entièrement engagés à la fin de l'exercice. Cette phrase suggère que l'on se hâte à dépenser ces crédits. A notre avis, il ne faudrait pas dépenser pour dépenser, il s'agit d'accorder les engagements PCT avec les priorités déclarées de la FAO.

Concernant l'examen du remboursement des dépenses d'appui, mon pays attend avec intérêt les conclusione de l'étude du Groupe d'Experts du PNUD en cette matière. Nous sommes pour une approche flexible qui favorise l'amélioration de l'efficacité des programmes de terrain. Dans cette optique, le problème ne peut pas être réduit, comme l'a déjà souligné le délégué du Royaume Uni, à simplement obtenir un remboursement maximum des dépenses d'appui comme suggéré dans le paragraphe 3.63.

Pour finir une remarque encore concernant le para 3.79 ayant trait aux ajustements des postes. Le tableau en page 48 du rapport français nous informe de l'évolution des classes d'ajustement de postes entre décembre 1987 et janvier 1989.

D'après ce tableau il y a même eu une légère réduction de la classe applicable, ceci de la classe 9 à la classe 8 dans cette période. Cette évolution soutient à notre avis l'argument qu'il faut mettre au conditionnel l'estimation des augmentations sensibles de coûts pour le prochain biennium.

Yousef All Mahmoud HAMDI (Egypt) (Original Language Arabic): Thank you, Mr Chairman. I should like to thank Ambassador Bukhari for his very clear introduction for the report of the Finance Committee and the further explanations furnished by Mr Crowther. At the outset we should like to welcome and support the report of the Finance Committee, and would like to congratulate the Finance Committee for the work it has done.

We would also like to congratulate the Secretariat for the great efforts deployed in implementing the Programme under these difficult financial circumstances faced by the Organization in terms of the lack of resources. We would like to support what has been included in paragraph 3.49 regarding the scale of contributions, and we suggest that it be proposed to the Conference.

Mr Chairman, we all understand the economic conditions faced by all countries at all levels. There are many reasons behind these difficulties that lead to the late payment of contributions. We are fully confident that they have nothing to do with our confidence placed in the Organization, or with the diminishing importance of the leading role played by the FAO in the field of food and agriculture. Accordingly we join the appeal launched by the Director-General to all member countries to provide and to furnish the Organization with all the financial resources so that it may implement the Programme of Work that has been planned for the Organization.

In this context we should like to thank those countries that contributed recently and paid their contributions, and also those countries that are taking positive steps and which notified the Council of their intention to pay.

Mr Chairman, we would also like to support the members of the Finance Committee in terms of an expression of appreciation to the Italian Government regarding the support to be presented by the Italian Government in building the premises of FAO. We should like to thank the Permanent Representation of Italy to the FAO for the sound planning and for the hospitality ve have all witnessed in the excursion that was organized yesterday, and ve would like to convey our deep thanks to the Mayor and the Police Director for the great efforts they deployed in rendering this excursion successful and pleasant. I thank you, Mr Chairman.

Kwang-Shik WON (Korea. Republic of): Thank you, Mr Chairman. Like other distinguished delegates, I shall begin by congratulating His Excellency Ambassador Bukhari, Chairman of the Finance Committee, for his very clear and helpful introduction.

Mr Chairman, ve are now discussing an utmost important agenda item which deals with the financial crisis currently faced by our Organization. As the Director-General has already stressed the gravity and magnitude of the problems in his statement at the very beginning of the session, the Korean delegation is also deeply concerned about the negative outcome of the critical financial situation which did seriously affect each and every aspect of the FAO's activities, particularly in the execution of FAO's noble goal-the eradication of hunger and malnutrition in the poor developing world.

My delegation also regrets the fact that, inspite of strong appeals for early payment of assessment to member countries, there is an increasing tendency not only of the total amount of outstanding contributions, but also the number of member nations with outstanding arrears. Paragraph 3.28 of the report weil indicates how serious the problem is. The total outstanding arrears from 65 members reaches over US$ 100 million. In this connection my delegation would like to urge that the contributions in arrears should be paid by the governments at an earlier date so that FAO can get through the stringent situation, and thus sufficient resources will be available for its full functioning.

Mr Chairman, ve shall now briefly touch upon the specific issues in the report. In the first place, with regard to the annual report on Budgetary Performance to member nations, we give our full support to FAO in general for its efforts to overcome unprecedented financial difficulties through belt-tightening management and efficient project implementation over the past years. We are well avare that under the Programme reduction of US$ 20 million in 1988 alone, the FAO could not spare its efforts to proceed with the technical programme efficiently. We, however, urge FAO to continue its efforts in enhancing efficiency and effectiveness in this regard.

With respect to the TCP project implementation, ve note with concern that of a total appropriation of US$ 63.1 million, only US$ 9.4 million was made available to projects in 1988. We hope that the full appropriation for TCP will be utilized by the end of the 1988/89 biennium.

My delegation would like to stress the importance of extra-budgetary resources. As the number of collaborative arrangements with other agencies has grown in recent years, extra-budgetary resources from the arrangements become increasingly important for the technical backstopping of FAO field projects, particularly when the regular budget resources are in a critical situation. In this context we are of the view that FAO should pay greater attention to mobilizing and managing these valuable resources in an efficient way avoiding duplication of funding in project execution.

In relation to reimbursement of support costs from UNDP and Trust Fund programmes, we welcome the progress made in developing new arrangements for UNDP support cost reimbursement to agencies including FAO, as shown in paragraphs 3.5.9 to 3.6.4. We, however, are of the opinion that, through an active participation of FAO, arrangements should be established so that the reimbursement rate would be raised to 202 from 13% of the current level so as to cover the full support costs of FAO services in the course of executing UNDP and Trust Fund projects.

Finally, as regards the scale of contributions for 1990/91, since the FAO Scale of Contributions has been derived directly from the UN Scale of Assessments, we have no difficulties in accepting the proposed resolution in paragraphs 3.4.9 of the report. Having said that, the Korean delegation fully endorse the Report of the 65th Session of the Finance Committee.

To sum up, we sincerely hope that the current financial crisis will not continue in the next biennium, and that there will be no programme reduction in the years to come. In our belief there is a general feeling in this Session that FAO should undertake its noble tasks in combating hunger and

poverty in the world on a healthier and sound financial basis. In this regard, we reiterate that, in any circumstances, the proposed budget should be adopted by consensus at the coming Conference and thus the consensus lead all member nations to pay their contributions without any conditions and reservations.

