EL PRESIDENTE: Distinguidos delegados, nos corresponde continuar con el examen del temario asignado a la Comisión, en particular con el relativo al punto 29, Cuentas comprobadas, y sus documentos C 91/5, C 91/6, C 91/LIM/19, C 91/LIM/37.
Daré el uso de la palabra al distinguido Sr. Mehboob para que nos introduzca en nuestro tema.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): Thank you Mr Chairman. The item under consideration is the Audited Accounts and the External Auditor's report for the 1988-89 biennium relating to the Regular Programme and the UNDP.
Document C 91/5 contains the accounts for the Regular Programme, and document C 91/6 for those of the UNDP. These accounts have been reviewed in depth by the Finance Committee at its Sixty-ninth Session, and by the Council at its Ninety-eighth Session. The comments are found in document CL 98/REP paras 212-214, and in the Conference document C 91/LIM/19. Both these bodies have endorsed the External Auditor's Report for submission to the Conference.
They have also noted the Director-General's actions on the possible improvements mentioned by the External Auditor in his report.
Mr Chairman, in accordance with Financial Regulation XII, paragraph 12.10, these accounts are to be approved by the Conference. A draft resolution contained in document C 91/LIM/19, is now before the Conference for its consideration and adoption.
Mr Chairman, my colleagues and I would be pleased to answer any questions which the distinguished members may have.
EL PRESIDENTE: Muchas gracias Sr. Mehboob por su aclaración y su declaración que ha sido seguramente muy útil para toda nuestra Comisión.
Distinguidos delegados, ofrezco la palabra por si alguna delegación desea intervenir sobre el punto que estamos analizando.
Ms Teresa D. HOBGOOD (United States of America): At the Ninety-eighth Session of the FAO Council the United States delegation expressed appreciation to the internal and external auditors for their excellent work in preparing the financial statements. We are pleased that no significant shortcomings were reported which would have given rise to the issuance of a qualified opinion on the financial statements. At the same time, however, we regret that too little attention has been paid of the comprehensive, value-for-money reports prepared at regular intervals by the Controller and the Auditor General of the United Kingdom. To facilitate future discussions we would urge FAO to provide a written report on concrete measures taken to implement previous recommendations of the External Auditor. If necessary, this report should also contain an explanation as to the reasons a particular recommendation was not implemented. The United States has requested similar written reports from other UN agencies. We are encouraged by their efforts in complying with our request.
It is through this External Auditor process that Member States can be assured that their resources are being used in a most effective and efficient manner. We are pleased to note that the current session of the UN General Assembly is considering the important issues of establishing uniform accounting principles among UN organizations. During times when difficult choices among competing priorities for limited resources must be made, uniformity by UN agencies in presenting financial data becomes ever more important.
Turning to the audited accounts for the United Nations Development Programme, we are pleased again that an unqualified opinion has been rendered on the financial statements for 1988-89. We do have one question on the UNDP audited accounts which we believe it is appropriate to raise in this forum rather than the UN's Fifth Committee and the UNDP Governing Council.
We understand that the UN Board of Auditors recently has been critical of UNDP's inability to obtain FAO's signature on a standard basic executing agreement. This issue is an important matter to my Government since it calls into question the proper management and effective use of Member States' resources. We would appreciate the reaction of the FAO Secretariat to the Board's observation that an agreement has not been signed and negotiations brought to a standstill.
Finally, we support the adoption of the resolution on the Audited Accounts.
EL PRESIDENTE: Muchísimas gracias, distinguida delegada de los Estados Unidos, su declaración será tomada en cuenta y se dará atenta y debida nota a sus observaciones. Al mismo tiempo, desearía consultar a los miembros de la Mesa si se puede en este momento dar respuesta a su pregunta distinguida delegada. Estamos en consulta, un momento por favor.
El Sr. Regnier me ha pedido la palabra para dar respuesta a este interrogante. Tiene usted la palabra.
A. REGNIER (Director, Field Programme Development Division): I would like to reply to the question raised by the distinguished delegate of the United
States by reassuring her completely on our willingness to sign the standard, basic agreement.
We have noticed the remarks on the Board of Auditors' Report. It is a fact that the ILO and FAO have not yet signed this standard basic agreement. We were in negotiations with UNDP. To an extent we were waiting for the outcome of the successor arrangement on support cost because it may have some influence but we have communicated to the UNDP in writing our willingness to sign this agreement after the necessary discussion and negotiation. Mr Gómez, the Associated Administrator of the UNDP has conveyed this message to the Second Committee. We are in touch with Mr Evgran who is responsible for that matter in UNDP. I am sure in the end we will have a text and both the ILO - because I think they were in the same position - and the FAO have conveyed their willingness and we are negotiating to reach the final text which will be signed as soon as feasible. I hope this reassures the United States delegation.
Ray ALLEN (United Kingdom) : My delegation has already had the opportunity to comment on these accounts at the Council but I would like to reiterate some of the points that we made there.
We would like to commend the efforts of both the Internal and External Auditors in the preparation of the documents and accounts before us today. Accounting for such a complex set of operations can be a very difficult task.
My delegation is particularly pleased to see the unqualified opinion given by the Auditors on these reports. There are a number of observations and recommendations contained in the reports of the Auditor. We sincerely hope that the Secretariat will take due note and implement them whenever possible. Audited reports are not just a formality. They serve a useful function and can be a very valuable tool for future planning.
We welcome the initiative taken by the Secretariat in following up some of the recommendations of the external consultants relating to management, particularly the disclosure of some of the contingent liabilities relating to personnel, and support the recommendation put forward that these should be included in the financial statements.
We consider that there are a number of other recommendations made by the management consultants which could also be usefully pursued.
I would like to support the suggestion that the presentation and format of financial statements and accounting policies be standardized. I understand this is something currently being considered in New York. This was mentioned by my US colleague yesterday. Following on from this, we would also hope that in future expenditure figures be shown separately from outstanding obligations.
We are pleased to see that the detailed guidelines for equipment formulation are under preparation. On the delivery of equipment, we support the recommendation that there should be closer coordination between FAO and
UNDP representatives.
Regarding evaluation, we remain concerned, as we have already highlighted in Commission II, that there is an uneven distribution of evaluation activities between Trust Fund and other field projects and that feed-back on evaluation results should be more readily made available.
We are also concerned by the statement made in paragraph 110 of C 91/5 relating to the fact that about 86 percent of all evaluation missions in 1988-89 were carried out by non-evaluation service staff. The Organization must ensure that the lessons learned from the evaluations undertaken are not just fed back but that they are the right lessons.
Finally, I would like to support the delegation of the United States regarding the issuance of written statements. We would like to support the adoption of the audited accounts.
EL PRESIDENTE: Muchísimas gracias distinguido delegado del Reino Unido por su importante declaración que será tomada debidamente en cuenta.
Distinguidos delegados, ¿alguna otra delegación desea hacer uso de la palabra? No veo ninguna. La distinguida delegación de Suiza, usted tiene la palabra.
Robert MUEGGLER (Suisse): Permettez-moi de remercier le Commissaire aux comptes et son équipe de l'excellent rapport portant sur la période 1988-89. Ce rapport mériterait dans l'ensemble une appréciation et une discussion approfondie. Personnellement, je consacrerai mes quelques remarques au document C 91/5.
Le rapport du Commissaire aux comptes concernant l'achat du matériel fait état d'un examen approfondi portant sur des questions d'économie, d'efficience et d'efficacité.
Dans ce contexte ma délégation a noté dans le paragraphe 67 de ce rapport que le retard moyen de livraison de matériel de projets par rapport aux dates demandées dépassait neuf mois. Il est évident que cela pose des problèmes au niveau des projets et qu'il est difficile dans ces conditions d'assurer une utilisation efficace des ressources.
Une des raisons principales de ces retards est identifiée par le Commissaire dans le paragraphe 86: nous apprenons là que les projets ont souvent du mal à obtenir le dédouanement de leur matériel par les autorités douanières.
C'est un problème bien connu et très sérieux, non seulement pour les projets de la FAO mais pour le développement en général. Certaines bureaucraties douanières et autres qui ne fonctionnent pas bien sont un véritable obstacle pour le développement, pour l'aide extérieure et pour les investissements étrangers.
