25. Other Administrative and Financial Matters
25. Autres questions administratives et financières
25. Otros asuntos administrativos y financieros
CHAIRMAN: It is my pleasure to open the third meeting of this Commission. As usual, we are facing the problem of the quorum: this is not anyone's fault in particular, it is caused by logistic problems which are faced by most delegations with limited members, especially in the second week.
The matters before us this afternoon are on Item 25:
25.1. Status of Contributions
25.2. Replenishment and Level of the Working Capital Fund
25.3. Replenishment of the Special Reserve Account
Without further ado, I ask Mr Crowther to introduce Item 25.1, Status of Contributions.
25.1. Status of Contributions
25.1. Etat des contributions
25.1. Estado de las cuotas
Dean K. CROWTHER (Assistant Director-General, Administration and Finance Department): Thank you, Mr Chairman. Concerning contribution matters, you have a document before you, CL 92/4, and in addition you have a LIM document that updates the situation through 17 November. It is C 87/LIM/38. The report of the September 1987 Session of the Finance Committee reported the status of contributions in paragraphs 3.32 to 3.39 of the report. The status of contributions was updated for the Council Session just before this Conference in document C 87/LIM/11. It was updated through 5 November 1987. Additional contributions have since been received in the amount of $US 103 767.37 from Peru, representing a partial payment of its contribution outstanding for 1985. This payment will be reflected in the report of the Conference.
Up until the end of September, the rate of receipt of contributions had been more favourable than in previous years from most countries. However, since that date some additional Member Nations have paid, and as of today 46 Member Nations have still not made any cash payment this year, while 41 Member Nations still have arrears outstanding. A total of $US 94 million is outstanding of which SUS 67 million pertains to the amounts owed by the largest contributor. Mr Chairman, 28 Member Nations have responded to the appeal of the Council with regard to deferring or relinquishing their share of the cash surplus distribution for the 1984-85 biennium. This amount has improved the financial position of the Organization and has helped us in our cash flow during the remainder of 1987 by approximately $US 9 million. One Member Nation, Angola, has relinquished its share of the cash surplus, and the host country, Italy, has abandoned its share. All Member Nations are invited to follow these good examples, of course. It is one thing to defer and it is something else to relinquish stock.
Mr Chairman, the Director-General will appeal again to all Member Nations that have deferred the cash surplus to further defer the application through 1989 if they are willing to do so. I am happy to report that of the 12 Member Nations originally in danger of losing their right to vote, seven member nations have regularized their positions and two have requested instalment plans, leaving
only three members which have not regularized their contribution positions to permit them to vote. The Conference is requested to make a statement to urge all Member Nations to pay their outstanding contributions as soon as possible in order to enable the Organization to overcome its liquidity problems.
Mr Chairman, this completes the introduction. The information in detail is in the documents before you, and we would be pleased to answer any questions that the delegates may have.
CHAIRMAN: Thank you, Mr Crowther. 1 understand this item is mainly for information, but then I would like to open the discussion to the floor if there are any questions that members wish to ask to Mr Crowther. Since I see no hands and no requests for the floor, I take it that the report on this item has met with the satisfaction of member countries, and I declare Item 25.1 closed.
Now we go on to Item 25.2, Replenishment and Level of the Working Capital Fund.
25.2. Replenishment and Level of the Working Capital Fund
25.2. Reconstitution et niveau du Fonds de roulement
25.2. Reposición y cuantía del Fondo de Operaciones
Dean K. Crowther (Assistant Director-General, Administration and Finance Department): We have before the Commission document C 87/LIM/12 relating to an increase in the level of Working Capital Fund. This document includes a draft resolution for the Conference. At its Ninety-second Session, the Council discussed alternative approaches to deal with budgetary and financial uncertainties being encountered by the Organization. In its discussions the Council noted that a series of negative _ factors had contributed to the current difficult financial situation and that these factors were unlikely to be all resolved in a short period of time. The Council recognized that in such circumstances the ratio between the current level of the Working Capital Fund and the budget does not allow the Fund to perform its functions as stipulated in Financial Regulation 6.2, mainly with regard to advancing monies to the General Fund to finance budgetary expenditures pending receipt of contributions to the budget. For this reason the Director-General has proposed to increase the Fund from its present level of $US 13 250 000 to $US 20 000 000 as from 1 January 1988 and to $US 26 000 000 as from 1 January 1990. These phased increases would, in his view, ensure that in the future average delays in the payment of contributions would not have an undue effect on the timely and regular implementation of the Programme of Work and Budget.
Although some Council members did not support the proposal, most 'agreed to the increase in the working Capital Fund to the $US 20 000 000 figure. A few members expressed reservations on the second incremental increase to $US 26 000 000. Nonetheless, Mr Chairman, the Council recommended the resolution as presented in document C 87/LIM/12 for adoption by the Conference. The paper is before you for consideration. If there are any questions, I would be happy to answer those that are put forth.
CHAIRMAN: I would like to open the floor for discussion on this item. I give the floor to the delegate of Canada.
John LYNCH (Canada): My delegation support in principle the concept that UN specialized agencies have realistic working capital funds. In fact, a recommendation to this effect was part of a package of proposals which Canada submitted in connection with the Conference Agenda Item 11, Consideration and Review of Certain Aspects of FAO's Goals and Operations, including the need for reform in the programme budget proposal. In our national submission under this agenda item contained in document C 87/30 my Government stated that the sole purpose of the Working Capital Fund as a
financial instrument should be to act as a cash flow regulator pending the receipt of delayed contributions. We also stressed that the methodology of its funding and access conditions should be defined to be both transparent and effective. Despite our support in principle for larger working capital funds, we find ourselves in the difficult position where we cannot support the proposed resolution. There are several reasons for this position. First, the level of the combined increase in the Working Capital Fund is too large, virtual doubling of the Fund from $US 13 250 000 to $US 26 000 000. Second, the fact that this replenishment in the Working Capital Fund will take place at the same time as a sharp increase in annual assessments to the FAO Regular Budget and a large new demand on FAO member countries in order to replenish the Special Reserve Account. Taken together, these increases are incompatible with my Government's objective of restraint in public expenditures.
Third, we believe that the replenishment of the Working Capital Fund should be part of a group of measures to deal with the current financial crisis facing the FAO. We believe that this group of measures should include the adoption of contingency planning measures, what some states have called "core budgeting" and what Canada has described in our paper submitted under the Reform Agenda Item as a system of financial envelopes. A reduction of programmes so as to correspond more closely to anticipated levels of income and finally, the adoption of a system of split currency assessments.
Fourth, in the current circumstances we believe that there will be a tendency to use the increase in the Working Capital Fund to do more than act as a cash flow regulator pending the receipt of delayed contributions within a financial year. We believe there will be a tendency to use the Working Capital Fund as a substitute for contributions which come due within any particular year.
Raúl LOPEZ LIRA (México): Antes de hacer uso de la palabra, quisiera preguntarle si es posible que haga una declaración general para todo el tema 25, a fin de no estar abusando del uso de la palabra, ya que el tono será más o menos el mismo.
CHAIRMAN: On that question, I think it might be confusing to deal with several items at one time. I think we should try to address ourselves to one particular part of the whole of Item 25 rather than taking it as a whole. I hope that would not in any way cause a problem for your delegation. Do you wish still to take the floor?