Juan NUIRY SANCHEZ (Cuba): Muy brevemente, Señor Presidente, pues no son palabras, sino hechos contantes y sonantes los que se necesitan y cualquier comentarlo no puede alejarse de esta realidad.

Como país en vías de desarrollo, la delegación cubana ha oído con mucha atención, repito, mucha atención, las intervenciones sobre este fundamental aspecto, tanto la del Embajador Bukhari, como la del señor Crowther, que han sido muy claras precisas y sinceras exponiendo los ritmos lentos, los pagos atrasados, la deuda, que asciende a 300 millones de dólares a la Organización, así como la crítica situación. Durante estos días, tanto en la Sesión inagural como en el acto por el 25° Aniversario del Grupo de los 77, sólo para poner dos altos exponentes, hemos oído al Director General de la FAO, Señor Saouma, y a nuestro Presidente del Grupo de los 77, Embajador Tchicaya relatar la crítica y grave situación que atraviesa la humanidad, en la situación actual de la alimentación y sus reservas y la necesidad que representa para esta realidad la FAO, como organismo fundamental del Sistema de las Naciones Unidas para resolver los problemas más acuciantes de los países del Tercer Mundo.

A la FAO nadie le pone en duda su trabajo y proyección, pues la propia existencia de la FAO es poder cumplir su fundamental compromiso con su Programa de Labores y Presupuesto, pues esto constituye el motor para impulsar sus grandes proyecciones. Nuestra delegación lo ha manifestado siempre, y repite ahora, que aunque haga esfuerzos o sacrificios como lo ha hecho para su pago, y así conjuntamente los países en vías de desarrollo, hay que decirlo claro, que esto corresponde, fundamentalmente, a los principales contribuyentes. Hay que dejar a un lado cualquier mecanismo interno o administrativo y comprender que está en juego algo más importante y fundamental. Si esto no se comprende, aunque el Director General, Señor Saouma, y el Asistente del Director General, Señor Crowther, hagan todos sus esfuerzos, tiempo y paciencia, si éstos no tienen oído receptor y voluntad, todas nuestras excelentes intervenciones caerán en el vacío.

Este punto que nos ocupa es fundamental, y no queremos repetir por conocido los argumentos. El no resolver lo expuesto por el señor Crowther y dilatar esto, es como estar harando en el mar; y el no comprenderlo es estar de espalda a la realidad más acucíente de la Humanidad.

Angus MACDONALD (Austraila): As Australia is represented on the Finance Committee, my intervention can be exceedingly brief. At the outset let me thank Ambassador Bukhari for his enlightening commente, and the facts and figures provided by Mr Crowther.

My delegation supports that part of the Finance Committee report before us and the recommendations contained therein. We would point out that the entire report is not before the Council and that the Australian Representative on the Finance Committee intends to clarify at the next Finance Committee meeting the procedure for handling future reports.

We appreciate Ambassador Bukhari's explanation in his introduction of that part of the report relating to other matters, but recognize that, as they come up through the World Food Programme annual report, they will not be received by this Council until November 1990.

On specific issues I would like to turn to the Technical Cooperation Programmes. We appreciate that the TCP expenditures cannot be prorated over the course of a biennium equally. We do note that expenditures and commitments on TCP at the half way point, that is, at the end of 1988, amounted to US$ 9.4 million out of a total appropriation of US$ 63.1 million. We note that US$ 32 million has been committed to projects to governments as at 31 March.

On paragraph 3.16 relating to the lapse factor of 5.5%, we would note that this implies approximately one position in about 19 not being filled within the Organization. While this may not be desirable, and while the lapse factor figure of 5.5% is high relative to other UN agencies, it does not necessarily imply a major problem with such a number of unfilled positions.

On the payment of contributions, again we call on all Members to pay their dues in full and on time, and we welcome the efforts made by a number of developing countries mentioned this morning to pay their dues, as well as the recent news conveyed by Mr Crowther of the USA position and that of Japan.

On the scale of assessments, we support the position taken in the report before us. We would wish to see the assessment process of the United Nations to be more up to date reflecting the latest economic situation in Member Countries.

With regard to paragraph 3.77, ve note reference to the introduction of a freeze on take-home pay of FAO employees. As a point of clarification we would ask if there are any expenditure implications or savings to the Organization from this measure.

Turning now to support costs, we recognize the significance of these to FAO and its management. In paragraphs 3.59 to 3.64 the issue was discussed. Perhaps the Secretariat could clarify the position with regard to the support cost payment. The Organization receives something like 13% of Trust Fund payments from UNDP and other Trust Fund donors for carrying out extra budgetary work. In dollar terms we note that for the past biennium this could exceed a figure of about US$ 65 million. Presumably, these funds represent an injection in some way of additional funds over and above the approved budget level for staff costs. There are, of course, outgoing support costs and they appear to be higher than receipts. We do, however, assume that salaries would still be paid if personnel were not working on Trust Fund activities and they would be applying themselves to Regular Programme acivities. In this case it seems to us that the approximately US$ 65 million would appear to be extra resources.

Finally, I will simply say that we can support the United Kingdom view on the Special Reserve Account, and we believe that the proposal of the delegation of Switzerland for core budgeting has considerable merit, which the Finance Committee could develop and consider at a later date.

Abdul KUDDUS AHMAD (Malaysia): My delegation would like to thank Ambassador Bukhari and Mr Crowther for their informative statements on the document before us.

As I have mentioned in my previous intervention on SPWB last week, my delegation is of the opinion that in agreeing to the programme increase the proposed budget level should not be solved by imposing extra financial burdens on Members of the Organization.

My delegation has some difficulty with the FAO scale of contributions that has been derived directly from the UN scale of assessment since 1955. We observe that in some of the changes from 1988 to 1989 the FAO scale did not correspond to the recent changes in the economic position of the Members Nations concerned. This is mainly because a 10-year statistical base period is being used to determine the capacity of each Member country to pay. In this case the statistical period that ended with 1986 therefore does not reflect the recent economic changes in the countries concerned.

In this respect my delegation wishes to express its concern about the validity of the methodology and criteria used by the UN, and urges that a more appropriate up-to-date scale be made available so that a more realistic 1990/91 scale of contributions would be tabled for consideration by the Conference.

Turning to the need to review the application of the lapse factor in budgetary provision, my delegation wishes to recommend that FAO adopt a lower lapse factor because we feel it would be more practical in view of the exercises undertaken by the Organization to reduce the number of posts considered to be not critical to the Organization's functions. My delegation is fully aware of the difficulties arising from the financial problems facing the Organization concerning the preparation of the full Programme of Work and Budget. We therefore believe that the Council should once more appeal to Member Countries to honour their constitutional obligations to the Organization. As far as Maiaysia is concerned, we would like to announce with all humility that we have always fulfilled our financial obligations.