Il est important que le système multilatéral aide les pays concernés à trouver des formes de contrôle et de taxation qui ne découragent pas le développement. Ce n'est pas en premier lieu une tâche de la FAO mais il serait peut-être utile que la FAO fasse connaître ces problèmes dans ce
domaine. Voilà un domaine où la coordination est nécessaire dans le système multilatéral.
Un autre point concerne l'examen des opérations d'achat de matériel pour le terrain. Est-ce que la sous-division des achats qui s'occupe d'environ la moitié des achats de terrain procède à une évaluation de l'opportunité de tel ou tel matériel du point de vue des faits récurrents?
D'un côté un peu plus formel, mais à notre avis aussi important, nous suggérons au Commissaire aux comptes de faire ressortir dans ses rapports les points saillants, notamment ses recommandations, par exemple en les encadrant. Par cette présentation le travail des délégués sera facilité, ceci pour la période de rapport tout comme pour le contrôle du suivi qui a été donné aux recommandations du Commissaire aux comptes.
Dans ce contexte, notre délégation propose à la Conférence de prier le Directeur général de faire rapport à la prochaine Conférence sur les progrès réalisés dans l'application des recommandations du Commissaire aux comptes.
En troisième lieu, j'aimerais répéter la suggestion que notre délégation a déjà faite il y a deux ans et qu'elle juge d'un intérêt tout actuel vu l'état financier de l'Organisation et la peine de beaucoup de pays membres de trouver les moyens nécessaires pour cette Organisation: nous proposons que la Conférence demande au Commissaire aux comptes de lui présenter à sa prochaine session une comparaison de l'augmentation des coûts budgétés avec les augmentations réelles des coûts constatés dans les dépenses effectives de la période en question et de faire part de ses suggestions éventuelles.
Nous aimerions également que le Commissaire aux comptes examine comment pourrait être améliorée l'information à l'intention des pays membres sur l'évolution du coût et de l'efficacité dans les différentes activités de la FAO.
Finalement, nous serons prêts à approuver les comptes tels que présentés.
EL PRESIDENTE: Muchas gracias distinguido Representante de Suiza por su declaración, se ha tomado atenta y debida nota por la Secretaria de sus sugerencias que han sido sumamente constructivas.
¿Alguna otra delegación desea hacer uso de la palabra sobre el tema? No veo a ninguno. Distinguidos delegados, hemos escuchado las observaciones que han hecho cada una de las distintas delegaciones que han hecho uso de la palabra. La Secretaria las ha tomado en cuenta y entiendo que existe un consenso en la Sala para aprobar los informes que tenemos ante nuestra vista y resaltar la labor realizada.
Tenemos que tomar en cuenta si debemos aprobar el proyecto de Resolución. Me ha pedido la palabra el distinguido Sr. Mehboob.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): I just would like to make a brief comment on one or two aspects which have been mentioned. One is the uniformity in presentation of financial data and the financial statements. This is a question which is
being discussed in the UN system at present. It is under review by CCAQ, which is the Consultative Committee on Administrative Questions. FAO is participating in these discussions. There is a working party formed to review this whole aspect and FAO will be participating actively in these discussions. We will have to have some other discussions with the External Auditor because it affects his programme, his terms of reference, etcetera.
EL PRESIDENTE: Muchísimas gracias distinguido Dr. Mehboob por su importante aclaración.
Como decía a la Sala hace un momento, y gracias a las explicaciones otorgadas, ustedes saben el Consejo subscribió la opinión del Comité de Finanzas y sus recomendaciones y acordó remitir a la Conferencia la Resolución que ustedes tienen en el documento C 91/LIM/19. De las declaraciones hechas hasta este momento, entiendo hay acuerdo para la adopción de esta Resolución.
Queda adoptada. Muchas gracias distinguidos delegados.
EL PRESIDENTE: Nos corresponde enseguida abordar el tema 30 de nuestro programa. Escala de cuotas para 1992-93, y los documentos C 91/LIM/4; C 91/LIM/4-Corr.1; y C 91/LIM/37.
Sobre el particular desearía solicitar al distinguido Sr. Mehboob, si nos pudiera hacer la introducción respectiva de este tema.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): In accordance with past practice document C 91/LIM/4, containing a resolution concerning the scale of contributions to be adopted for the next biennium, is presented to the Conference in compliance with the recommendations of the Council. The Council noted at its Ninety-ninth Session in June 1991 that in accordance with the decision of the Eighth Session of the Conference in 1955 the FAO scale of contributions for the years 1992-93 have been derived from the United Nations scale of assessments. In this case the one in force for the calendar year 1991 as established by General Assembly Resolution 43/233 of 21 December 1988.
The appendix to the document sets out the proposed FAO scale for 1992-93 which has been modified since the recommendation of the Council to take into account the new members, Estonia, Latvia and Lithuania, admitted at the current session of the Conference.
The revised scale of contributions is provided in document
C 91/LIM/4-Corr.1. The assessment rates for these three Member Nations have been calculated by the UN Statistical Office based on the income data provided by them for the entire statistical period using the same methodology as for other Member Nations. Assessment rates of Member Nations in the UN scale are lower than in the FAO scale since there is a difference
in membership which requires a pro rata increase in the UN assessment rates in order to arrive at an FAO scale of a full 100 percent.
For example, the rates resulting from the recommendation of the United Nations Committee on Contributions of .06 percent for Estonia, .11 percent for Latvia and .13 percent for Lithuania, become .07 percent, .13 percent and .15 percent, respectively, in the FAO scale.
The scale generally represents a decrease in the percentage assessment rates of countries other than the USA, which has a special assessment rate, and the countries with minimum assessments due to the admission of the three new Member Nations together with the inclusion of the former German Democratic Republic which was not a member of FAO in the State of Germany.
My colleagues and I would be pleased to answer any questions which may arise.
EL PRESIDENTE; Muchísimas gracias distinguido Dr. Mehboob por su importante declaración y sus informes a la Comisión, especialmente en lo relativo a la actualización realizada por el ingreso de estos nuevos miembros.
Distinguidos delegados, ofrezco la palabra sobre este tema si alguien desea hacer uso de ella.
La distinguida delegada de Kuwait tiene la palabra.
Ms Fatimah H.J. HAYAT (Kuwait) (Original language Arabic): I have a question. This concerns the accession of new Member Nations to FAO. As a result of their accession there has been a change, an amendment, to certain contributions. Kuwait's contribution has gone down by 0.01 percent. It was 0.35 percent and it is now 0.34 percent. Was this decrease due to the accession of new Member Nations or was it occasioned by new criteria adopted in the UN System by the UN Committee on Contributions.
EL PRESIDENTE: Muchísimas gracias distinguida delegada de Kuwait por su importante declaración. Desearía consultarle al Sr. Mehboob si acaso tiene la bondad de dar respuesta a la inquietud de la distinguida delegada.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): The decrease is as a result of the admission of new Member States.
EL PRESIDENTE: Muchísismas gracias por su explicación, distinguida delegada queda usted satisfecha por la respuesta, me imagino.
El distinguido delegado de Zambia me ha pedido la palabra.
Francis MBEWE (Zambia): My question relates to the absolute figures that are going to arise as a result of this share of contributions. I looked through the documents but I do not seem to see the actual figures that
relate to the contributions for next year. Maybe as we proceed with the Conference - the budget was approved yesterday and these figures may not be out - but having the share of contributions here, I wish to request the Secretariat that in the course of the Conference we should also be provided with the absolute figures, which will be the assessments for at least next year, so that by the time we go back those of us who are supposed to be making budgets for 1991-92 contributions will know what it is that we are to contribute next year.
Frederic A. HEIM (Director, Financial Services Division): You are correct that yesterday the budget level and the appropriation level was established. Today we will be establishing the scale of contributions. Once these two actions are complete, the Secretariat will prepare a booklet that will be distributed to all of the Members, probably early next week, that will combine these two items and show what the actual assessed contributions will be for Member Nations for 1992. That will be distributed to all Members early next week.
EL PRESIDENTE: Muchísimas gracias, señor Director, por su explicación. Distinguido delegado, le satisface la explicación? Muchas gracias. Señores delegados, alguna otra intervención sobre el tema? No veo ninguna.
Tengo la impresión, entonces, que puedo asumir que la Comisión aprueba, con las observaciones hechas con oportunidad por cada una de las intervenciones que hemos escuchado, lo relativo al tema. En consecuencia, debemos decidir, distinguidos delegados, sobre el proyecto de Resolución que figura en el documento C 91/LIM/4, sobre la escala de cuotas, entendido su corrigendum 1.