Raúl LOPEZ LIRA (México): En ese caso, señor Presidente, antes que nada desearía saludarlo y decirle que nos complace mucho verle presidir esta reunión y señalar que, como no escapará a su conocimiento, así como al de los demás miembros de la sala, mi país atraviesa por una crisis muy severa, a causa de su deuda externa. En el día de hoy por la mañana, señor Presidente, recibimos la grave noticia de que el peso mexicano ha sufrido una nueva devaluación. Es por esta razón y por ninguna otra que nosotros tenemos que oponernos al aumento del Fondo de Operaciones y que solicitamos se tenga en cuenta la crisis monetaria de los Estados Miembros que, como es nuestro caso, hemos visto devaluar nuestra moneda con relación al dólar estadounidense y, por tanto, nuestras contribuciones en esta moneda se han incrementado. Deseamos, al respecto, solicitar muy atentamente al Director General que entre en contacto con aquellos miembros que han visto reducir sus contribuciones en moneda local, para que los invite a hacer un mayor esfuerzo de solidaridad, aportando sus pagos a la misma tasa que en el bienio 1986-87.
Ya en la Comisión II hemos planteado la necesidad de que el Comité de Finanzas estudie alguna alternativa para hacer una distribución de las cargas entre los diversos países tomando en consideración los movimientos monetarios, de tal suerte que se logre una mayor equidad en las cargas en el futuro.
Nos satisface que el doctor Crowther, al cerrar el tema 23, haya indicado que los comentarios realizados en esta sala serían transmitidos a dicho Comité, para su consideración.
Ms. Janet Lesley TOMI (Australia): Australia wishes to place clearly on the record its strong opposition to this draft resolution seeking an increase at this time in the Working Capital Fund. Australian views are very well known through our membership of both the Council and the Finance Committee. Australia believes that any increases in the Working Capital Fund should only be met through reductions in the Regular Programme of Work and Budget, and Australia is strongly opposed to the Organization asking members to fund an increase at. a time when many members, including Australia, are already experiencing difficulty in making our contributions to the Organization. We also believe that the Working Capital Fund must only be used to meet temporary - and by that we mean from 3 to 6 months - cash flow needs. We would be strongly opposed to seeing the Working Capital Fund utilized to cover exchange rate changes, inflation increases or long delays in payment of contributions.
Pedro SEBASTIAO (Angola): Je voudrais vous remercier tout d'abord de présider notre réunion. Nous sommes conscients des difficultés de notre pays et aussi reconnaissons-nous l'importance des fonds. C'est la raison pour laquelle nous soutenons cette proposition.
Y. HEIDSMA (Netherlands): First of all I should like to say that my delegation intends to vote in favour of the budget of FAO tomorrow which I believe may help in putting into the right perspective what I have to say on the Agenda Items this afternoon.
We would like to go on record for not agreeing to the proposal for an increase in the level of the Working Capital Fund in the draft resolution now before us. In general, Mr Chairman, the Netherlands is strongly in favour of providing international organizations with the tools they need for conducting an efficient and effective financial management; also in periods of adverse financial developments. These tools, if properly used, should, to a large extent, protect the Organization from the negative effects of these developments. In this respect Mr Chairman, we do not only value the Working Capital Fund as such a tool, but we can also go along with changes in the level of the Working Capital Fund if this indeed would enhance in a structural manner the Organization's capacity to deal with financial problems.
Given, however, the cause for the present problems, proposals such as the one now before us amount in our view to no more than stop-gap measures. We feel that neither the Organization, nor the member states for that matter, ultimately would benefit from this. So the question that necessarily should be raised is whether the proposed increase in the Working Capital Fund is meant to be a structural improvement to safeguard the Organization more effectively from temporary delays in payment of contributions, or whether it is meant as an ad hoc attempt to increase the resources of the Organization which are falling behind because of those member states that do not fulfil their financial obligations toward the Organization. We believe, Mr Chairman, that the latter is the case, and as such our conclusion is that an additional assessment of the member states with regard to the Working Capital Fund merely serves as a compensation for the present and expected arrears in assessed contributions.
It has been the stated policy of the Netherlands not to compensate for the failure of other member states to fulfil their financial obligations, and therefore this delegation opposes the adoption of resolution before us, taking into account as well that adoption would not contribute substantially to alleviating the financial constraints which the Organization will probably be facing in the very near future.
In conclusion, Mr Chairman, let me put forward also a practical argument for not adopting this proposal. Given the low rate of receipt of contributions it will not be realistic to expect that the rate of receipt of additional assessment will fare any better, which would mean again that countries such as the Netherlands would have to share an unequal part of that additional burden.
Mohd. Zulkifli MOHAMMED (Malaysia): This proposal to increase the level of the Working Capital Fund has been deliberated quite lengthily in the Finance Committee sessions and the two previous Session of the Council. During the discussions of both these fora our delegation has given its full support
to the proposal as presented to us in the Draft Resolution. The reason for our support is simply to enable this Organization to be able to function efficiently. Therefore we just wish to reiterate: our support here.
Luka RADOJICIC (Yougoslavie): Permettez-moi d'exposer brièvement les commentaires de la délégation yougoslave relatifs aux projets de résolutions sur l'augmentation des fonds de roulement. Ma délégation partage l'opinion exprimée par la majorité des délégations sur la nécessité de légitimer la proposition d'augmenter le fonds de roulement de notre Organisation, du fait de la crise qui existe dans tout le système des Nations Unies et qui touche non seulement la FAO, mais aussi les autres Organisations de ce système, et du fait que le niveau du fonds de roulement de la FAO est le plus faible par rapport aux autres organisations. Cependant, une question se pose: tous les pays membres doivent-ils être pénalisés par les obligations financières additionnelles pour compenser les obligations déductives non effectuées par certains pays membres, parmi lesquels se trouve le plus grand bailleur? Bien que nous en soutenons le principe et que la nécessité d'une augmentation du fonds de roulement soit une condition pour un fonctionnement plus efficace de la FAO, dans les conditions financières actuelles avec lesquelles se confronte mon pays, ma délégation n'est pas en mesure de supporter une augmentation de notre contribution au-delà de 0,25 pour cent qui a été proposée par le Programme de travail et budget pour 1988-89 et que nous avons appuyée.
Rainer PRESTIEN (Germany, Federal Republic of) (original language German): First I would like to thank Mr Crowther for his very clear introduction to this Item 25. My Government believes that the Organization within the UN system needs sufficient resources to be able to fill its important tasks. The suggestion that there should be an increase in the Working Capital Fund in two stages from 13.2 million to 26 million US dollars is an idea we were unable to support at the 91st Council already. We feel that the financing of that increase would only be possible if a special payment were made by member countries, and this would mean that those countries making those payments would be paying for those member states that had not paid, or only partly paid their actual assessed contributions. For short-term shortfalls in payments the Working Capital Fund at its present level is sufficient as a bridging system. For longer-term shortfalls in payments it is not suited as a means of security. The C 87/LIM/12 resolution we cannot support for those reasons.
Masahiko YASUMURO (Japan): My delegation recognizes that the present level of the Working Capital Fund is nearly 3 percent over the budget level but also understands the obligated TCP to be carried; over to the next biennium, which would be 31 million US dollars, is also functioning as the resources to protect the Organization against adverse effects caused by delays in:.the payment of assessed contributions. So the present level of the Working Capital Fund and the obligated TCP, nearly 44 million US dollars intotal, is nearly 8.5 percent over the next biennium budget level. This ratio seems to be no lower than in most comparative organizations and my delegation thinks that the increase of the total Member Nations' contributions in 1988 from this year should be as modest as possible.
In the light of these thoughts, my delegation does not agree to any increase in the level of the Working Capital Fund from the 1st of January 1988.