Finally, Malaysia, being a member of the Finance Committee, would like to reiterate our support of the report made by the Committee's Sixty-fifth Session.

Bashir EL MABROUK SAID (Libya): I should like to join the previous speakers who have expressed their congratulations to Ambassador Bukhari on his very good and concise report on the Sixty-fifth Session of the Finance Committee. I would also like to thank Mr Crowther for his clarifications on this item.

My delegation also joins previous speakers who have expressed concern about the unfavourable position of the Organization, which, as in the last biennium, would be detrimental to the programmes of FAO. This is simply due to the fact that so many Member Nations do not pay their contributions, some for political reasons (which is to be regretted) and others for financial and economic reasons. However we should like to appeal to all Member Nations to fulfil their obligations in this respect.

In this context we would like to confirm to Mr Crowther that the Jamahiriya will fulfil its obligations for this year, and that procedures are speedily being adopted to pay our contribution very shortly. We hope that this will take place before the Conference.

Regarding contributions for the next biennium, 1990-91: In view of the fact that, as my delegation has confirmed, the scale of assessment, which is derived from that of the United Nations, does not take into account economic variables encountered by many countries-particularly those which have affected oil-producing countries, which have that sole source of income, in recent years-ve would hope that the Finance Committee in future sessions will consider this matter so that contributions may be more equitable and also take into account the economic changes which have taken place in many developing countries, including oil producing countries.

We do however fully endorse the Report of the Finance Committee, and ve agree that for the present such contributions should be the same as in the last biennia-that is, derived from the United Nations scale.

John G. COOK (United States of America): We are members of the Finance Committee, and therefore feel ourselves in a position to completely support the report of that Committee. As one who sat with Ambassador Bukhari in that capacity, I am particularly pleased to thank him for his very skilful distillation of what vere, in fact, some very lengthy and complex deliberations.

Much of what the United States would have wished to say this morning has already been said, or is present in the Report. I would however like to make one or two very brief points. They refer specifically to paragraphs 3.36 and 3.43 of the Report.

We say that as of March 31 1989 the Special Reserve Account was replenished to a level of US$ 12.2 million, of which US$ 4.2 million was due to savings resulting from the Organization's purchase of forward exchange contracts for Lire. The Secretariat projects additional savings of this nature during 1989. As we have indicated in the Finance Committee, we support the practice of purchasing forward foreign exchange contracts, and we note that the result of that practice would be to protect the Budget against Dollar/Lira currency fluctuations. Since an important purpose of the Special Reserve Account is to provide protection against Dollar/Lira currency fluctuations, and such protection will no longer be necessary with the practice which I have just mentioned, the need for the Special Reserve Account needs further review in our judgement. We feel that this should be borne in mind as the Council and Conference make decisions on the budget, the appropriate level of the Special Reserve Account and the recommendation of the management consultants.

One further very brief point: the United States has a long-held position on the question of borrowing within the United Nations system by United Nations agencies. This has been expressed this morning by several other delegations, particularly the United Kingdom delegation, and I would like simply to remind the Council of that position.

Bernard LEDUN (France): Mon intervention sera relativement brève car beaucoup de délèguès ici présents sont intervenus pour dire l'essentiel des commentaires qu'il fallait faire sur le document qui fait l'objet de notre examen.

Il va sans dire que notre délégation approuve le rapport du Comité financier présidé par M. Bukhari, qu'elle tient à complimenter pour la présentation claire qu'il en a faite.

Si j'Interviens à la fin des débats, c'est peut-être pour tenter de tirer un peu la morale de la discussion que nous avons eue sur ce point de l'Ordre du jour.

Le Directeur général, dans son discours introductif, a parlé, à propos de la situation de trésorerie de l'Organisation, d'une situation de convalescence. Ce mot nous parait un peu prématuré. Peut-on en effet parler de situation de convalescence à propos de la situation de trésorerie de la FAO quand on sait-d'ailleurs, ces chiffres sont connus de tous mais peut-être faut-Il encore les rappeler-que 122 Etats Membres n'ont pas réglé ou n'ont réglé que partiellement leurs contributions de 1989, que 61 sont redevables d'arriérés pour 1989 et des périodes antérieures, que par ailleurs le montant total des arriérés dépasse 100 millions de dollars E-U., qu'en outre-M. Crowther a bien voulu nous le rappeler tout à l'heure-le montant total des arriérés et des contributions statutaires qui restent dues à.l'Organisation s'élève à 350 millions de dollars E-U., si j'ai bien entendu ce chiffre?

Dans ces conditions, parler de convalescence peut sembler en effet optimiste et les chiffres que je viens de citer tendent à prouver le contraire. En fait, la situation de trésorerie de la FAO reste éminemment critique.

A propos des défauts de contributions de la part d'un grand nombre de pays, et surtout de la part des plus gros contributeurs de l'Organisation, je pense qu'il faut indiquer ici avec force qu'en ce qui nous concerne, nous ne pouvons prendre au sérieux les propositions, les intentions ou les

discours tenue par les représentante de ces pays-là qu'à l'aune des versements effectifs qu'ils ont faite ou vont faire à l'Organisation. On ne peut pas en effet-notamment sur un chapitre aussi important que le budget de l'Organisation-prendre au sérieux certaines déclarations selon lesquelles l'Organisation vit au-dessus de ses moyens, selon lesquelles on estime qu'il faut tenir compte impérativement du principe de la croissance zéro, alors que les auteurs de ces déclarations représentent des Etats qui n'ont pas versé et qui continuent de ne pas verser leurs contributions. Et je ne parle pas seulement des contributions de 1989 mais également de celles des années antérieures.

Voilà les réflexions que je voulais livrer en conclusion de ce débat. Bien entendu, je ne voudrais pas terminer sans lancer à nouveau un appel-un enième appel-à ces principaux contributeurs pour qu'ils s'acquittent de leurs contributions. Jusqu'à présent, malheureusement, ces appels, 11 faut bien le dire, n'ont guère été entendus. Espérons que la proximité de la Conférence et que la situation difficile que connaît et risque encore de connaître l'Organisation dans les mois qui viennent fera réfléchir ces pays et les incitera à aligner leurs actes sur leurs discours.

Atif Y. BUKHARI (Saudi Arabia): I do not wish to delve into the details of the Report submitted by the Finance Committee: nonetheless, I would like to tackle the scale of contributions for 1990-91 for this Organization.