El Dr. Mehboob me pide la palabra para hacer una aclaración acerca de un error que se ha deslizado.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): It is on document C 91/LIM/4 in the Draft Resolution for the Conference. The last line of the Resolution, which says, "... adopts for use in 1991.w That 1991 should read 1992-93, and not 1991.
EL PRESIDENTE: Entiendo que en el texto francés y español está correcto. Creo que esta corrección es válida exclusivamente para el texto en inglés. Me confirman que es asi.
Señores delegados, en vista de lo dicho anteriormente, presumo la aprobación para este proyecto. Queda aprobado.
EL PRESIDENTE: Nos corresponde enseguida analizar el tema 31 de nuestra agenda: Situación financiera de la Organización; también el tema 31.1: Estado de las Cuotas (C 91/LIM/11; C 91/LIM/32; C 91/LIM/45); asimismo, el punto 31.2 relativo al estudio en profundidad sobre la cuestión de las cuotas pendientes y atrasadas (C 91/LIM/20).
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): Document C 91/LIM/32 has been prepared in order to provide the Conference with an update on the contribution position as of 18 November 1991 and to detail the amounts received since the last session of the Council.
Before proceeding further, I should like to highlight that the financial situation of the Organization has deteriorated. The high amount of arrears - about US$138 million - which are outstanding has made the Organization's financial position precarious. Any late payments and arrears have a negative impact on the programme approved by the Conference, but especially so when arrears and late payments involve the major contributors, two of which, for example, account for about 38 percent of the contributions to the budget. Based on the experience of the last couple of years, there appear to be two courses of action to deal with such a situation. One is to have the Working Capital Fund and the Special Reserve Account at an adequate level to provide a safety net for the Organization. Since you will be dealing with these two accounts under a separate agenda item later on, I will not go into any details on them here.
The second course of action which the Organization has been forced to follow in the current biennium is to go in for borrowing. The Organization was compelled to resort to borrowing during the course of this year and may have to do so again. In fact, when the expected payment from the major contributor is not received in early December, then additional borrowing will become necessary.
Let me now very briefly walk you through this document. Paragraph 3 of the paper shows the amount outstanding at the beginning of the year divided into current assessments and arrears, the amounts received until 18 November 1991, and finally, the amount outstanding at this date together with comparative figures for the year 1990. Paragraph 4 of the paper enables a comparison of the rate of receipt of current contributions on a month-by-month basis during the last five years. Paragraph 5 of the paper gives you an indication of how many Member Nations have paid their current assessments in full, in part, or not at all, and of how many currently have arrears of contributions due to the Organization.
The Appendix shows you in the first column receipts credited in 1991 in respect of current contributions as well as arrears. The second column shows the current assessments outstanding. The third column shows arrears of assessed contributions outstanding. The fourth column shows total of assessed contributions outstanding. The last column shows the total amount outstanding as a percentage of the 1991 assessment.
I turn now to document C 91/LIM/45. Members will have received a corrigendum to this paper, C 91/LIM/45-Corr.1, which provides information on the financial position of the Organization as of 31 October 1991. This document also includes a summary of the cash flow to 31 October 1991 and a
forecast for the months of November and December. Paragraphs 2 to 4 summarize the situation compared to the effective working budget voted in Conference Resolution 10/89 in which it is expected that the full appropriation will be utilized. Paragraphs 5, 6 and 7 summarize the contributions received, outstanding, and in arrears on 31 October 1991. This information has been updated in C 91/LIM/32, to which I have already referred.
The situation regarding the Working Capital Fund is covered in paragraph 8. You will note that the balance of US$18 million had to be advanced to the General Fund in June of this year to finance budgetary expenditures pending receipt of contributions.
Paragraph 9 refers to the Special Reserve Account. The average UN operational rate of exchange for the 22 months to October 1991 of Lit. 1 216 to the US dollar has been consistently below the rate of Lit. 1 335 established for the budget. As a result, additional staff costs amounting to US$17.6 million have been charged to this account. Further net losses on exchange which have amounted to about US$5.3 million have also been transferred to this account. The account is now in deficit. At the end of the biennium, the deficit will be transferred to the General Fund.
Paragraphs 10 through 12 summarize the cash flow situation. This is supported by the graphic presentation and details in Appendixes A and B. You will note that as a result of the late receipt of contributions from major contributors, the Organization was compelled to resort to borrowing, both internally and externally. This reached a peak of US$85 million in October. However, following the receipt of some contributions in October 1991, the Organization was able to repay US$45 million of external borrowing on maturity at the end of October and in early November. The extent of further borrowing required to meet the expenditures to the end of the year will depend on the timing of the receipt of contributions outstanding from the major contributor.
We would be pleased to answer any questions that may arise.
EL PRESIDENTE: Muchisimas gracias Dr. Mehboob por su importante introducción a este tema y por sus explicaciones sumamente esclarecedoras.
Distinguidos delegados, ofrezco la palabra para debatir el tema que estamos tratando.
Ms Teresa D. HOBGOOD (United States of America): As we have stated on numerous occasions, President Bush has committed to restoring financial stability to international organizations, including FAO. As evidence of his strong commitment, the United States paid FAO US$13.7 million toward our arrears in October. We also paid over US$34.9 million of the amount the United States Congress appropriated for our calendar year 1991 assessment to FAO. We will make every effort to pay an additional US$34.9 million, the remaining amount of our calendar year 1991 assessment to FAO, before the end of the year. Let me reiterate what we have stated with respect of our schedule of payment of arrears. For fiscal year 1992, FAO's calendar year 1991, some US$92.7 million was appropriated to international organizations to pay arrears. Of this, US$92.7 million, US$22.6 million was made
available to FAO. However, we can make no firm guarantees at this time that all of these funds - that is, the US$22.6 million - will be provided, since our first priority will be to pay our assessed contributions to international organizations in full. Let me assure you that we will make every effort to provide FAO as close to US$22.6 million as we can by June 1992.
Turning to documents C 91/LIM/32 and C 91/LIM/45, we note that 79.06 percent of current assessments were received as of 18 November. With a payment of US$34.9 million by the United States in December 1991, the percentage of current assessments received will rise to over 91 percent. This is the highest percentage of current assessments received since 1987 and in our view clearly represents a positive development. We also note that as of the end of October 1991, FAO received contributions of over US$510 million from 1 January 1990 to 31 October 1991.
This figure compares favourably with the expenditure figure of 482.9 million dollars in document C 91/LIM/45. Having said that we cannot understand why FAO would need to borrow funds externally next year, and seek the Secretariat's clarification on this point.
As my delegation stated yesterday, we are opposed to external borrowing since it undermines the budgetary discipline we have been seeking throughout the UN system over the past decade. In addition, US Law prohibits us from paying interest costs incurred through external borrowings.
Finally, we are dismayed that C 91/LIM/45-Corr.1 was issued to Member States at the same time this agenda item was discussed. This clearly does not provide my delegation with an opportunity to examine carefully and to raise very important questions with respect to the assumptions upon which information contained in this document is based.
EL PRESIDENTE: Distinguida delegada de los Estados Unidos de América, su declaración ha sido muy importante y ha efectuado algunas preguntas a la Secretaría.
Frederic A. HEIM (Director, Financial Services Division): We certainly can acknowledge and confirm the amounts the delegate from the United States has indicated have been paid to the Organization. These amounts certainly have been paid, and they are duly recorded in the information that has been furnished to you.
The reason that we indicate that additional external borrowing may be required is dependent upon the specific cash requirements at a given time. In his introduction Mr Mehboob indicated that depending upon the timing of the receipt of the money from the United States in December would have an effect on whether we have to borrow again in December.
. As you will see from the cash flow statement before you, our balance of cash at the end of November is expected to be almost nothing. That we will have a payroll about 17 December amounting to US$15 million from the Regular Programme.
If the US payment is not received early in December we will have to borrow in order to meet these payments.
However, when that money is received the loans would be repaid to the extent it is possible to do so. If some of the arrears that the delegate has talked about could be paid in December it would avoid the need for additional external borrowing.
So the very fact that money is received in December, late December, would not necessarily avoid our having to borrow for payments to be made early in December.