Ronald DEARE (United Kingdom): My delegation is unable to support this proposal or the resolution that goes with it.
Mr Chairman, the sole reason for this proposed increase in the Working Capital Fund is to deal with a situation in which more and more countries are paying their assessed contributions later and later. Mr Chairman, one of the documents before us today indicates that 66 member countries of this Organization have outstanding contributions. Reference has been made on more than one occasion to the position of our largest contributor but, Mr Chairman, if we look at this document we find that there are 35 member countries which have, in proportion, greater arrears than our large contributor.
So this is a serious problem and it is not confined to just one country, but like the Netherlands delegation, Mr Chairman, the. United Kingdom is opposed to any proposal that involves the membership being subjected to a supplementary assessment in order to compensate for these failings to live up to the payment of assessed contributions.
This delegation shares the concern expressed by Australia about the time-span involved in the use of the Working Capital Fund. It is my understanding it was intended to be a short-term measure, not to provide a long-term cushion for non-payment. We believe it to be particularly inappropriate to seek an increase in the size of the Working Capital Fund at a time when it is clear that the Organization will have to make programme adjustments in the next biennium to offset the amount transferred from the Working Capital Fund in the present biennium. An increase in the size of the Working Capital Fund will exacerbate this problem rather than ease it. Therefore, for all these reasons we will vote against this resolution.
André REGLI (Suisse): Permettez-moi tout d'abord de vous féliciter pour votre présidence à cette Commission. En ce qui concerne la proposition d'augmenter le fonds de roulement, nous en supportons le principe. Nous aimerions néanmoins que le Secrétariat nous explique pour quelle raison précise une telle augmentation est prévue. Nous tenons à rappeler que l'objet de ce fonds consiste à équilibrer la situation des liquidités à court terme ou de couvrir les dépenses de caractère exceptionnel qui ne peuvent être imputées au budget de l'exercice en cours. Ce fonds ne devrait pas être utilisé pour échapper aux conséquences d'une aggravation financière sans perspective d'amélioration.
Nous aimerions également réitérer que la première 'tâche d'un pays membre d'une Organisation consiste à régler sa contribution dans les délais normaux. Ma délégation annonce ses réserves à toute proposition visant à compenser les contributions déficitaires d'autres pays ou à défavoriser les contribuables réglementaires.
Une dernière remarque générale m'amène à la constatation que ma délégation aurait préféré discuter les thèmes du point 25, c'est-à-dire les autres questions administratives et financières, en étroite relation avec le débat sur le Programme de travail et budget proposé, c'est-à-dire dans la même Commission, de sorte qu'une unité aurait été garantie.
Jean-Luc GRAEVE (France): Je souhaiterais,au début de mon intervention, rappeler l'appui que mon pays entend apporter au budget qui nous est proposé par le Directeur général et que mon pays entend voter en séance plénière lorsqu'il lui sera présenté.
C'est dans ce contexte général que je voudrais présenter nos remarques concernant les avances demandées pour le Fonds de roulement.
Ces avances, Monsieur le Président, sont coûteuses. Elles représentent, en pourcentage du budget du biennium 1986-87, 1,54 pour cent dans une première étape, et 2,91 pour cent dans une seconde étape. Elles aboutissent, ces demandes d'avance, ainsi que l'ont souligné d'autres délégations, notamment la délégation des Pays-Bas et du Royaume-Uni, à reporter sur les Etats bons payeurs la charge de trésorerie provoquée par les retards excessifs dans les paiements des arriérés des contributions, notamment, des contributions dues par le plus important Etat bailleur de Fonds de cette Organisation.
C'est, Monsieur le Président,une compensation que mon pays ne peut accepter dans son principe.
Aussi ma délégation entend marquer ses réserves sur la proposition qui nous est soumise et agira en conséquence lors du vote de la résolution en séance plénière.
A. SAINTRAINT (Belgique): Je voudrais commencer ma déclaration, à l'instar des Pays-Bas, en disant de façon extrêmement claire et précise que nous voterons le budget du biennium 1988-89.
Nous avons longuement examiné le problème du Fonds de roulement, et mon gouvernement a été amené, après examen, à- douter de la pertinence et de l'opportunité de ce double relèvement en deux étapes, même si la seconde étape ne vient qu'au biennium suivant, c'est-à-dire 1990-91. Il est certain que le texte de la résolution prévoit une décision concernant cette augmentation pour le biennium ultérieur de manière définitive dès maintenant.
En fait, incontestablement, il s'agit d'un supplément de contributions à la charge des Etats Membres qui ne profiteraient pas directement au Programme de l'Organisation. Nous estimons que cette augmentation est peu compatible avec les objectifs que nous connaissons tous, et qui nous sont hélas imposés, du resserrement des dépenses publiques.
Nous n'avons pas l'intention, et cela a été exprimé par d'autres pays, de faire des avances de trésorerie et d'être le banquier de débiteurs défaillants, ou de contributeurs qui retarderaient le paiement de leurs contributions de manière excessive.
Je crois que cela ne peut être le rôle du Fonds de roulement et le problème mériterait d'être examiné.
Dès lors, après une étude approfondie, mon gouvernement estime ne pouvoir émettre un avis favorable à une proposition de résolution d'augmentation du Fonds de roulement, compte tenu des différents éléments que je viens de vous présenter.
Nous nous rendons compte qu'au cours du vote une position sera prise. Nous sommes également conscients que des problèmes seront posés à court terme. Mais nous voudrions que le problème soit posé et résolu, non pas par des palliatifs, des bouts de ficelle; c'est un moyen de régler les problèmes qui devraient l'être autrement.
Nous avons peur qu'en permettant cette augmentation du Fonds de roulement nous arrivions en fait à différer un débat et une discussion de fond sur la nécessité de travailler ensemble dans cette Organisation des Nations Unies pour l'alimentation et l'agriculture qui nous tient à coeur, qui doit de l'avis de tous recevoir une priorité, compte tenu des angoissants problèmes qui se posent dans le monde et plus spécialement dans le tiers monde.
Nous ne sommes pas opposés à des formules qui permettraient de trouver des solutions, mais nous émettons des réserves expresses sur les moyens utilisés.
En ce qui concerne mon pays, compte tenu de tous ces éléments, compte tenu surtout du fait que nous ne désirons pas servir de banquiers à des débiteurs défaillants qui devraient assumer leurs obligations, nous comptons sur cette résolution, émettre un vote d'abstention.
Vaasatia Poloma KOMITI (Samoa): In the interests of time I will be brief. However, I would like to thank the Secretariat for the preparation of this document, which has been very enlightening. Whilst my delegation is sympathetic to the intent and purpose of the Draft Resolution under consideration, we find ourselves in a position where we cannot support the proposal.
Briefly, for the reasons that have been espoused better by other speakers like the delegates of Australia, the Netherlands, the United Kingdom, Switzerland and so on, my delegation feels that while the Working Capital Fund has to be replenished, it must be replenished from elsewhere other than raising the levels of contributions by Member States. At a time when most countries, if not all, are facing financial problems we find it difficult to agree to support a proposal that would mean an increase in the contributions from member countries.
Mrs Kate ABANKWA (Ghana): I would like to thank you, Mr Crowther, for your vivid introduction. My delegation is of the view that the provision of an adequate Working Capital Fund is necessary for the early and effective implementation of the Programme of Activities drawn up for the next biennium and for financing emergency expenditures pending the receipt of assessed contributions from Member States.