The members of the Committee In fact unanimously expressed a certain concern about this scale, and I was one of those who qualified the method of use to determine scale as being somewhat faulty, and I also have criticism as to the procedure used for drawing up the scale of contributions. Perhaps it might be easier if the developing countries were to know exactly what the position is as we can see that the shares relative to their contributions are increasing constantly, whereas the contributions of the other countries seem to be dropping.

I am not trying to throw the blame on the Organization, nor would I be tempted to throw the blame on the Finance Committee and its members. Quite obviously this whole problem goes far beyond and surpasses the will of the Organization and of the Finance Committee.

The Finance Committee cannot change or alter or amend what has been agreed on within the UN system. On numerous occasions Council has recommended that the basic inspiration of what is applied in a general United Nations system should be accepted. On that basis we ask Council to forward to the United Nations, and especially to the United Nations Contributions Committee, our wish relevant to an overall review of the methods and procedures used in the establishment of this scale. We should call on that same Committee or Commission to develop criteria for a scale of contributions which could inject a greater degree of equality between the various members of the United Nations family, especially vis-a-vis developing countries, including therein statistical yardsticks or parameters which at all times give our representation of the economic situation affecting numerous countries throughout the world.

The United Nations Contributions Committee bases its considerations essentially on the per capita income in countries. That is a criterion which very often fosters distortions because per capita income cannot be looked at as an overall indication of an economic situation. My brother from the Libyan Arab Jamahiriya refers to the current situation affecting the petroleum exporting countries. If the average per capita income of oil-exporting countries were to surpass that which is evident in an average European country, quite obviously that would not really translate the real situation according to which that European country's position may be behind that of an exporting country-nor does this mean that the petroleum exporting country is better able to pay its contributions. There are many variables which have to be respected if people want to take an overall and objective look at the situation. One thing is a theoretical and mathematical model, but another is the national situation. We are deploying every effort, as is done by other developing countries, to increase our development. Obviously these efforts require the use of great potential. I do not want to boast about Saudi Arabia, but its contribution was increased for the last biennium, and for this year as well. We have foreseen for the new biennium 1990/91 that there will be a further increase in our contribution, and I can tell you, Mr Chairman, that this is a cause for concern. This is why we would very much like to see a review of the setting up of scales.

C. Srinivase SASTRY (India): We thank Mr Bukhari for his statement introducing the Report of the Finance Committee and the Assistant Director-General, Mr Crowther, for presenting the latest financial position of FAO and updating the figures contained in Document CL/95/LIM/1.

We congratulate the Finance Committee on its report and compliment it on its work during a period when the Organization has been passing through a difficult phase. We support the proposals of the Finance Committe about the scale of contributions for the biennium 1990/91, and also the Draft Resolution in paragraph 3.49.

However, ve feel that the suggestion made by the delegate of the United Kingdom about adopting a different base period for the first and second years of the FAO biennium merits careful consideration as this would provide for considering more up-to-date statistical data reflecting recent economic changes. It was also mentioned that in at least two other organizations in the United Nations system this method is being followed. We request the Finance Committee carefully to go into this matter and make recommendations for consideration in the next meeting of the Council.

On the question of splitting the assessments into different currencies, this aspect is being gone into by one of the management consultants. Therefore, we feel that the recommendations should be awaited.

On the budgetary performance bearing in mind the financial situation of the Organization, we strongly support the conclusion of the Finance Committee in paragraph 3.26

"that the best approach, at this stage, continued to be the appeals to Member Nations"

as compared to other possible approaches. We also support the appeal of the Finance Committee contained in paragraph 3.27 "to all member nations".

We have followed with interest the views expressed on the ongoing study in the UNDP, by a group of four experts appointed by UNDP. Reacting to the Finance Committee's views, a suggestion was made by one of the delegates whether it would not be advisable to adopt a system in which each UN specialized agency like FAO bears its own support costs without endeavouring to get a support cost contribution from his sister UN agencies like UNDP. The logic of this argument seems to be that anyway it is the Member Nations who pay the support costs, be it in FAO, UNDP, or the other agencies in the system. We submit this proposition should be looked at in the background of the data contained in page 5 of document CL 95/3, which gives the detailed breakup over the last eight years of the different sources of funding for FAO field operations. We notice that by and large UNDP has been meeting only 50% of the total field operation costs of FAO, and for 1988 as much as US$ 109 million out of US$ 320 million has come from sources like the FAO and government cooperation programmes and unilateral trust funds. In this background we feel that there are certain advantages which would recommend the continuance of the current system.

First, having an external agency like UNDP or an independent group of experts to look at FAO project execution costs would possibly throw light on any hidden costs or inefficiencies in the ways of working, which would aid transparency in the work of FAO and bring the matter to the notice of the government bodies.

Secondly, when ve have an independent body like the UNDP which is external to the FAO to focus on FAO's costs, ve would have a better conscience in asking the other funding agencies to pitch their support costs at least on the same level as UNDP. We request the Finance Committee to go into this suggestion after it has been examined by the Secretariat.

I would also like to thank the host country on what it is doing to help FAO in terms of headquarters accommodation, as indicated in paragraphs 3.84 to 3.88. My delegation joins other delegations in thanking the host country for the excellent visit organized yesterday.

We support the Finance Committee in its observation in paragraph 3.95 dealing with the JIU study on the use of equipment provided to TCP in the developing countries. We endorse the suggestion that more emphasis should be laid on the supply of equipment from developing country sources. We also note that FAO was intent on increasing the supply of project equipment from developing countries wherever the available supply was judged appropriate and feasible.

On FINSYS/PERSYS, ve have had reports that possibly the project was going slowly. However, we are happy and reassured to find from paragraph 3.107 that the project waw proceeding on schedule and within the same fixed price as already decided.

Kota HIRAMURA (Japan): I am grateful to you, Mr Chairman, for giving me the opportunity to speak a second time. I sincerely apologise to other delegations that I have spoken twice.

On behalf of my delegation I would like to make a few comments on the Report of the 65th Session of the Finance Committee. First of all, with regard to the level of support costs for UNDP and the Trust Fund programmes which is at present being reviewed by a group of four experts appointed by UNDP we recognize that this very important review should be done very carefully with assistance from all the agencies concerned, one of which is FAO. Therefore, an internal, inter-departmental group constituted within FAO should play an important role in assisting UNDP in preparing the report with reference to the level of support costs. Ve request the Secretariat to provide us with sufficient information to examine the level of support costs, taking into account types of projects such as training, institutional assistance, and so on.

Secondly, with reference to paragraph 3.62, the Report points out the contribution of field projects to the regular programme. May I ask the Secretariat for further clarification of the way in which field projects contribute to the regular programme. In this regard, we think that FAO should promote field activities since the field programme is one of the major programmes of FAO.