As I mentioned, much of this is dependent upon when we need the money to pay ongoing bills. The same thing is true in terms of 1992. The delegate has mentioned that whereas the United States has paid very significant sums in this last year and the total expenditures as well as total income may be about the same, we again foresee problems with having cash shortages at particular times and may very well need to borrow again in order to meet these short-term requirements. The Director-General and the Organization have no desire to borrow. It is only as a last recourse that borrowing is undertaken and that the funds borrowed are intended to be repaid at the earliest opportunity upon receipt of additional funds to do so.
I hope that clarifies the question, Mr Chairman.
Ray ALLEN (United Kingdom) : My delegation fully recognizes the financial difficulties that the Organization has experienced in recent years. We recognize too the often painful decisions that have had to be made. Recognizing the fact, or sympathizing with the predicament does not, however, make the problem go away.
It is the view of my delegation, Mr Chairman, that recourse to external borrowing simply compounds the problem. Problems of borrowing are well known. We have long advocated the prioritization in cutting out of programmes, and projects of less priority could ease some of the burden. But, Mr Chairman, given the magnitude of the problem this alone may not be the complete answer. We note from document C 91/LIM/32 that as at 18 November of this year only 66 Member States have paid their assessed contributions in full, 26 have made only part payment and 65, I repeat 65, have made no payment at all.
Coupled with this, 66 countries are in arrears. C 91/LIM/11 shows 23 countries owe arrears in such an amount that they were, if the rules were strictly applied, in danger of losing their right to vote.
Paragraph 9 of C 91/LIM/11 states that it would be unfair to penalize those countries unable to pay for reasons beyond their control.
Mr Chairman, this Organization works on the UN scale of assessments which is designed to put an equal burden on all nations. We have just adopted that scale. I would therefore urge that all Member States make their best endeavours to pay their assessed contributions. Those members who do meet their assessed contributions should not be made to carry the whole burden. We should not have to rely on only 66 members to meet their obligations, and I repeat that the burden on most of these members is as great as that
on the others, to shoulder the weight and see an agreed Programme of Work that they have paid for in full cut back because of lack of funds.
This, Mr Chairman, does not in any way relieve the Secretariat of its responsibilities to ensure that the money it does receive is spent on areas that the membership have identified as a priority.
Finally, Mr Chairman, and with all due respect, as mentioned by the United States delegation the provision of the updated cash flow provided in C 91/LIM/45-Corr.1 at this very late stage gives us no time to fully analyze the figures for this debate.
Ms Fatimah H.J. HAYAT (Kuwait) (Original language Arabic): I see that today it is proper to declare the situation of my country vis-à-vis its due contributions because I have learned through a cable three days ago that Kuwait has paid all its assessed contributions and all arrears since 1990 and even before, an amount of one million seven hundred thousand US dollars.
There remains the amounts outstanding for 1991. Kuwait was not in arrears for logical reasons, I might say, but for the harsh conditions we go through now because officials are busy with priorities and we have been promised that before the end of this year Kuwait will pay all outstanding amounts regarding the contributions of 1991.
I regret that this document was issued on 18 November, the date of my receipt of the cable from Kuwait, therefore Kuwait was not put in its proper place. Therefore I do expect, Mr Chairman, that an updated document will be issued following this one which will clarify the situation of Kuwait and we can use this as a reference to convince my authorities to pay the amounts due.
Gerhard LIEBER (Germany) (Original language German): Having heard the various statements, particularly the statement by the United States delegation, we too now are very glad to welcome a structural improvement in the financial situation of the Organization, an Organization which was financially sick for so long. We hope that soon also the cash flow situation will be normalized in such a way that external borrowing can be precluded.
Now, Mr Chairman, when I spoke to Agenda Item 16 on the Programme of Work and Budget for 1992-93 I pointed out that whatever budget one discussed and agreed with the appropriations contained in it, it would only be meaningful if the receipts needed for its financing are actually received. In the past, alas, we have seen, and we hope that this is over and done with, that this was not always the case with FAO, and that this situation unfortunately still prevails.
The financial problems occasioned thereby for the Organization, and this is also something which we have seen in the past, these problems at the end of the day become a burden on those Member Nations who pay their assessments to the Organization in time. Internal and external borrowing forms an extra burden then on those nations. This is something we have a particular problem with. This is particularly true for the intended increase of the
Working Capital Fund, and the replenishment of the Special Reserve Account. I will be addressing our concerns with these matters when we come to Agenda Item 32.3. Thank you Mr Chairman.
Eivind HOMME (Norway) : My delegation would like to take the floor to support what has just been said by the delegate of the United Kingdom about external borrowing and the status of contributions. Norway has, together with other Nordic countries, repeatedly urged all Member States to fulfil their legal obligations to pay in full and on time. We truly hope that after the consensus budget that was adopted yesterday, and the positive information provided by the delegate of the United States of America today, that this situation will be considerably improved for the next biennium.
Norway appreciates the efforts of the Finance Committee and the Secretariat to seek for ways and means to encourage prompt payment of contributions. We are not sure, however, if the suggested discount scheme, which will provide a credit to Member Nations for early payment, is the right way to go. I say so, although my country is among those Member Nations which clearly would benefit from such a scheme.
My delegation will not fail to mention that a number of developing countries, despite serious financial problems at home, have paid their contributions in full. We would like to express our appreciation for their efforts to do so.
In concluding, I would appeal to all Member Nations in arrears to do their utmost to settle these during the next biennium.
EL PRESIDENTE: Muchisimas gracias al distinguido delegado de Noruega por su declaración, gracias por su constructivo llamamiento y sus observaciones.
Ernst ZIMMERL (Austria) (Originai language German) : I am obliged to the Secretariat for their overview of outstanding obligations of Member Nations to the Organization, and also the Organization's obligations in terms of debts. I would like to know what the level of FAO's internal debts are and the level of the debts to banks. I would like to know what the level of FAO's obligations towards suppliers of goods and services at a given day were, say 31 October. What was the level of the unpaid bills? In that connection, what were the repercussions on prices charged by suppliers if the FAO had to lengthen its period of payment.
Jovan TEGOVSKI (Yugoslavia) : I would like to note that Yugoslavia fully
recognizes the deteriorating financial situation of the Organization, and
to express our readiness to engage ourselves in constructive cooperation
concerning the FAO's financial position.
As you are aware, Yugoslavia has always been among those countries which, although with a certain delay, regularly paid their contributions. Unfortunately political and economic changes in the country have caused a significant delay with respect to Yugoslavia's payments of its contributions to the FAO budget. For quite some time now the Federal budget has had no revenues since no payments were received from the Republic and
Provinces. That is the main reason why Yugoslavia has paid only a small portion of its contribution in the course of last year, and why this year no payment has been made whatsoever.
Bearing in mind the situation, we are unable to specify when the payment will be effected, but we would like to assure you that a number of measures have been taken so as to meet at least last year's obligation. Thank you Mr Chairman.
EL PRESIDENTE: Muchísimas gracias distinguido delegado de Yugoslavia por su importante declaración, y hacemos voto porque la solución sea la mejor para el distinguido pueblo de Yugoslavia.
Maria De Lourdes DUARTE (Cap-Vert): A l'instar des déclarations précédentes ma délégation aimerait vous faire savoir que le Cap-Vert a pu s'acquitter du montant de sa contribution pour 1991. En effet, hier la FAO a reçu le montant dû dont le transfert a été fait au début du mois de novembre.
Jean-Pierre POLY (France): En fait ma délégation a déjà fait savoir, lors de la dernière session du Conseil, ses vives préoccupations sur la situation financière précaire de notre Organisation qui, nous le savons tous, a dû recourir aux emprunts pour éviter de trop sévères coupures, parfois non sans arbitraire, dans nos programmes.
Nous voulons voir toutefois dans les signes enregistrés ces dernières semaines et dont vient de faire état le Secrétariat quelques raisons d'espérer puisque nous avons constaté le versement de certaines contributions et arriérés de contributions. Peur-être faut-il voir là les prémisses d'une discipline budgétaire restaurée.
Nous voulons croire également que le programme et budget adopté hier par notre Conférence, par consensus, bénéficiera enfin, conformément aux déclarations enregistrées, des moyens nécessaires à son exécution.
Bjòrn WULF (Sweden): The availability of relevant resources is one prerequisite for a sound financial management of FAO in carrying out the responsibilities entrusted to it. We cannot allow the Organization to constantly operate under financial uncertainties and, at the same time, expect that all activities are carried out to complete satisfaction.