The delayed payments of contributions by some members make it imperative for the Organization to increase its Working Capital Fund. While appealing to members to pay their contributions, my delegation wishes to state that an increase of the Working Capital Fund by $13 250 000 to $20 000 000 as from 1st January 1980 and $26 million as from 1st January 1990 is in the right direction. My delegation believes that the Council examined the matter carefully and its implications before arriving at the recommendation before us. The foregoing would indicate that my delegation has no problem with the Draft Resolution before us and supports it in order to ensure the smooth running of the Organization.
Elio PASCARELLI (Italy): I am sorry I missed the explanations given at the beginning by Mr Crowther, but I have heard them many times in the Finance Committee and I do not think I need to hear them again.
I am a little surprised that we here in this hall do not give much consideration to the permanent organs of the Organization. We have discussed this for hours and hours. Some members who expressed reservations but who did not then say "no", are saying "no" in this room. For the same reason that I approved them then, I approve them now. That is consistent. We fully recognize the need. May I quote an Italian Prime Minister at the beginning of the century, Sidney Sonnino. In his library, his studio, he had a Latin motto which read "Quod aliis licet tibi non" which means "Whatever is permissible to others is not permissible to you". We want to act as faithful and honest members of this association. We see that other organizations have the same rules as we have. Their difficulties are not minor compared to ours, so if those organizations - and I think Mr Crowther could enlighten us further - have felt the need to increase their fund, why should we not do so as well?
The only concession I may make now, after saying that my Government will vote convincingly in favour of this resolution, is to accept that the Working Capital Fund be increased only to $US 20 million, and we leave it to the next Conference to decide what happens in 1990-91. This figure was immediately acceptable to some members of the Finance Committee, whereas $US 26 million was not acceptable to all. This might have a calming effect on some of the objections that have been made.
I do not think that we should always come forward with the same record, that because some members do not pay their contributions on time, or forget about paying -on time, that we should always be complaining that we have to pay for them. We are not paying for them; we are paying for the Organization that we love and that we support. That is why our vote will be a big "yes".
A. Daniel WEYGANDT (United States): I have certainly followed with great interest the debate that we have had this afternoon on this subject. I have been interested to hear that a number of delegates have prefaced their remarks on their position on this question by indicating what their position on the overall budget might be. I can see that there might be some connection between these two issues. It seems to me, however, that what we have to do here is to come up with the proposal that will solve the problem that the Organization clearly faces - that is, continuing shortfalls in contributions.
In June at the Ninety-first Council my delegation indicated that we could go along with an increase in the Working Capital Fund to a level of $US 20 million. I was interested to hear the immediate previous speaker say that perhaps one consideration we might propose now would be to alter this resolution and to limit it only to an increase to $US 20 million. The reason that my delegation supported that increase was because we felt it would put FAO more in line with the provisions that pertain in other organizations. We certainly feel that doubling the Working Capital Fund from upwards of $US 13 million to $US 26 million is an excessive reaction to a problem.
In Commission II of this Conference my delegation made a statement explaining what we expect our own situation to be with respect to our own contributions to FAO. It was clear from that statement that unfortunately our ability to pay is going to remain very constrained for some time to come. We expect that the shortfalls in our own payments will continue to be at a very significant level, certainly a significant level in terms of the Working Capital Fund, so there should be no doubt that
Working Capital Fund could in some way be used as an offset to arrears if these arrears are supposed to be coming from one particular country. We have to look at the Working Capital Fund on its own merits and not on the merits of what the rate of payment is or is not. We should confine ourselves to focusing on a level that would be consistent with what other organizations in the UN system have. I have been very much struck by the fact that the clear majority of previous speakers have spoken in opposition to this resolution. It seems to me that this puts the Organization in very much of a dilemma because most of those speakers have said that they do not see a solution to income shortfalls in an increasing contribution assessment. That is pretty logical.
The message that I hear coming from our discussion this afternoon is that whilst there is a clear problem facing the Organization, and whilst we are all resolved to try and do something about it, that solution cannot simply lie in increased levies on members. Perhaps we could take a serious look at the proposal just advanced by our distinguished Italian colleague, to modify this resolution somewhat to limit the increase to $US 20 million. I have to make clear that as the resolution stands now my delegation would have to oppose it, as many of the previous speakers have indicated.
Antonio C. DE ALMEIDA RIBEIRO (Portugal): Sans allonger le débat, je dirais que notre délégation va dans le même sens que d'autres. Le Portugal ne peut malheureusement pas donner son appui à la proposition du Secrétariat. Comme l'a dit le Représentant des Pays-Bas, nous estimons que les pays, comme le Portugal, qui ont toujours payé à temps leur contribution annuelle ne doivent pas être pénalisés par le fait qu'un certain nombre de pays membres n'ont pas accompli leurs obligations à l'égard de l'Organisation.
Clifton E. MAYNARD (Barbados): Both the Finance Committee and the Council at the Ninety-first Session examined this particular problem in detail. We all know the cause of the problem. Might I suggest that the effects of this problem and the cause of this problem may have started a long time ago when some countries sought to influence international organizations towards their own will by paying contributions by instalments. Some got so into the habit of paying contributions by instalments, that when hard times came they got caught up in a way that they had not anticipated.
I might take the position of the—distinguished representative of the Netherlands. Indeed, I might take the position of the distinguished representative of the United Kingdom. My delegation and Barbados are entirely in the same position. What then would be the condition of the Organization? What is the position of food and agriculture in this world at this particular moment? When you put these two together it seems to me that we still need the Organization and that it must function efficiently.
Therefore, despite all the arguments about having to carry the burden for people who will not pay or cannot pay, I believe that there is no alternative for a country like mine which believes that, because of size and because of lack of money, we have to find comfort with international organizations. Therefore, there is no alternative but to ensure that the Organization continues to function. Indeed the information that was put _to" the Programme Committee, to the Finance Committee and indeed to the Council, shows clearly what will happen if we do not approve this resolution.
I would just like to add something that comes to my mind, something Professor Mayer said in this hall about what is needed to feed the hungry of this world in comparison with the expenditure on arms.
When I put all these things together, I see no alternative but to support this resolution, and I unreservedly do so.
Hermann REDL (Austria) (original language German): Mr Chairman, as this is the first time I have taken the floor please allow me to congratulate you on your election as Chairman of this Commission.
Austria is amongst those countries who will support the proposed Programme of Work and Budget. However, we would agree with what has been said by France on this issue. We always pay our assessed contributions promptly. We are of the opinion that those who pay promptly should not be penalized. A replenishment of the Working Capital Fund should be done only according to how much is actually needed. This increase is something that should be checked very carefully indeed before we actually come to a final decision on it.
Hidayat Ganda ATMADJA (Indonesia): Although my delegation to a certain extent understands the position taken by some delegates who have opposed the increase of the Working Capital Fund, my delegation thinks that the increase in the fund could be of help to the Organization in overcoming the financial difficulties it now faces. Therefore, my delegation will firmly vote in favour of the resolution.
Srta.Mery Cecilia HURTADO SALAMANCA (Colombia): En primer lugar, la delegación de Colombia quiere
Mi delegación, en el Consejo pasado, aprobó el aumento de la cuantía del Fondo de Operaciones. Siguiendo las instrucciones de nuestro Gobierno y conociendo la situación por la que atraviesa nuestra Organización, la delegación de Colombia apoya el proyecto de resolución.