Concerning the scale of contributions for the biennium 1990-91, at present the system has applied to FAO since 1955. It was reviewed and adopted by the FAO Conferences in 1975 and 1983. We have no objection to the recommendation of the Finance Committee for the scale of contribution in 1991 to be increased from 13% in the current biennium to 13.592 for Japan in 1991.

However, as for the proposal to urge the United Nations that further consideration be given to the provision of a scale based on balanced and up-to-date Information, ve are of the view that such a proposal should be made to the United Nations after a thorough and precise study has been conducted, concluding by clarifying and analysing what kinds of programmes exist in the present United Nations' scale of assessments.

Finally, I would like to touch upon the cost increase which was already discussed in agenda item 14. The Japanese delegation shares with other delegations the view that a request for further information about details of the cost increase is needed. Therefore, ve strongly hope such information of details will be included in the full Programme of Work and Budget, well in advance of the Conference, as clearly mentioned by Mr Shah in his explanation of agenda item 14, and that this information should be presented before us before the Conference for careful consideration by all of us.

Gérard BIRAUD (PNUD): Je voudrais remercier l'Ambassadeur Bukhari et le sous-directeur général Crowther pour la façon dont ils ont introduit ce débat sur le rapport du Comité financier, et je voudrais rappeler, sur l'un des points qui Intéresse particulièrement le PNUD au cours de ce débat et qui est le point 3.59 à 3.64 concernant les dépenses d'appui, les paroles de mon collègue qui est intervenu la semaine dernière dans le document CL 95/PV/8. Il était le dernier orateur à ce débat, et je ne saurais mieux que lui reprendre cette question des coûts d'appui qu'il a traitée à la fin de son intervention.

Je voudrais seulement assurer tous ceux qui ont évoqué cette question ce matin qu'ils ont été entendus et écoutée et entendus avec beaucoup d'attention. Je me ferai le transmetteur des différentes idées que j'ai pu entendre auprès du Siège du PNUD.

D'autre part je voudrais rassurer tous ceux qui ont souhaité très légitimement qu'un dialogue très approfondi se fasse, s'établisse entre nos deux institutions. Je puis leur dire que dans les semaines qui viennent le Groupe d'experts du PNUD aera en Europe pour prendre contact avec les différentes institutions des agences des Nations Unies et je pense que cette venue d Rome, notamment, donnera l'occasion è ses membres d'avoir un dialogue extrêmement fourni avec le Secrétariat qui a cependant entendu lui aussi et écouté avec beaucoup d'intérêt les Etats Membres.

Je voudrais dire que je suis convaincu (et le PNUD est convaincu) que ce dialogue sera considérablement facilité puisque au fond les deux institutions partagent pleinement un certain nombre de soucis et je me réfère notamment ici à ce qu'a dit le Représentant de la FAO ces jours-ci à New York au Conseil d'administration du PNUD.

D'abord le souci d'une coopération technique qui soit de la meilleure qualité, du meilleur rapport qualité-prix, du meilleur coût et avantage; une coopération technique dont nous savons les uns et les autres qu'elle évolue, qu'elle a déjà évolué et qu'elle doit encore évoluer. Nous partageons également la commune préoccupation de la pleine souveraineté des pays concernée et noue partageons enfin le souhait d'avoir renforcé leur capacité en matière d'assistance technique.

Je suis donc très confiant dans l'avenir de ce dialogue et j'apporterai peut-être simplement une note de prudence. Le précédent orateur vient de prononcer ce mot de prudence. Il y a un aspect de cette prudence qui ne vient à l'esprit en ayant écouté l'ensemble de notre discussion. Nous sommes, notamment, au bureau de Genève, bien placés pour observer les différentes institutions et leurs difficultés financières, institutions spécialisées des Nations Unies. Nous constatons une dégradation qui nous préoccupe, notamment en ce qui concerne le paiement des contributions. Ce n'est pas à une organisation où aux représentants d'une organisation internationale telle que la mienne d'apprécier ou de porter des jugements, mais je voudrais simplement souligner que cette préoccupation, que cette déclaration ne devrait pas interférer dans la discussion que les deux secrétariats de nos institutions vont avoir ensemble. Car, à l'évidence, le PNUD ne peut, en aucun cas, être considéré comme responsable d'une telle situation.

Je pense donc que nous trouverons dans un approfondissement de ces principes auxquels nous sommes les uns et les autres attachée, les germes d'une solution qui fasse d'abord pleinement justice aux Etats Membres, aux Etats bénéficiaires, d'une coopération à laquelle nous collaborons ensemble. Je suis heureux que le cours actuel des relations entre le PNUD et la FAO encore une fois me permette d'avoir bon espoir à l'égard d'une situation qui satisfasse d'abord nos Gouvernements, parties aux deux institutions, l'ensemble des gouvernements bénéficiaires et donateurs, et qui satisfasse nos deux secrétariats.

Atif Υ· BUKHARI (Chairman, Finance Committee) (original language Arabic): I would like to begin by thanking all my brothers and colleagues of the Council who have expressed their support of the Finance Committee's Report. I would also like to mention the proposals that have been made by the members of the Council. I can assure them that we have certainly taken note of their suggestions, and I will get into contact with the Secretariat so that we can take the necessary steps so as to prepare the documents on those suggestions. In this way, the Finance Committee will be able to study them at their next session.

D.K. CROWTHER (Assistant Director-Cenerai, Administration and Finance Committee): First, I would like to thank the members of the Council for their heartening remarks of support, both for the Finance Committee Report as well as for the strong appeal that has been made for all member countries to pay their contributions. I would particularly like to recognize the tremendous effort that has been made and put forth by a fairly large number of developing countries to pay their contributions, in extreme cases of economic poverty, in cases where hard currency is very difficult to come by. I am certainly heartened by the remarks and efforts that have been made there.

Secondly, I think it is important to recognize the statement made today by Japan. That is certainly heartening. We look forward to the efforts that the government will put forward to make a prompt payment as early as they possibly can. That, too, certainly will go a long way to help.

There were some specific questions raised by a few delegates. I will attempt to answer those that were specifically addressed to me, and Mr Shah, my colleague, will answer some of the other· questions. We will divide them between us.