The programme planning and other activities must trust that means are available for the authorized expenditures. My delegation notes once again with regret that this has not been the case. The magnitude of arrears and delays in payment of the current assessments continues to be a reality.
We therefore urge all Member States that have not yet done so to fulfil their legal duty to pay their contributions on time and in full, so that FAO can retain the capability to respond to the tasks required of it.
Mr Chairman, it is deplorable to see from document C 91/LIM/32 that the figure of payment in full and the figure of no payment are almost equal.
Christian BONAPARTE (Haiti): Je souhaitais apporter deux points à ce débat: tout d'abord, le Gouvernement que je représente, Haïti, fait partie des PMA, parmi le groupe des pays moins avancés le seul, comme je l'ai déjà souligné, de l'hémisphère nord. Cependant nous essayons malgré nos difficultés, de nous acquitter de nos contributions et les états financiers montrent que, comparativement à d'autres pays qui ont des moyens beaucoup plus larges que les nôtres, nous ne sommes pas aussi en retard, nous faisons des versements tant bien que mal.
Ceci me permet de m'étonner, à la lecture du rapport C 91/LIM/11, notamment aux paragraphes 6, 7 et 8, du nombre très important de membres, qui ne font pas partie des PMA ou des pays qui n'ont pas vraiment de ressources comme nous, qui n'ont rien versé. Soixante-quatorze Etats Membres n'ont rien versé en 1991.
Deuxième point: nous remarquons aussi que seulement sept Etats Membres représentent une contribution à verser de 130 millions de dollars, ce qui est énorme.
C'est ainsi que je me demande dans quelle mesure nous pourrions voir le Secrétariat ou l'Organisation établir ou demander certains types de garanties pour pouvoir obtenir le versement des arriérés à l'Organisation, tel qu'il se doit.
Les paroles et les promesses ne sont pas mises en doute, mais pour assurer la fiabilité de l'Organisation et pour arriver à finaliser le Programme tel qu'il a été proposé il nous faut des garanties.
J'aurais souhaité avoir des réponses sur ces questions.
EL PRESIDENTE: Muchísimas gracias distinguido Embajador de Haiti por su declaración, se ha tomado nota de ella.
No veo otras delegaciones que deseen hacer uso de la palabra.
Le rogaria al distinguido Dr. Mehboob si tuviera a bien responder a algunas inquietudes que han sido planteadas durante el análisis del tema.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department) : One of the concerns was from the distinguished representative of Kuwait about the payment from her country. We have received today a payment which is about 1.7 million dollars but it does not say who it is from, and we are trying to identify the country from which it is coming because other countries have about the same payments. We will obviously issue an update as soon as the bank gets back to us as to who is the sender of this money. Mr Chairman, it was an unidentified payment.
There was another question from the distinguished representative of Austria about the FAO's indebtedness to external banks and internal funds. We owe at the moment U$S10 million to an external bank. As I pointed out in the paper, at one point we had substantially more external borrowings which we paid back in October; US$10 million is outstanding of the external borrowing, and US$30 million from internal borrowing.
Those are the only borrowing figures outstanding.
As for the question about the unpaid bills, this is not an easy figure to produce since all our procurement cuts across the various programmes, Regular Programmes, Trust Funds and UNDP. It would not be possible to produce a figure without going into considerable research but if the distinguished representative of Austria wishes some detail on this aspect we would be happy to meet with him and see if we can satisfy his desire for this information.
I do not think there were any other questions. May I make a brief comment on borrowing?
The Organization, as I pointed out in my introduction, was compelled to borrow because of the extremely high figure of arrears - in fact, the highest the Organization has ever had - as well as late payments regarding the current assessments.
The borrowing was done in accordance with the authority given by the Conference to the Director-General. It was done to implement a Programme of Work and Budget which has been approved by the Conference. For the Organization that is the mandate given by Conference to implement the Programme. That is what the Organization has attempted to do.
Ernst ZIMMERL (Austria) (Original language German) : From what has been said by the Secretariat concerning unpaid bills, I can well imagine that it is very difficult to list these but could this perhaps be provided in the future? Before Conference you produced a conspectus of unpaid bills as of 31 October.
Also, you did not field the point about the periods for payment. Did we, as a result of the financial crisis, have to extend periods for payment?
Khalid MEHBOOB (Assistant Director-General, a.i., Administration and Finance Department): If I have understood the question correctly, it is referring to the borrowing which we have of US$30 million internal borrowing and US$10 million external borrowing. Yes, the US$30 million was borrowed in June and we have not been able to pay it back. So that is the internal funds. The US$10 million external we have been expecting from month to month and recently from week to week because the contributions have not come in. We have been extending these borrowings pending receipt of funds.
Ray ALLEN (United Kingdom) : I would like to support what has been said by the delegation of Austria. I think the whole Conference would be interested in having the detail of the figures for unpaid bills. My delegation certainly would be interested. If the information could be provided to the Conference I would be grateful.
Frederic A. HEIM (Director, Financial Services Division): With advance knowledge that the information is desired, it most certainly can be prepared as to the amount of outstanding bills that do exist.
You will understand, I am sure, that will be prepared on the various funds we have, the Regular Programme which we are talking about here today, but it also impacts upon the United Nations Development Programme as well as the Trust Fund Programmes. Those figures are significant in themselves for their individual programmes.
EL PRESIDENTE: Muchas gracias distinguido Director por su respuesta.
Señores delegados, no hay más delegaciones que deseen hacer uso de la palabra. En vista de ello, entiendo que la Comisión desearía dar por aprobado y superado este ítem de nuestra agenda para, con las observaciones y declaraciones que se han formulado y de lo cual la Secretaría ha tomado atenta y debida nota, pasar a la consideración de nuestro siguiente punto del orden del día. Señores delegados, es el tema 31.2.
Dr. Mehboob, por favor, para la introducción de este tema tiene la palabra.
Khalid MEHBOOB (Assistant Director-General, a.i., Administration and Finance Department): Document 91/LIM/20 addresses the measures proposed to encourage Member Nations to make prompt payment of their contributions. In this paper the Director-General proposes a discount scheme which would provide a credit to the Member Nations for early payment of their assessed contributions.
The subject was discussed at the Hundredth Session of the Council, following the recommendations of the Seventy-second Session of the Finance Committee in September this year. Paragraph 3.76 (a) (b) (c) and (d) of Appendix A, which is an extract from the report of the Finance Committee, explains the proposed rules to be applied in operating the scheme.
As stated in (a), a Member Nation could earn a discount if the full amount of its assessments were paid prior to 31 March of the year of assessment. Paragraph (b) provides that the discount earned would be credited to the Member Nation in the year after payment and would be used to reduce the payment required for that year. Paragraph (c) provides that the discount credited to Member Nations would not exceed the interest earned on Regular Programme funds during that year. Because of this provision, the scheme would not create a deficit in earnings from investments.
As pointed out in paragraph (d), Member Nations who have arrears outstanding would not qualify for the discount treatment on their remittance until the arrears were settled in full.
We would be pleased to supply any details on the Scheme should the Members so desire.
EL PRESIDENTE: Gracias Sr. Mehboob por su intervención. En realidad, ha estado relacionada con el tema 31.2: Estudio en profundidad sobre la cuestión de las cuotas pendientes y atrasadas, documento C 91/LIM/20.
Es éste el punto en realidad que estamos en discusión, y la introducción del Dr. Mehboob ha sido para este punto en especifico antes de pasar al que habla mencionado hace unos momentos.
Sobre este punto 31.2 de nuestra Agenda me ha pedido la palabra la delegación de Australia.
John Bruce SHARPE (Australia): My delegation considers that all - and I repeat "all" - Members should endeavour to meet their financial obligation to the Organization. Without a cash flow, many of the positive developments of FAO's programme of work cannot be achieved. An alternative is to borrow, something Australia strongly opposes. With borrowing there is a cost involved in the form of interest which reduces the funds available to the programme of work. There is also the principle involved that, while the problem has its origins in non-payment of contributions and arrears by some countries, the cost of borrowing is met by those funds provided by countries such as Australia who have regularly met their contribution obligations.