Amilcar Spencer LOPES (Cap-Vert): Tout en appuyant le budget pour le prochain biennium, ma délégation a affirmé à maintes reprises qu'elle trouve le niveau du budget proposé par le Directeur général extrêmement faible pour que l'Organisation puisse faire face à ses responsabilités. De même, nous faisons appel aux Etats Membres qui ont des arriérés pour qu'ils s'acquittent de leurs obligations. Toutefois, l'avenir n'est pas prometteur et en conséquence nous appuyons le projet de résolution.
Germán CARRASCO DOMINGUEZ (Chile): Primero, deseo felicitarlo por el hecho de que Ud. tenga a bien presidir nuestras sesiones. No era mi intención intervenir en este debate, en un tema sobre el cual no conozco mucho. No formamos parte del Comité Financiero ni estamos representados, de hecho, en el Consejo; pero, señor Presidente, a mi Delegación, a mi país, a mi Gobierno, nos interesa fundamentalmente la buena marcha de la FAO, la buena marcha de la Organización. Estamos muy conscientes de cuanto ella significa en favor de los países en vías de desarrollo.
De ahí, señor Presidente, que nosotros votaremos a favor de esta resolución, no obstante las razones -al parecer, buenas, o, al parecer, infundadas- con que algunos países se van a oponer a ella. Lo único que yo quiero, señor Presidente, para concluir esta breve intervención,es destacar la paradoja de que los países que tenemos más fe en la Organización y que cumplimos nuestras obligaciones podríamos estar penalizados, como se ha dicho, por el hecho de que otros países no cumplan con las contribuciones a que están obligados por la Constitución.
Assefa YILALA (Ethiopia): First of all I would like to congratulate you, and convey my pleasure in seeing you in the Chair. In spite of the economic difficulties being faced by my country, Ethiopia has always paid its share of contribution, however modest, on time and in full. Therefore, what I am about to say has nothing to do with the particular and specific payment of Ethiopia.
We do realise the difficulties faced by this Organization with regard to the cash flow caused by the delayed payment of some member countries and we also see the need to replenish the Working Capital Fund in order to ascertain the smooth and continuous flow of operations. On the other hand, we feel that some member countries which are not able to pay their share of contributions on time are being faced with economic difficulties and financial problems, a solution to which cannot be seen within a short, or even a foreseeable, time. This being the case, we do appreciate the difficulties in
getting these additional contributions to come forward. However, when they do not pay their share of contribution, we find difficulty in realising how they can fulfil the additional obligations requested in this Resolution.
We would however like to indicate our support for this Resolution, and to state our alliance with the views presented by the distinguished delegate of Italy, that the second increase which stands at $26 million as of January 1988 should be left for the next Council and consequently the coming Conference. We would therefore like to support the views expressed by the distinguished delegate of Italy, which were supported by other countries later in the discussion.
Guillermo GONZALEZ (Argentina): Gracias, señor Presidente. Mi Delegación va a ser sumamente breve. En primer lugar, deseamos dejar constancia de nuestras felicitaciones por verlo a Ud. dirigiendo nuestros debates con toda eficiencia y cordialidad.
En lo que hace al fondo de la cuestión, señor Presidente, debo decir que mi Delegación estuvo entre aquellas que, cuando trataron el tema en el Consejo, hicieron reservas, pues en aquel momento no estaban en condiciones de prestar su apoyo a resoluciones de esta naturaleza. Hoy, ya en la Conferencia, y haciendo grandes sacrificios por nuestra parte, estamos dispuestos a prestar nuestro apoyo al Presupuesto general de la Organización. Pero, en lo que hace al aumento de la cuantía del Fondo de Operaciones, lamentablemente no podremos prestarle nuestro apoyo cuando se vote la' resolución que se nos ha presentado y que tenemos hoy en nuestras mesas.
La Delegación argentina entiende las razones que dan motivo a esta resolución, y debo decir que apoyamos el principio que la inspira. Pero, lamentablemente, nos encontramos en una situación difícil, que ya hemos expresado y explicado en otros foros y que nos ha llevado a tener retrasos en nuestras cuotas en los organismos internacionales y particularmente en la FAO. Por este motivo, señor Presidente, exclusivamente, nos vemos en la situación de no poder respaldar con nuestro voto positivo este proyecto de resolución. Gracias.
Likunde LI-BOTAYI (Zaire): Mon pays est membre du Conseil et il 'a activement participé aux discassions qui ont eu lieu au sujet de l'augmentation du fonds de roulement. Dans sa déclaration faite à la plénière, la délégation du Zaïre a appuyé le programme pour le prochain biennium. Elle a également exprimé le souhait ardent de voir l'Organisation disposer de moyens financiers adéquats lui permettant d'exécuter, à la satisfaction de tous les membres, les programmes de travail qu'elle devra approuver à la Conférence. Notre délégation a aussi souligné que le programme que devra approuver la Conférence, doit être considéré comme un minimum que la FAO doit exécuter en faveur des pays en développement. Ceci, pour le prochain biennium.
Pour ce faire, la délégation du Zaīre soutient le principe de ce fonds de roulement, cependant, dans le cadre du consensus, elle estime (bien que cette augmentation soit modérée), qu'elle doit rejoindre la position des autres délégués qui ont soutenu le principe de l'augmentation, et qui consiste à ce que le niveau de cette augmentation soit maintenu à celui qui a été décidé au cours de la session du Conseil, c'est-à-dire: 20 millions.
T.F.F. MALUZA (Zambia): My delegation agrees with the principle of raising the FAO Working Capital Fund so that it is in line with other United Nations organizations. At the same time it should be noted that Zambia does not agree in general to anything which would make us pay more than the assessed contributions in accordance with the United Nations level of contributions.
In consideration of the problem facing FAO at present, we agree to the proposal that the level of the Working Capital Fund be increased, but as a compromise we would also agree with the suggestion by the distinguished delegate of Italy that the Working Capital Fund should only be raised to $20 million. We hope that, with this amendment, other Member Nations will join us in approving the Resolution contained in C 87/LIM/12.
Elio PASCARELLI (Italy): I ask your kind permission to add a word. I posed the question to the Assistant Director-General for Administration and Finance concerning the rares of Working Capital Funds prevailing in other organizations, which I repeat - and underline - have problems which are sometimes even harsher than our own.
I would also ask Mr. Crowther to clarify one point which I think has gone wrong - at least, in my . opinion. This is the point made by the distinguished delegate of Japan, when he added the $30 million of the Working Capital Fund to the minus $31.5, unobligated balance of the TCP, I think there is some confusion on this which should be cleared up.
Finally, since I see that a compromise is shaping up on the little amendment to this Resolution, so that it may be acceptable to the broadest possible consensus of the Conference, I insist once again that for the time being we limit our approval to the raise to $20 million of the Working Capital Fund for the next biennium - and wait for God to help us with the biennium after that!
Dean K. CROWTHER (Assistant Director-General, Administration and Finance Department): A few questions have been raised, and I believe some clarification is needed to place the Resolution and the question before the commission in the proper perspective.
First, although I did not specifically state them in my introductory remarks, it would perhaps be useful for us to recall now the basic purposes of the Working Capital fund. In the Basic Texts, in Financial Regulation 6.2, there is reference to the Working Capital Fund and to the original authorization of the Working Capital Fund. It was established for three purposes, which are stated in Regulation 6.2 as:
"(i) advancing moneys to the General Fund to finance budgetary expenditures pending receipt of
contributions to the budget;
(ii) advancing moneys to the General Fund to finance emergency expenditures not provided for in the
current budget;
(iii) making reimbursable loans for such purposes as the Council may authorize in specific cases. Advances made by the Working Capital Fund for these purposes shall be considered as forming part of the Fund."