First, the delegate of the U.K. raised some questions I would like to address. The first one had to do with a contribution from the U.K. The statement was made that the U.K. would need information on cash requirements of FAO before the U.K. could decide when to pay. In this regard, I would just like to point out to all the members that the Basic Text in paragraph 5.5-and here let me quote-calls for "contributions and advances shall be due and payable in full within 30 days of the receipt of the communication of the Director-General referred to in Regulation 5.4 above or as of the first day of the calendar year to which they relate, whichever is the later". The Director-General was very concerned about putting out his call early, and he put it out in early December 1988 so that the contributions would fall due on 1 January. All members have the same obligation to pay, rather than to determine whether the FAO needs the cash or not.

Questions were raised concerning the Working Capital Fund and the Special Reserve Account and its replenishment.

Here again let me say that without going into the history of the establishment of both of those funds, but essentially they were established as safety nets to offset the needs of cash short falls, or in the case of the Special Reserve Account it has an additional purpose of offsetting monetary fluctuations due to staff cost variance. I might add Mr Chairman, that both of these funde, the Working Capital Fund and the Special Reserve Account, were well established to assist the

Organization in those cases when there has been a substantial short fall in contributions. The Special Reserve Account has that added dimension to assist the Working Capital Fund if needed. Fortunately, ve have never had to call upon it for that reason, but it is a very important function of the Special Reserve Account.

Secondly the Director-General has not called for replenishment and reimbursement at this point in time, but with the contribution situation like it is certainly that could change, and ve look forward to seeing how the contributions respond.

Mr Chairman, the UK delegate also raised a question on the UK scale, and a number of other delegates raised the same question. The scale, as adequately explained by Ambassador Bukhari, is established by the UN Committee on Contributions, and it does cover this ten-year rolling period and the current period ends in 1986. That does create a number of problems for member nations because, even though the information was requested in 1987 by the Committee on Contributions, it took members the better part of 1987 and some part of 1988 to submit the information to the UN so that it could be analysed. The UN did analyse it, and the Committee on Contributions pronounced it itself, and the resolution was passed by the General Assembly in December 1988. The problem that creates, as has been expressed, is that you are talking about economic data that runs through 1986 but will not be applied in our case until 1990/91·

We have taken due note of those concerns and the Council certainly remembers that in the last Conference that same reference was made in the Conference, and asked the Director-General to make those concerns known to the Committee on Contributions which he promptly did through the Secretary-General, and as a result of our concerns being raised, and those of many other UN agencies being raised, some consideration was given this time to the debt of a number of member nations. That methodology needs to be improved and the Finance Committee recognized that very strongly.

We will pass along these concerns, and I am sure those of the Finance Committee, to the UN so that further consideration may be given to improving the methodology where possible.

With regard to the UN scale itself, it is set for a three-year period, and because FAO operates on a two-year biennium there is a period every few years when we have to use the old scale before the new scale is adopted. A question was raised as to whether or not we could adopt the scale two bienniums from now for the blennlum 1994/95 when this programme will next arise, and adopt it for one year. Mr Chairman, it is difficult for the Organization to adopt a scale for its biennium by piecemeal, not knowing where it will collect its contributions, and it would create a number of very serious problems for the Organization in the assessment and collection as has already been evidenced. We have enough serious problems in collecting contributions as it is. Our preference, Mr Chairman, would be to again reiterate the problem to the UN Committee on Contributions, and try and determine whether the methodology could be improved to overcome this problem, and then ve can be back to the normal situation.

There was considerable discussion on support costs and the replacement programme that is underway, and while my colleague Mr Shah touches on that more specifically, I would like to just point out that while we recognize the need for such a study, and certainly FAO will participate heavily in every aspect of this study because it is extremely important to the Organization, ve do report on a regular basis to the Finance Committee on the share of the Regular Programme that is necessary to subsidize a portion of the support costs, and while it may seem that our preoccupation is in collecting more on support costs, quite frankly the only thing ve are attempting to do is to make certain we protect the Regular Programme while at the same time carrying out the basic objective of assisting the member nations in their development through various projects and the backstopping that is required to do that.

I can assure the Council, Mr Chairman, through you, that the Organization will do everything at its disposal to cooperate to find the best means possible in assisting the study group as they develop a programme for recommendation to the member nations. It is quite right that in the end it is member nations who decide. It is important to the FAO Council in that, for the moment at least, some portion-and it is becoming larger and larger each year in the Regular Programme-is used to subsidize a portion of support costs. We have concern over that and the Director-General has evidenced it on a number of occasions.

Mr Chairman, I think that covers the areas that I wanted to address myself to, and if I can I will ask you to give Mr Shah the floor.

V.J. SHAH (Assistant Director-General, Office of Programme. Budget and Evaluation): Mr Chairman, there are six questions which I have noted, raised either individually or by more than one member of the Council which, with your permission, I would like to address.

Firstly there was a question from the distinguished representative of the United Kingdom referring to the follow-up of JIU reports, and as we do recall, this was a question which was considered also in reference to the Programme Committee. My answer Mr Chairman,-and let me add a personal note here-I happen to be the focal point in FAO for dealings with the JIU and this helps very much in ensuring that when JIU reports are considered by both of the Programme and Finance Committees, this continuity of contacts helps the Secretariat in drawing to the attention of the two Committees recommendations, not only in the reports before them but also of related reports which have been issued before.

It also helps the Secretariat, and I hope the Committees, in recalling recommendations of the JIU which the Organisation has undertaken to implement. To give you just one example: there was a report some years ago on cash managements in the UN system. This issue of cash management involved a certain number of recommendations. When the Finance Committee looks at items dealing with cash management, we make it a matter of course, to recall what had been recommended and what we had been expected to implement. Of course I cannot speak for the two Committees, but I hope this response of the Secretariat will be satisfactory.

Mr Chairman, a small number of références were made to the issue of the application of the lapse factor in the Programme of Work and Budget. I would only react at this stage by assuring those members who made comments, that the Finance Committee has not, as you will have noted, taken a position on the matter. It will revert to the matter at its September Session on the basis of a document which the Secretariat will provide, and I am sure that the Finance Committee will take into account the views which have been mentioned today. From the point of view of the Secretariat I do not wish to prolong or to harden the position by saying we insist or we will take a strong position on this or that aspect, so I trust Mr Chairman, that I do not need to elaborate too much on that.

However, one aspect which I would like to leave with the Council is that, in considering the filling of established posts let us all recall that under the system of Programme Budgeting, which you and the Conference decided upon almost two decades ago and which is in operation, our Programme of Work has to be implemented as approved with the resources as approved. Why do I say this? What is important Mr Chairman under programme budgeting is not that a post is filled. What is important is that the programme is carried out, and programme budgeting has the flexibility to provide that, as long as the programme is carried out-and that is the important point for member nations-it does not really matter whether it is carried out through the filling of one or more posts, or whether it 16 carried out through recourse to other expertise such as through consultancies or through contracts. I mention this only to recall an aspect which I do think we should all bear in mind.