As a member of the Finance Committee, Australia has been a party to the careful consideration which has been given by that Committee to means for encouraging Members to pay their contributions. That Committee looked at a number of alternatives. Those that involve penalty elements were rejected because they were inequitable. Firstly, they disadvantaged those developing countries who, because of economic circumstances, were having difficulty in meeting their payments. Secondly, it disadvantaged those countries who, because of their domestic budgetary arrangements and timing, were required to make their payments later or in the second half of the year.
Australia, who always makes its annual contribution and who is never in arrears, falls within that category.
The Finance Committee is putting forward its proposals based on incentives. In doing so, it complies with Council's directives that penalty schemes not be included in measures proposed.
Australia is the country mentioned in the Council report in C 91/LIM/20 as recommending that, in determining the application of the rate of discount, the Director-General should consult with the Finance Committee. Unfortunately, we have some reservations about whether the proposed discount scheme will accomplish the desired objective of encouraging Members to pay their assessed contributions promptly. There are too many other factors involved. We hope that it will. As a country which wishes to see Members fully meet their financial obligations, we support FAO in trying the discount scheme proposed.
XU NAN-SHAN (China) (Original language Chinese): First of all, I would like to express my appreciation of the Secretariat for the document it has prepared on the financial position of this Organization. I also thank you for your introduction.
We all know that the successful implementation of FAO's programme of work is entirely dependent upon the timely payment from its Member States. Now, due to arrears arising from the late payment of some country assessments, this Organization has encountered serious problems in programme implementation. As a result, the Director-General has to resort to borrowing in order to keep the Organization running. Therefore, we would like to make an appeal to all Member States to honour their financial obligations towards FAO and pay their contributions on time, so that FAO can function properly.
We have also taken note of the measures put forward by the Director-General to encourage timely payment of contributions. These measures may not solve all the problems but we believe they will facilitate the payment of contributions. Therefore, before more effective measures are found, we would like to give our support to the measures already proposed.
Nedilson Ricardo JORGE (Brazil): I would just like to know what item are we discussing? I had the impression we had moved to Item 32, but listening to the interventions I would like to clarify if we are still discussing Item 31, 31.2 or 32?
EL PRESIDENTE: Lo aclaré hace unos instantes atrás. El Dr. Mehboob hizo la presentación del tema 31.2: Estudio en profundidad sobre la cuestión de las cuotas pendientes y atrasadas, C 91/LIM/20, que es al que nos estamos refiriendo. Luego pasaremos al otro tema que habíamos mencionado. Faltaba esa introducción y los señores delegados han intervenido sobre este punto en particular. ¿Le queda perfectamente claro? Muchas gracias.
Vanrob ISARANKURA (Thailand): On this sub-item 31.2, my delegation would like to offer two comments as follows: First, we agree with the majority of the Finance Committee views as mentioned in paragraph 3.73 of Appendix A of document C 91/LIM/20. In order to prevent the difficult cash flow situation for our Organization, the Director-General had to exercise his authority to borrow given by the Council and the Conference and to make a provision for this situation through inspection and the Working Capital Fund.
Secondly, we fully support the scheme to provide a credit to the Member Nations for early payment of their assessment as contained in paragraph 3.76 of the same Appendix of the document.
We strongly believe that this scheme would accomplish the desired objective of encouraging at least some Member Nations to pay their assessment promptly. Therefore, we would like to suggest that we should launch this scheme as soon as possible.
Takayoshi ISHIDERA (Japan): On behalf of my delegation, I would like to explain our point on the contribution for this year. Japan has never been in arrears with its contribution as the second largest contributor to FAO. We paid our contribution for this year on 29 October in order to relieve the financial difficulty of the Organization, while the exchange rate at the time was higher than that set in the budget and the deficit caused by
the difference of exchange rate must be offset by other items in the budget.
In this way, Japan has made every effort to pay the contribution as early as possible. As we are fully aware that each country has respective budgetary systems. Japan has its own fiscal year which is from April to March. Before this period we cannot carry out any disbursement of the contribution to the major international organizations until the budget is approved by the National Diet and the exchange rate meets one which is set by the authorities when the budget was drawn up. Therefore, we sincerely and wholeheartedly request FAO to draw up adequate cash flow plans which will meet the time when the contribution of the member countries will be assumed to be paid so as to respond to the cash imbalance caused by the different budgetary systems of each member country. We believe that the adequate cash flow is essential before we consider the encouraged prompt payment of contributions and the introduction of any incentive system is not a realistic way, without taking into account the budgetary systems and financial difficulties of member countries.
In case penalty schemes to the delay are considered, Japan would like to stress that the measures should be stipulated in the Constitution.
In any case, we believe that it will be unfair and an unjustified action to apply the measures to the delay which will be caused by the domestic system in each member country.
Christian BONAPARTE (Haiti): J'ai écouté les délégations qui se sont exprimées ici et qui ont donné des avis différents quant aux mesures à adopter. J'appuie la proposition du Directeur général qui nous est faite car je pense que l'Organisation ne dispose pas d'autres moyens pour pouvoir parer à cette situation. Je crois que les recommandations du Comité financier sont valables et font avancer un peu les choses. Toutefois, certaines délégations ont mis en doute la capacité de ce système à accorder des crédits. Je pense que cela pourrait être opérant car nous n'avons pas encore les garanties que notre délégation souhaiterait avoir, à propos des pays membres les plus récalcitrants en matière de montants ou d'arriérés. Je pense cependant que ce système, basé sur la différence entre les intérêts perçus et sur laquelle une remise pourrait être envisagée, comporte une faiblesse qui est la suivante. Les taux d'intérêts sont différents dans chacun des pays membres et je pense que pour certains, il n'est probablement pas intéressant de payer plus tôt même s'il y a une remise, compte tenu de la différence entre les taux d'intérêts. Je crois que c'est une proposition qui pourrait être retenue par le Secrétariat. L'Organisation pourrait établir un relevé des taux d'intérêt pratiqués dans la plupart des pays des Etats Membres et les comparer avec les arriérés. Cela pourrait nous fournir des indications positives. Il s'agirait peut-être simplement d'un document d'information mais qui pourrait donner des éléments très pragmatiques sur la capacité de ce système et sur la bonne volonté de certains pays membres nonobstant les indications qui nous sont fournies au paragraphe 3.79 du document C 91/LIM/20. Les problèmes relatifs à l'approbation du budget sont fréquents et les considérations d'ordre politique interviennent toujours.
Patrick Mutava NZUE (Kenya): We have looked at document C 91/LIM/20 and we have taken into account the recommendations of the Finance Committee. I have one question to ask the FAO Secretariat. This has been a rather longstanding problem where the Organization has been facing this problem because we know some countries have been going through a dire economic situation causing many aspects.
The eighties have been described as a lost decade particularly in the African context. Could there be a clarification on the real problems because I am sure the Secretariat has been in communication with these countries that have high outstanding arrears? We have no problem in using the proposed incentives but we need to take into account the financial problems being faced by some of these poorer member countries that may not be able to pay even with incentives.
Peter Rieuwer JANUS (Netherlands): Mr Chairman, although my delegation has in principle no difficulty with the proposal submitted by the Director-General and the comments of the Finance Committee concerning the discount scheme, as with some other delegations, we are not entirely convinced that this method will be sufficient. We would therefore like to encourage the Director-General as well as the Finance Committee to continue its search for effective methods to encourage prompt payment of contributions.
Mrs Birgitta STENIUS-MLADENOV (Finland): My delegation, referring also to what was said by my Norwegian colleague on the previous agenda item, do not find the idea of giving a discount to those who pay on time as a professionally very stable ground to build an economy upon. Even if we were to be the ones to benefit from this system, we do have some reservations, but as so many delegations have expressed their views that it might encourage early payment, we think we could go on and give it a try on a sort of provisional basis.
Francis MBEWE (Zambia): My delegation has examined the document C 91/LIM/20. There are several questions really. The proposal assumes that people do not pay because they deliberately do not want to pay and, therefore, creating an incentive to pay may entice them to pay. I think maybe that analysis is correct for those that are able to pay and are agreeable to arm twisting by the Organization to advance their cause, but there are countries that just do not have the foreign exchange. Even if you apply the incentive, they may have the local currency in their budget, but to get it through the central banking system and get it over to FAO takes months. So, as other colleagues have said, we really do not know if the incentive that is being put before us will encourage payment. Maybe those that have the means to pay but deliberately do not want to pay may therefore take advantage of that incentive.