The same Basic Text requires reimbursement or replenishment of the amounts when they are withdrawn for any of those three purposes.
Regulation 6.4 makes reference to the fact that moneys provided by each Member Nation under Regulation 6.2. (the one I have just quoted to you) shall be carried to the credit of that Member Nation, and in Regulation 6.5.
(a) "Advances made from the Working Capital Fund to finance budgetary expenditure under Financial Regulation 6.2(a) (i) shall be reimbursed from the General Fund as soon as feasible, but in any case within the next financial period, by programme adjustments if necessary.
There has been reference by several speakers this afternoon to the fact that this Resolution includes replenishment of the Working Capital Fund. I would like to clarify that. The Resolution does not call for replenishment - it is calling for an increase. The Organization will end the year with a zero balance in the Working Capital Fund because of a shortfall in contribution and must therefore replenish the basic amount of $13.25 million either from arrears which will be received next year or, if they are not received, from reductions in the Programme itself - Programme savings.
That is the basic amount, and that must be replenished during the following biennium. The Resolution calls for an increase in the Working Capital Fund. That increase, therefore, comes from assessed amounts, the same as the original established amount was received.
Secondly, Mr Chairman, there was reference made by a number of speakers to the purpose and need for the Working Capital Fund. Several of the speakers said that they would not be in favour of an increase in the Working Capital Fund if it were to be used to offset contributions that were not received by others. The intent there certainly seemed to be that they did not want to pay for those contributors who are not making their payments on a regular basis.
Several members stated that they did not want to make up for the shortfall in contributions by the largest contributor. Mr Chairman, I think I can put the concern at rest in that the Working Capital Fund Resolution for an increase in no event would make up for a shortfall by the largest contributor. At the end of this year the largest contributor will owe the Organization $US 63.7 million. The requested increase, even if both were accepted, would go to $US 26 million. Certainly that is not sufficient to offset the arrearages that we are foreseeing in this biennium. That is not the intent.
Some members made reference to the fact that more and more Members Nations are paying their dues later and later to the Organization. We should clarify that as well. The document that you have before you on the status of contributions indicates that there are fewer Member Nations owing the Organization at this point in time than has been the case for several years. We do appreciate the fact that most Member Nations have come forward and expedited their payments wherever possible. That is not to say that the dollar amount, exclusive of that owed by the largest contributor, is still constantly increasing. That is a function of the amount and level of the budget, not the number of contributors that are paying late. We should be very clear on that fact. In fact, if I may quote, Mr Chairman, as of 17 November, 66.10 percent of current assessments had been received. Short of the period when the largest contributor had paid its full amount, this is the largest amount that otherwise would have been received for a number of years. Secondly, there are 98 Member Nations who have paid in full. Last year at this time there were 65. The year before, there were 76, and prior to that 73. There are more who have paid in full now than for several years. The same thing is true for those who have paid part of their assessments, and there are fewer who have made no payments. Consequently, in percentage terms the number of arrears are reducing, but because the amounts of the budget level are increasing, the amount needed for the Working Capital Fund is also increasing. This is the basic philosophy for requesting an increase in the Working Capital Fund.
The delegate of Italy asked for information with respect to sister agencies. Although it is not directly comparable for a number of reasons in the way the budget is stated, the best comparison that you can make is that while there are a number of agencies that range from 6 percent up to as high as 11 percent in their working capital fund, there are also a couple that are actually smaller. There is one that is 1.2 percent, but it is a much smaller agency. They have as serious a problem as we, in most cases much more serious. Their governing bodies have seen fit to raise their working capital funds to levels of a percentage of at least considerably in excess of our roughly 3 percent. We thought that going to $US 20 million was a relatively modest increase even though we respect the problems that creates for a number of Member Nations because it does increase the call for contributions.
Mr Chairman, a reference was made by the distinguished delegate of Japan about the TCP appropriation carryover. In each of the biennia the TCP that is authorized during a particular budget period can be used in the following biennia, and therefore the appropriation related to that amount is carried forward. That does create cash for those TCP projects, but our rules do not permit us to use the TCP Fund to offset members' contributions. They clearly must be used for the purposes that they were intended. We cannot fall back on the TCP Funds as an offset to the Working Capital Fund or an extension of the Working Capital Fund, nor can we use any of the other funds of the Organization to do that. Our financial regulations are reasonably clear on that point. They stipulate the precise uses of the Working Capital Fund, the amount of the Working Capital Fund and how it is to be reimbursed. We meticulously try to respond to those rules.
Mr Chairman, the idea for asking for increases in two tranches over four years or two biennia was certainly in understanding of the burden that this makes on the Member Nations. The Organization has not seen fit, nor has the Finance Committee nor has any of the Council of Governing Bodies, to request an increase in the Working Capital Fund over the years. Therefore the percentage has. reduced in real terms in comparison with the level of our budget. That is why it is down to 3 percent. Even though we get a higher percentage of contributions paid by the end of each year than has been the case in prior years with some very ardent collection activities and with good response on the part of each Member Nation, the flat level of $US 13.5 million in our Working Capital Fund is a very low percentage in terms of our total budget stock. Therefore, it seemed warranted to increase it to 5 or 6 percent and to split it over two different tranches of a four-year period. Again, this makes it an extra call for those increases, but in order for the Organization to function and to carry out its Programme of Work and Budget, we do expect that some Member Nations from time to time are going to have problems. Again, there is no way that we can use even the increases in the Working Capital
Fund to offset major donor defaults or delays in payment like that of the United States, but it is intended more as an offset against the normal arrearages. That was the intent. That is the purpose. For those of you who saw it quite differently, perhaps that would be an important factor for you to take into consideration.
Mr Chairman, I think this has covered the points that have been raised. If there are other clarifications that are needed, I will be happy to respond to them. I do appreciate the debate that has gone on and the views that have been expressed. If there are any further clarifications that are needed, I would be happy to respond to them.
CHAIRMAN Thank you very much, Mr Crowther. I am sure your explanation has satisfied the questions that have been raised by many delegates. We hope it also explained the reason why the Organization needs this increase in the Working Capital Fund and the Resolution that has been brought forth before you. From the debate that has taken place this afternoon, my assessment of the debate is that a slight majority of member countries have agreed to the Resolution, although quite a number also objected to it. But the other element that has cropped in was that there was a suggestion that a compromise would be in the best interests of this Commission. That is to increase the level of the Working Capital Fund up to $US 20 million as from 1 January 1988, for which quite a few members have voiced support. In the interests of getting a consensus and trying to avoid voting on this Resolution I will submit that this Commission agree to this amendment up to US$ 20 million increase. Of course, that is subject to the delegates of the Commission. Failing to have a consensus on this, we would have no recourse but to take a vote on the matter. Again, I reiterate here that I am trying to get a consensus so that there is no need to take recourse in voting. We would like to avoid that step. The United Kingdom delegate has asked for the floor. You may have the floor, Sir.
Ronald DEARE (United Kingdom) Thank you, Mr Chairman. I am always anxious to support the Chair if possible in reaching a consensus, but quite franky, having listened to the debate this afternoon I do not think a consensus is within our grasp. Certainly I will have to take issue with you on the question of whether or not there was a majority here this afternoon, even a slight majority, that spoke in favour. I thought that it was, if anything, the other way, but I would be prepared to accept it as being evenly balanced but certainly not a majority in favour. Just to complete my intervention, could I say that my objection to this resolution remains, we could not support it, whether it is for $US 26 million or for $US 20 million.