Mr Chairman, the third point was in relation to the post adjustments and to the post adjustment multiplier. There were two or three distinguished representatives who referred to this point. Firstly I would like to reiterate my assurance that information on the cost increases will be given in more detail in the full Programme of the Work and Budget, so you need not have any fear there. But one distinguished representative-if I recall correctly that of Switzerland-referred to the table which appears under the section of Changes in Salary Scales and Allowances in the Finance Committee's Report and this appears under paragraph 3.79. In the English it is at the top of page 46. He referred to the fact that the index and the multiplier has shown certain decreases over the period December 1987 to January 1989. Mr Chairman, the first point I would like to make is that looking at the column of the index, please do bear in mind that the base of the index as given in that table changes from March 1988 onwards. That is to say for the first four months it is on a base of March 1983 to 100. Subsequently-it changes from April 1988-it is rebased on a scale of November 1987 to 100. That is why there is suddenly a difference. In March 1988 you are at an Index of 157.0, and then in April 1988 you are suddenly at 103.2.

The second point I would like to make is that the multiplier, that is in the last column of the table, deals with the currency factor on the post adjustment, and that is why it is important not only to look at the actual amount of the multiplier but to look at it in relation to the Lire/Dollar exchange rate, and that is why when the exchange rate was 1240 the multiplier was at one level and when it changes to 1400 or 1364 you see a different multiplier. But I think the core of the question is, has there been an increased cost or not, or has there been a currency gain or not, and my answer is there has been both. The currency gain has led to the crediting of the Special Reserve Account during 1988 with an amount of US$ 2 984 000, so the changes in the currency had a positive factor. But then, as we discussed last Friday, and as it is given also in the Budgetary Performance Report, the staff cost variance deteriorated, declined-there was a negative variance-of US$ 8 258 000 and that is an actual cost which has to be borne by the budget.

I think the Council may have assurance-et least there is no doubt on ay pert-that these matters we are perfectly reedy to pursue with the Finance Committee and with yourselves and the opportunities are provided for this.

Then there were some references to the TCP and the observations were really of two aspects. One was whether the expenditure and obligations, commitments, under the TCP for the first year of the biennium 1988 in the amount of US$ 9 370 000 is too low. Is there something wrong when you consider that the appropriations for this biennium is at a level of US$ 63.1 million? Related to that there was at least one comment suggesting that care should be ensured in providing a prudent and a proper use of the TCP resources so that if the level of approvals is too low in the first year of the biennium that one should not press ahead to earmark and commit funds during the second year in order to show that the funds have been utilized.

The Secretariat wishes to be fully open and sincere in its response. I think our record of the TCP utilisation shows that we are prudent, that we do not rush to approve projects or to utilise resources just to show that the funds have been utilized. Let me give you one example of that. If you take that amount of the TCP appropriation that is underutilized after its due period and reverts to miscellaneous income, what is the pattern? Over the biennia since 1976/77 when the TCP was established from the appropriation relating to that first biennium the underutilised amount was US$ 2 000. From 1978/79 there was nothing. In 1980/81 there was another US$ 2 000. In 1982/83 there was US$ 3 077. In 1984/85 it jumped up-I make no apology for it and I think it is good to show-to US$ 6 824 000. I hope that proves my point.

Is the fact that only US$ 9.4 million has been expended and committed a bad sign or a good sign? I would like to give you two points here. Firstly, we have to look at the part of the TCP appropriation that is set aside for approved projects each year, and what did we have at the end of 1988? At the end of 1988 40% of the biennium appropriation was set aside for approved projects. This to me is quite reasonable. Looking again over the past biennia, here was a low in one biennium of 25.5% and there was a high in only one biennium of 57%. In most biennis it has been about 40 to 45%. I think this is reasonable and the Secretariat should neither alarm you nor make any apology.

Secondly, the expenditures and commitments in the first year of the biennium are also at the same level. I am just giving you the figures going back. in the appropriation for 1986/7, out of US$ 61.4 million, the expenditures and commitments were US$ 10.6 million; 1984/85, US$ 10.3 million; 1982/83, US$ 9 million; 1980/81, US$ 6.4 million. I hope you see the trend and perspective in which I would suggest this aspect be viewed.

The fifth point relates to the issue of the cost of implementing whatever recommendations may result from the review and as may be decided upon by the Conference. With all due respect, these matters were discussed under your item on the Review last Friday. I do not feel that it is necessary or appropriate for me to add anything more.

However, the representative of Switzerland suggested that the Finance Committee look into the feasibility or the desirability of a core budget. This suggestion finds favor of only one other representative, Australia, whose delegate said that he could see some merit in these suggestions, but did not press for any time specificity. I would like to recall that this question of core budget has been considered not only by the Council, but by the Conference on at least two occasions if my memory is correct, and most Member Nations have not accepted that it be done. I mention this because I would not like the Council to leave this discussion with any erroneous impression that the Council has changed its mind on the matter or that the Conference said otherwise. Certainly from the point of view of the Secretariat I have explained at earlier Council and Conference Sessions why we do not consider it feasible or desirable.

The final issue is support cost, which Mr Crowther said I would have something to say about. This is something on which not only he and I but our other colleagues including Mr Rinville, the Assistant Director-General of the Development Department, have worked closely together on.

The first point I would like to emphasise is that from the point of view of the Council, and in fact from the point of view of all Member Nations, what are the issues that are in our minds most important? One is that the cost of implementing field activities be appropriate and realistic. It is not s question of our saying that we should push the costs to the maximum or should reduce them to a minimum. I do not think it can be taken in abstract. Field activities should have the right level of support. The right level of support from whose point of view? From the point of view essentially of the countries receiving the benefits of these activities. Of course, we should make aure that the costs are contained as much as possible, that we are as effective and efficient as possible, but nothing should be sacrificed to the quality and effectiveness of the field programme. I do not believe anyone would quarrel with that. The second point is who should pay for it? I think there again we can all agree that it is important to recognize that the costs as reasonable and realistic have to be provided for.

The third issue is who provides for them. Here I see that we have to face a number of different situations. The first situation is as regards UNDP, because for that field programme, which is funded by the UNDP and which is executed by FAO, the question comes, as initially raised by the representatives of the United Kingdom and then by others, that after all it is the member governments who pay for the support costs. They pay through two different channels. What is important from FAO's point of view? From the point of view of FAO the Member Nations should agree to reach a point on which they agree that the reimbursement should be met and in what proportions. But what is very important is that when the Member Nations agree that only a part of the support cost is going to be reimbursed through UNDP, then those same Member Governments must agree among themselves that the balance of the support costs have to be met through other means-through the Regular Budget.