They have the local currency in the budget, and they are willing to release it to the central bank. At that point, it is beyond their control. As much as you would wish to have the money sent to Rome in time, it just does not get sent. It is in the queue. You put your money in in January, it is in the queue, and it gets released in May. It just did not get sent. So I think we need to look' at this problem in that context. Are people not paying because they just do not want to pay and twist the arm of FAO, or
are they not paying because they just do not have the currency that is required by FAO? I think those are the questions that need to be answered by this body. I think before we agree, we must understand the things that have caused people not to pay.
Ray ALLEN (United Kingdom) : The Secretariat will be well aware of the United Kingdom policy. We have always and will always comply in full with our obligation toward the Organization and will not fall into arrears in our assessed contributions to the budget. We are fully aware of the difficulties that arrears of assessment create for the financial management of the FAO. The United Kingdom assessed contribution for the current year has been paid in full. We have repeatedly expressed our opposition to external borrowing by the Organization. We believe that notwithstanding the difficulties created by late payments and arrears, borrowing undermines the financial discipline which has governed the affairs of the Organization. Resolution 18/87 embodies the principle that good payers should have priority in benefiting from the interest income element of any cash surplus. By the same logic, bad payers should shoulder the burden of interest payments due on loans contracted by the Organization. We would prefer to see a system adopted whereby the cost of borrowing - if that is finally embarked on - and I repeat, this is not favoured by my delegation -that the cost is borne by Member States in direct proportion to their outstanding contributions owing to FAO at the time any external loan was drawn. Thus, those Members up-to-date in their payments when a loan was drawn would make no contribution to the interest payment. This would be divided among those Members with assessments outstanding at the time of any external loan and calculated on a daily basis according to the timing of their payment.
We consider that the discount proposals could well lead to a level of assessments higher than is actually required. We would expect the Secretariat to provide an accurate assessment and not an overly inflated one. For this reason, we do not favour a discount scheme.
I would like to stress that we are in no way condoning external borrowing. This has been the course of action that the Secretariat has chosen in the past, despite our opposition. If those Member States who have precipitated the problem have to pay for the consequences, this may prove an incentive in itself.
BjÖrn WULF (Sweden): Let me just make a short general comment on the notion of considering a discount scheme. My delegation is not at all convinced that this is an efficient way to encourage prompt payment. Maybe other ways should be looked into. I have no special proposal at this stage, but I think that we know that other organizations have this kind of incentive scheme, so maybe it could be worthwhile that the Secretariat look at how that scheme functions in other organizations and report to us later so that we can see if it is a good or a bad idea, as we have no experience ourselves in this Organization. Perhaps after that, we could take a more firm position on this in either direction.
As a final remark, let me just mention that, at least in my country, you do not get any discount if you pay what you are supposed to pay on time.
Ms Teresa D. HOBGOOD (United States of America): As a member of the Finance Committee, my delegation participated in the discussions on the discount scheme and did not oppose it for two reasons. First, the scheme would serve as an incentive scheme rather than a disincentive scheme. Second, it would be limited to interest earned on contributions received toward the Regular Programme. We agree with Australia that the Finance Committee should have an opportunity to engage in consultations with the Director-General on the amount of any discount to be offered to the eligible Member nations. In our view, this step is clearly consistent with the important mandate that the Finance Committee has been charged to be carried out.
Ernest ZIMMERL (Austria) (Original language German) : I can approach this proposal from a commercial angle as well, working out how much interest you would get by paying on time, say on 31 March, and working out how much interest I would save by paying at the end of the year. I could always say that I will always earn more if I keep my money and fork it out at the end of the year.
Nedilson Ricardo JORGE (Brazil): The Brazilian delegation thinks that the reasons for late payment are mostly because of financial and economic difficulties or, as some delegates have mentioned, administrative internal procedures. While bearing in mind these reasons, my delegation has doubts whether the incentives scheme is appropriate.
I would also like to repeat the views of my delegation on the question of external borrowing and the payment of interest, as some delegates have mentioned. The Brazilian delegation accepts external borrowing as a last resort and a temporary solution to the serious financial situation faced because we acknowledge the need of the Secretariat to manage the affairs of the Organization and to pay bills. We are confident that the Director-General will use this authority to borrow only in case of real need, to the extent necessary, and keeping interest costs to a minimum.
My Government is also confident that Member countries will not be required to make additional payments to cover the costs of these borrowings and their interest charges. We think that borrowing should have no future impact on the contributions of any Member country, particularly developing countries, bearing in mind the economic and financial difficulties these countries face, which are mostly due to the burden of their external debt. The Brazilian delegation, therefore, favours a reallocation of resources in order to repay loans as well as interest charges deriving from them and opposes raising the contributions of Member Nations. The payment of loans and interest rates should come from the total amount of received contributions without distinction. Indeed, we think they should come from the General Fund, as any interest payable on loans should be charged to miscellaneous income. The Brazilian delegation firmly opposes the idea that some Member countries could dissociate themselves from the payment of loans and interest charges, refusing to pay these costs. This cannot be accepted, not only because the authority of the Director-General to borrow has come from a Council Resolution endorsed by a Conference Resolution, but also because this would be unfair since it would then overburden specific countries. Such a situation would be particularly detrimental to developing countries with contributions in arrears due to economic and financial reasons, and not to political reasons or any lack of support for FAO. The
penalties for being in arrears have already been established, and they were accepted by every country. They cannot be altered now after the consequently authorized borrowings were made. Transferring the burden of these payments to specific countries constitutes, in practical terms, an additional penalty to countries with contributions in arrears. We also think that at this stage all Member countries must be in solidarity in this critical financial situation. My delegation deems it impossible to accept the introduction of the practice of formulating restrictions on the use of contributions, such as the payment of interest, for this practice could lead to serious distortions in the near future. It is also clear to us that there is no provision that allows countries to dissociate their contributions from the payment of interest charges. Anyway, any change in financial rules cannot be retroactive, and if proposed, we will be opposed to any changes in this sense because it would perpetuate what is going to be an unequal and unfair situation.
Thomas YANGA (Cameroun): Mon pays étant membre du Conseil financier a déjà eu à se prononcer sur les propositions qui nous sont faites par le Secrétariat concernant les mesures qui visent à accorder un crédit aux pays qui paieraient leur contribution courante dans un certain délai. Ma délégation reconnaît l'importance que revêtent les détails de paiement des contributions dans une situation financière difficile telle que celle que traverse la FAO depuis un certain temps. Le Comité financier avait, lors de sa Session de mai rejeté presque à l'unanimité des propositions du Secrétariat qui visaient à pénaliser les pays qui paieraient leur contribution en retard. Les nouvelles propositions faites par le Secrétariat l'ont été à la suite du rejet de celles qui visaient à pénaliser les pays qui paieraient en retard.
Ma délégation n'éprouve pas de difficultés à appuyer ces propositions. Toutefois nous tenons à faire remarquer que des pays comme le nôtre, ont un exercice budgétaire qui ne correspond pas à l'année calendaire. En effet, au Cameroun l'année calendaire va du mois de juillet à juin. Ces pays ne pourront pas profiter de ces mesures qui nous sont proposées parce que les dispositions réglementaires et parlementaires ne permettront pas de payer dans les délais prescrits par ces mesures.
Toutefois, reconnaissant l'importance, comme je l'ai dit au départ, du paiement rapide des contributions pour l'Organisation, nous n'avons aucune difficulté à appuyer ces mesures mais nous tenons à faire remarquer que certains pays ne pourront pas en bénéficier, non pas par manque de bonne volonté mais en raison des contraintes réglementaires intérieures.
Vanrob ISARANKURA (Thailand): I am sorry I have to take the floor again, since I think I am the first delegate to support this, that is to say that we support this scheme, but after some delegations spoke, I think I have to say something at least, when I heard the delegate from Brazil. He said that every country has some problem in paying the contribution, he mentioned about administrative procedure problems. That is why I think if we have this scheme we can solve this problem. I will tell you what happened in our case. In Thailand, the Ministry of Agriculture and Cooperatives take the responsibility to submit the Budget Bureau. Our budget year starts in October and ends at September of the following year. What happens when after we know how much this year we have to pay a contribution to the FAO
we have to ask the Budget Bureau to get the money to make the contribution to FAO. In practice, we cannot draw the money in October because we have to wait for the verbal note from this Organization to inform us how much is our contribution, usually we receive that note in January every year.