CHAIRMAN: Thank you, distinguished delegate of the United Kingdom. Actually, my assessment of the debate is not based just on my whims. I have made a count and definitely, according to my counting, there is a slight majority in favour. Your impression, I believe, is due to the fact that those who objected to the resolution made very long statements, whereas those who agreed just made very short statements. Any way, as I put across to you earlier, we would like to have a consensus on the amendment suggested for which I have sort of received some favourable support from member countries. If it is agreeable, the Commission would take the position that it is agreeable to this amendment.
I recognize the delegate of the United States of America.
A. Daniel WEYGANDT (United States of America): I would have to say first off that I think you have made a bad deal with your Chairman as a Vice-Chairman because I think he has given you a very difficult task here this afternoon, to try and work this out. I think, of course, it would be eminently preferable for us all if we could reach a consensus on this. But I have to say that, based on my understanding of the discussion, there really does seem to be a divergence of opinion.
Where I would agree with you however is clearly that there tends to be more support for what I consider to be the proposal put forward by the delegation of Italy than there is for the resolution that we have before us. Now I do not know whether we should aim for the maximum support if we
cannot get a consensus, or whether we should treat the resolution as it is now, but I would simply say that it seems to me, regardless of whether or not a majority of delegates have spoken in favour of this or not, there is very significant opposition to this resolution, and I say that in the interest of continuing harmony in our own Commission here. It seems to me that we ought to take a little extra time to try and find an agreeable solution to this, because whether there is a majority or not in the Commission for one proposal, I think it is our practice that if there is significant opposition, whether it is 40 percent or 37½ percent or 46.2 percent, I think it is still significant. I think we all know what we are talking about here. So I think we ought to give some consideration to this issue before we conclude in any way or another. That is simply my view, Mr Chairman, but I do think that you are right in saying that there is more support for the Italian proposal than there is for the resolution we have before us.
Likunde LI-BOTAYI (Zaīre): Je crois avoir déjà éclairé la lanterne du Bureau sur la position du Zaire lors de la séance plénière. Nous avions proposé d'adopter le compromis, qui a été exposé par la délégation de l'Italie, c'est-à-dire accepter une augmentation modeste pouvant aller jusqu'à 20 millions pour alléger la lourde charge des Pays Membres. Je pense que ces 20 millions pourront être répartis en deux tranches. Il faudra ensuite décider quelle somme nous pourrons allouer pour la première année et quelle autre somme pour la seconde année. J'insiste vraiment sur le fait qu'il faudrait que les 20 millions puissent être répartis en deux tranches.
J. HEIDSMA (Netherlands): I just want to react on your question whether this amendment would be acceptable, and I am afraid I have to say, as did the delegate from the U.K., that we do not think we could support the resolution even if amended. I am not sure how you are going to proceed now, but I do not disagree with the idea of the United States to have some further discussion on this issue although I have a little doubt that in the end it might lead to consensus. From the debate I gathered, and I do not at all dispute your figures - I did not make this count so I am sure you are right Mr Chairman - but nevertheless the opposition was quite considerable to this proposal so I am not sure whether this is going to help us, the proposal of the United States, but of course my delegation is always prepared, everywhere, to discuss matters a little further. There is no doubt about that.
John LYNCH (Canada): Mr Chairman, first of all we have before us one proposal and I think most people have spoken on it. I did a count and probably my count is wrong because usually I am wrong in terms of numbers, but I get it as being even, with two perhaps being on the fence. Now they would probably give you a slight majority, and I think a majority of two on a question like this is very small, so I think that I would tend to go for the people…… I see nodding up there, so I believe I may for once have been right in terms of numbers.
The second point though is on your compromise proposal. I do not see it as being that much of a compromise; in fact I would go so far as to say that perhaps it is really what was being proposed except with part of it being delayed for another two years. I think that a number of the countries who intervened indicated that one of the reasons they had problems with the proposal was the burden it would put on them in the coming biennium in terms of their financial contribution to this Organization — that there was 0.25 million increase in the Regular Budget, there was the 6.75 million increase here, and then there is the 12 million dollar increase which will come under the special reserve account. So when you total all that up you are talking about 20 million additional dollars going to have to be split among the membership, and probably a large part of the membership will not pay up, so an additional burden is going to be placed on what we have been terming here "the good payers".
If we are going to look at a compromise I think it might be more realistic if we put a real compromise before the group, and that is take the amount of money that is actually being proposed as an increase for the Working Capital Fund for this coming biennium which is, according to my figures - and again I may be wrong -but 6.75 million and cut that in half, because what we are really doing here is we are taking the coming biennium and treating the increase during that as if it was approved.
So there is really no compromise in terms of financial burden during the coming biennium, which is the fear that raised it and which, as far as I was listening, almost half of the speakers here have. So I would think that perhaps, if we are looking at a compromise we should look at one that has some real financial impact during the coming biennium. So if that further complicates your task, Mr Chairman, I can just indicate that as the resolution is worded I do not think we can pass it. I think you are right to follow a compromise but I think the Italian proposal, if we were to look at it afresh which I think we have to do, may find almost as much difficulty as the original.
Elio PASCARELLI (Italy): Mr Chairman, of course I do not agree with the statement of my distinguished Canadian colleague that our proposal does not make any difference. It makes just the difference of 6 million dollars which is something, because we cannot engage the members as of now to pay in 1990. The difference is very big - 6 million dollars.
I would ask the Secretariat to modify the wording of this resolution which does not seem to reach the consensus that you are looking for, and stop it at the first increase in two instalments, but since I forecast for the Organization greater difficulties in the first year than in the second I would say three million seven hundred and fifty thousand dollars in the first instalment, and 3 million dollars in the second instalment. This is the proposal that I assessed from the number of speakers.
Mr Chairman, we share your wise judgment that we have to count the contents and not the minutes, because usually the opposers take four times the time that we take.
CHAIRMAN: Thank you very much. As suggested before, I think we will close the debate on this matter for today and we will come to it tomorrow, but since we have a few more minutes left I would like to give the floor to Mr Shah to address the questions that were raised on the audited accounts.
V.J. SHAH (Director, Office of Programme, Budget and Evaluation): Mr Chairman, I am informed that the distinguished Delegate of the United Kingdom referred to the External Auditor's Report and in particular para 10 (iii) on the subject of budgetary monitoring by object-of-expenditure, and expressed that delegation's feeling of not being entirely happy with the comments of the Secretariat on the subject as reflected in the External Auditor's Report.
Mr Chairman, first of all let me recall that this comment of the External Auditor on monitoring by object-of-expenditure is in the context of his overall comments on the budgetary monitoring system, and he says specifically in para 10 that there is a comprehensive system of budgetary planning and monitoring, and that his staff's test examination showed that the system was operating as intended and that close control was maintained over divisional staffing in spending. So I think it is important to recall what the overall comment of the External Auditor was.
Then he goes on to say that there are, however, some issues which appear to him to offer some scope for improvement, and the comment on monitoring by object-of-expenditure is in that context.
Mr Chairman, I would now like to point out and recall that of course when we formulate the Programme of Work and Budget, in formulating the programme we have to look at objects-of-expenditure. In examing what the programme activities are going to be and in costing those proposals we need to see how these activities are going to be carried out; are they going to be carried out by staff or with consultants; are these people going to travel; will there be meetings held; will there be publications. So these are means for costing.