The issue becomes a little more complicated, or it has different aspects, when you look at the issue of Trust Funds, because Member Nations may agree, since they are represented both in the UNDP and in the specialized agencies, that the balance of support cost reimbursement will be according to a certain formula for the UNDP. What about Trust Funds? For Trust Funds it would be, again, up to those in the FAO fora to say whether you decide to apply the same formula for the reimbursement of Trust Fund costs or not. This is why we in the Secretariat have always wanted to stress and to assure the Finance Committee and the Council, and eventually the Conference that these matters are not within the purview of anyone from outside FAO.

The point that the Director-General emphasized, as he did in 1981, is that whatever may be decided upon for support-cost reimbursement in the UNDP Governing Council, in which you have participated, the decision would be brought to the FAO Governing Bodies so that you may decide for FAO whether you accept it. The logic is that if Member Nations have accepted something, as regards UNDP support costs, in the forum of the UNDP Governing Council, 1 would find it difficult to see how they could not accept it in the forum of FAO. But the point has to be brought to you, especially because of the implication for the Trust Fund support costs.

I think that the only other factor is: are there decisions going to be taken in other fora which in a time frame will preclude the consideration of the matter in the FAO governing bodies?

From our point of view we intend to bring the matter to you with all of its developments and all of its options, at each stage, that is to say, in the Finance Committee in the September Session, to the Council in November with the report of the Finance Committee, and then to the Conference. Of course, at the time of the Conference the decisions of the UNDP Governing Council will not be taken, but what we will be able to indicate to you is what are the options that have been discussed, that have been considered, so as to seek the advice of the Conference and receive its instructions on where it wishes the FAO to react and in what form.

I have taken a lot of time; I hope I have done justice to the questions.

Igor MARINCEK (Switzerland): A point was made by Mr Shah on the question of core budgeting as raised by my delegation. I want to clarify. Two years ago the question which was discussed by this Council was different. There the suggestion was made to have a lower budget in accordance with the difficult financial situation.

The proposal made by my delegation does not point at all in that direction. Our suggestion is rather to create some provision, if this is considered to be necessary, for implementing the eventual recommendations following the FAO review. We think that this provision should be made within the proposed budget level.

I really would like to point out that the proposal does not at all suggest a budget decrease, as was the case with the core budgeting proposal two years ago. It rather aims at helping us to make the necessary reforms without adding to the burden of the member countries concerned, a burden that I think is felt by countries from different places of our membership.

LE PRESIDENT: Nous sommes arrivés à la fin d'une question trés importante. Je crois être l'interprète du Conseil pour signaler que vous avez noté avec une vive préoccupation le montant élevé des arriérés de contributions et la cadence trop faible de versement des contributions. Cette situation risque de freiner vivement l'Organisation et de ne pas lui permettre de remplir sa tâche dans des conditions acceptables, surtout dans cette phase particulièrement importante pour la FAO.

Le Conseil lance encore une fois-et c'est son devoir-un appel pressant á tous les Etats Membres pour qu'ils versent aussitôt que possible leur contribution et qu'ils fassent connaître la date 2 laquelle ils entendent le faire, ce qui permettra 2 la prochaine Conférence de prendre, en toutes connaissance de cause, les décisions qui s'imposent.

En ce qui concerne le barème des contributions, le Conseil approuve le projet de résolution présenté par le Comité financier pour le barème des contributions 1990-91 mais, comme l'a dit le Secrétaire général, il souhaiterait que cette question soit suivie auprès du Comité des contributions des Nations Unies pour aboutir 2 un barème plus adapté aux conditions économiques actuelles des pays membres·

En ce qui concerne les dépenses d'appui du PNUD, le Conseil a noté avec intérêt que de nouveaux arrangements pour le remboursement de ces dépenses entrera en vigueur en 1992. Il suivra avec attention les progrès de la Commission d'analyse de ces dépenses d'appui. A cet égard, 11 se félicite de la participation active de la FAO aux travaux de ce Comité. C'est une question très importante et nous espérons que le Conseil, lors d'une prochaine session, pourra être saisi de ce problème·

Je crois pouvoir dire également que le Conseil a adressé ses remerciements au Représentant de l'Italie pour l'effort d'élargissement des locaux du siège, qui a permis de faire démarrer ces travaux plus vite encore que prévu.

Enfin, le Conseil apporte son appui au rapport du Comité financier 2 la suite de sa soixante-cinquième session.

Si vous en convenez, nous pourrions arrêter les débats sur cette question très importante et nous pourrions, si le Conseil n'y volt pas d'objections, puisque nous sommes en avance, aborder cet après midi le point 11: Faits nouveaux survenus dans le système des Nations Unies, qui était prévu pour demain matin. Le document relatif est le CL 95/17.

Amin ABDEL MALIK (Liban) (langue originale arabe): Je voudrais signaler que nous sommes rentrés hier soir 2 minuit de l'excursion organisée par le Gouvernement italien et que nous n'avons pas eu malheureusement beaucoup de repos. Je pense que nous devrions aborder ce point demain, comme prévu dans le calendrier.

LE PRESIDENT: La décision appartient au Conseil. Est-ce qu'il y a des objections 2 la proposition du délégué du Liban ?

C. Srinivasa SASTRY (India): I would submit that, as the time schedule has been adhered to, if it is possible to discuss any further items this course should be adopted, so that the work before us can be disposed of as quickly as possible.

Daniel D.C. DON NANJIRA (Kenya): Unfortunately I was not on the excursion-and it seems from what the distinguished delegate for the Lebanon says that I have missed a lot!-but I support his view that ve discuss this item as scheduled. Some of us have been looking forward to debating it tomorrow. We will have no problem if you do bring it forward, provided that you allow us time to discuss it tomorrow. In that way, time will still be saved.

R.G. PETTIT (United Kingdom): In general, I would prefer that ve do such business as ve can, as there is now space available. The particular item which you suggest is one that can readily be divided, some speakers intervening this afternoon and some tomorrow. I would suggest that ve allow those who are in a position to speak this afternoon to do so, and that we give those suffering from "bus lag" an opportunity to speak tomorrow.

LE, PRESIDENT: Je crois que l'on pourrait convenir d'une cote mal taillée. Nous allons nous réunir á 15 h 30, pour permettre, á ceux qui le désirent, de se reposer.

The meeting rose at 12.30 hours.
La séance est levée á 12 h 30.
Se levanta la sesión a las 12.30 horas.

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