In the early 70's when we moved to the system of programme budgeting our governing bodies, including you Mr Chairman, the Conference recognized that indeed the programme budget would have to be formulated in that way, and the Conference expressed interest in having information on objects-of-expenditure in the programme budget document, and that is why we were instructed to give this
information in one of the annexes to the document on the Programme of Work and Budget. But at the same time the governing bodies recognized that according to these same principles of programme budgeting, what is important is not the object-of-expenditure but the programme. What is important is wheter you have implemented the programme or not, and not whether you have spent money on consultants or on publications or on staff. So it was for that reason that the governing bodies decided what the reporting system and the monitoring system should be. For example, the Finance Committee understood - and it specified this in its Report of its 23rd Session in 1970 - it understood "that allotments would be made on a programme basis to each organizational unit at the divisional level without reference to objects-of-expenditure". These instructions were also endorsed by the Council at it's 56th Session where again it repeated that an essential element in programme budgeting was flexibility in the use of resources to attain programme objectives and that objects-of-expenditure controls would be replaced by programme controls. That is why, Mr Chairman, our budgetary performance report which is submitted to the Finance Committee each year and through the Finance Committee to the Council, does not go by object-of-expenditure.
If there is such passionate interest in object-of-expenditure, it is not that we are trying to be cagey or to withhold information. As a practical course I would like to suggest that certainly we can look into providing information on object-of-expenditure on an aggregate basis in connection with the budgetary performance report. The annual budgetary performance report would provide, and we would look into, the best way of providing aggregate information on object-of-expenditure.
I understand there was also a request or a comment from the distinguished delegate of th United States of America on what we call PLANYSYS, our work planning and monitoring system. This is something we have developed over the last few years and in response to his request let me describe the main features of it.
PLANSYS consists of breaking down the programme budget for the technical and economic programmes to the lowest level for purposes of planning work and carrying out activities. As delegates well recognize, the technical and economic programmes are broken down into sub-programmes, and now for the first time this year are also shown at the element levels- these elements consist of activities and the activities themselves go down to the level of the inputs, the inputs being staff time, consultants' time, computer-use, etc. It is really a simple concept. It does not require genius, but a certain amount of mathematical application, mathematical application which is very much assisted by the use of the computer.
Each unit in a technical department on an annual basis has to work out its plan for that year down to the activity of input level so that for each activity that unit itself plans "When are we going to use our staff time to prepare this? When do we need consultants? When will the consultants actually carry out the work? When will the manuscript of the document be ready?" It is a scheduling exercise. But, of course, as with any scheduling exercise which becomes computerized, one can use it for improved management. One can call for all sorts of reports. For instance, how many consultants will be used for this unit in a year? What is their scheduling? According to that scheduling, have arrangements been made to recruit and brief them, to get them out to do the work?
I do not want to give the impression that I am trying to lecture in any way, but I hope I have given the Commission the sense of the purpose of this system and how it is being used. Let me say that this is not the right forum perhaps in which to give more examples, but as all distinguished delegates know, the Secretariat is always available to them, individually if they want to pursue this matter in any detail. I hope I have answered the questions which were brought to my attention.
CHAIRMAN: Thank you, Mr Shah, for your comprehensive answer and clarification. I am sure that it has met with the satisfaction of all the delegations who have asked questions.
Ronald DEARE (United Kingdom): I am most grateful to Mr Shah for coming along this afternoon. I know his has not been an easy day so far, and it is not yet over, but I am grateful for his explanation.
I am always a little reluctant to come back with a supplementary because I cannot begin to have the sort of grasp of the financing of the Organization as has Mr Shah, but I am still a little puzzled by one point and I hope he will bear with me if I ask one supplementary question.
It is stated in paragraph 11 of the report of the External Auditor to which we have referred, that information on object-of-expenditure is used to formulate the programme budget. As he has said, it is given for information in the annexes. My question is this: If this object-of-expenditure information is not monitored over the period to see if the bases on which the programmes have been put together remain valid, as is pointed out by the External Auditor in the preceding paragraph, how does the Organization know that these assumptions which are made about various costs to build up the programmes are valid for use in the following biennium? Is there not some system for checking that the bases on which the programme budget is built up remain valid over the biennium and thus are valid for the construction of the budget for the following biennium?
I am not sure if I have made myself clear, but this is a point which remains a puzzle to me and is the reason why I raised this in the first place.
V.J. SHAH (Director, Office of Programme, Budget and Evaluation): I think I understand the question, and I will try to answer it. Let me explain that when, for example, in this biennium we are implementing a programme which was constructed with certain assumptions and objects-of-expenditure used in the formulation of the programme of work for this biennium, that is one situation. What the delegate of the United Kingdom wants to know is how can we formulate the programme for the next biennium without seeing whether the performance of the object-of-expenditure in this biennium is according to the plans we have made - I see the delegate of the United Kingdom nodding his head.
There are two elements to my reply: firstly, a practical one of timing. We formulate a programme of work for the next biennium. We start formulating it even before the first year of this biennium is over, so there is a timing problem in not being able to consider the object-of-expenditure utilization for the entire biennium before formulating the programme for the next biennium. That is a question of timing.
The second aspect is that related to programme budgeting itself, that when the programme objectives are the bases of the budgetary system, the purpose is to achieve certain objectives, not to spend money for object-of-expenditure just because you have built up your assumption on that basis. To give an example - the objective is to pursue training activities. That objective can be reached either by holding a meeting or by having a training manual or a workshop, or providing travel for study tours. In each field it is difficult to say exactly that the objects-of-expenditure are immutable. Depending on the situation when the Programme of Work and Budget was formulated, it has a certain kind of pattern of expenditure which is envisaged. It is on that basis that the budget is built up. So I think it has these two points which need some understanding.
I hope I have been clear, and the comment I revert to again is that certainly if there is such interest in seeing what the outturn was, all right - with the budgetary performance report we can give aggregate figures from which we can see on an annual basis for each year what the overall expenditure was. From the point of view of the Secretariat, this is something which will be slightly of academic interest. However, information is always useful, and people can draw their own judgements about its utility. I hope my supplementary reply has been satisfactory.
CHAIRMAN: We have only four minutes left, and I am reluctant to call another speaker but if the distinguished delegate of France can be brief, I will allow him to speak.
Jean-Luc GRAEVE (France): Je voudrais poser une question d'ordre pratique.
Nos débats ont été très sérieux, je diraismême austères, à la différence d'autres commissions. Mais nous avons cependant pris du retard. J'aimerais savoir comment le Secrétariat entend organiser la suite des débats.
Pourrait-il nous donner des précisions sur le moment où pourrait être voté le budget et sur le moment et l'heure à laquelle nous reprendrons nos débats en Commission III?
CHAIRMAN: I am not in a position to answer the question posed by the delegate of France at the moment. I think the Secretariat will have to work out this matter tonight and come back with certain proposals tomorrow morning.
Elio PASCARELLI (Italy): I have a question concerning Item 24.4 of our agenda. Mr Chairman, do you anticipate being able to discuss that point tomorrow afternoon?
CHAIRMAN: We are still waiting for information from you as to whether you are making a formal proposal.
Elio PASCARELLI (Italy): My question has nothing to do with the attempt to table a resolution. I told you yesterday, Mr Chairman, that I would table that resolution only if I had sponsors from Latin America, Africa and Asia. There were none, so that was a proposal which was left in the desert. My question now has to do with another statement of the Italian Government which is of some importance to the Organization.
CHAIRMAN: I am sorry, I cannot allow time for any more speakers. We will resume the meeting tomorrow morning at 10 o'clock.
The meeting rose at 17.30 hours
La séance est levée à 17 h 30
Se levanta la sesión a las 17.30 horas