Therefore, in January, we can contact the Budget Bureau to draw the money to make a contribution to the FAO. But based on our administrative procedure it takes a lot of time to draw the money from the Budget Bureau. We could pay our contribution in April although we want to pay earlier than this. I would like to inform you that the discount benefit means nothing for us, but it should be considered that this scheme may urge the member countries to try to solve the administrative procedure problem in their country in order to help them to pay the Organization as quickly as possible.
Therefore I think this scheme should start as soon as possible since some country will have this kind of problem and it may not be good for all countries but it should be good at least for some countries and it can help the Organization.
EL PRESIDENTE: Muchas gracias distinguido delegado de Thailandia por su importante declaración. No tengo más oradores en mi lista en este momento, por lo tanto rogaría al distinguido Dr. Mehboob, si tuviera la amabilidad de esclarecernos algunos puntos que algunas delegaciones han presentado.
Khalid MEHBOOB (Assistant Director-General a.i., Administration and Finance Department): Just a few points of clarification. There were no particular questions.
The distinguished delegate from Japan talked about the importance of cash flow statements. We agree with the importance of cash flow statements and their usefulness. Our problem, Mr Chairman, is that since we don't have reliable information from Member Nations as to the timing of their payments, it is extremely difficult to prepare cash flow statements which would have reliable figures. So that is the main problem with our cash flow statement, that most of the Member Nations who are in arrears cannot for various reasons, administrative, or otherwise, give FAO the approximate timing of their payments. And FAO has followed up on many occasions with all the Member Nations in writing, verbally, in writing. But the information on the timing is never forthcoming, because countries find it difficult to give us this information.
Mr Chairman, the distinguished representative from Kenya referred to the various reasons which can contribute to a Member Nation being in arrears or late in its payment. These reasons were discussed at the Finance Committee. The Finance Committee agreed to endorse this request because it was on a trial basis. It is to give it a try, it is to see whether this system would work. The Organization did some time back put forward, as the distinguished delegate from Cameroon pointed out, a scheme whereby there would be penalties for those countries who pay their contributions late, but that scheme was rejected by the Finance Committee and I believe by the Council as well.
That left us with trying out a discount scheme. So it is a scheme which is being tried out and it is hoped it will work.
The distinguished delegate from Sweden referred to other organizations having some incentive schemes or other schemes which may be helping them in collecting their contributions on time, and wondered whether FAO could follow suit.
Our information is that there is no incentive scheme in other organizations. Two organizations have a penalty scheme, but since our Finance Committee and the Council have rejected the penalty schemes we did not put them forward again. Mr Chairman, I would just like to clarify the Organization's position again. I have commented on it just a while ago on borrowing. The Director-General does not like borrowing. He has made that clear on several occasions when addressing the meetings of our governing bodies. But when arrears and late payments reach a magnitude of the ones they have during the course of this biennium and the Director-General is compelled to borrow, if he has to deliver a Programme of Work and Budget approved by the Conference in exercising his authority to borrow he obviously complies with the resolution of the Conference. When it comes to the payment of interest, both these aspects are clearly spelled out in the resolutions approved by the Council and the Conference.
EL PRESIDENTE: Muchísimas gracias Dr. Mehboob por su importante aclaración.
Distinguidos delegados, hemos tenido un análisis profundizado del tema, effectivamente, tal como su título lo señala se ha estudiado en profundidad esta cuestión. Hemos escuchado 16 oradores al respecto, se han formulado importantísimas observaciones, sugerencias y posiciones aun sobre las cuales hay puntos de mayor o menor coincidencia, sin embargo, creo que ha sido un debate extremadamente útil, no obstante, las dificultades que todos conocemos respecto de este punto y del plan en particular.
Respecto a este punto, con las observaciones que cada delegación ha expresado, con las aclaraciones que la Secretaría ha formulado, sugiero a la Comisión para continuar, este estudio profundizado, que tomemos nota atentamente de todo lo que aquí se ha expresado y podamos, en consecuencia, dar por terminado el análisis de este tema y pasar al último tema que tenemos asignado para esta mañana.
Won Hua PARK (Korea, Republic of): Thank you, Mr Chairman. Simply I would like to ask clarification on the statement made by Mr Mehboob. Did I understand right, correctly, that he said there is no international organization that introduced an incentive scheme?
Khalid MEHBOOB (Assistant Director-General, a.i., Administration and Finance Department): I mentioned that there were two organizations which had a penalty scheme. Our understanding is there are organizations which have tried various types of incentive schemes and none have proved effective, and they are still studying them. This is one of them, the one we are proposing on the discounts. But the only two which have got a penalty scheme are two organizations, smaller ones in Geneva.
Won HWA PARK (Korea, Republic of): To my knowledge there are already one or two international organizations that have introduced these incentive schemes. The first one of which I am sure is Unesco, the second one I think, but I am not sure is WHO. So your trial if it is introduced will be the third one. Thank you, Sir.
Khalid MEHBOOB (Assistant Director-General, a.i., Administration and Finance Department): Thank you Mr Chairman. We take note of this information which has been provided to us. We will see what Unesco and WHO are doing. If they have got a similar discount scheme we can even ask them what their experience is, and develop our proposals further in the future in that context.
EL PRESIDENTE: Señores delegados, entonces podemos pasar al último tema que nos queda en nuestra agenda de la mañana. Ahora si, pasamos efectivamente al tema 32. Otros asuntos administrativos y financieros; 32.1. Locales de oficina en la Sede, documento C 91/LIM/14.
Khalid MEHBOOB (Assistant Director-General, a.i., Administration and Finance Department): Thank you Mr Chairman. Mr Chairman, this item concerns the status of reconstruction of the headquarters accommodation and is covered by document C 91/LIM/14.
The project was planned for execution in three separate phases. The first phase for the construction of additional parking spaces was partially completed by the end of 1990. The last part of this phase for the construction of a second level parking lot is pending the allocation of additional funds by the Italian Government.
The second phase for the construction of a new building linking Buildings C and D is progressing well, and the steel structure of the building has now reached the eighth floor. The third phase for the additional floor on top of building A - that is this building - and the bridge to Building B was initially delayed, Mr Chairman, but it can start now as the Italian authorities have finally given approval to the executive drawing submitted by the Ministry of Public Works for the repositioning of the supporting foundation pillars.
Mr Chairman, I would like to express the Organization's appreciation for the generous efforts of the Host Government and in particular for the personal intervention of the Permanent Representative of Italy to FAO,
His Excellency Ambassador Valenza, and his colleagues for their assistance. Thank you Mr Chairman.
EL PRESIDENTE: Muchísimas gracias, distinguido Dr. Mehboob, por su importante introducción y clarificación sobre este punto.
Distinguidos delegados, no veo oradores. Creo interpretar el sentir de la Sala si hacemos un especifico y especial reconocimiento a quienes han contribuido a que estas importantes construcciones de nuestra Sede puedan verse materializadas, y muy en particular, a la distinguida delegación de Italia, y a quienes son sus colaboradores, y al Gobierno de Italia naturalmente.
EL PRESIDENTE: Distinguidos delegados, voy a hacer una consulta a la Secretaria si disponemos de algún instante, simplemente, para la posibilidad de poner a consideración de ustedes el Informe relativo al punto 27 por parte de nuestro Relator.
No veo inconvenientes para adelantar nuestros trabajos.
Doy la palabra al Relator para el punto 27.
PARAGRAPHS 1 TO 8
PARAGRAPHES 1 A 8
PARRAFOS 1 A 8
Mustapha-Menouar SINACEUR (Rapporteur de la Commission III) : Cette partie du rapport est relative au point 27, document C 91/III/REP/2, Amendements aux Règles générales du PAM. Le document est entre les mains de Monsieur le délégué. Nous avons essayé de refléter exactement ce qui a été dit pendant les débats et je ne pense pas avoir quelque chose à ajouter.
Aussi je soumets à l'adoption par la Commission cette partie du rapport sur le point 27.
EL PRESIDENTE: Muchas gracias distinguido Relator. Estamos absolutamente seguros de que ha sido un gran trabajo de la relatoria.
Distinguidos delegados ¿alguna observación sobre el Informe presentado a consideración de ustedes en el punto 27 y documentos ya indicados? Ninguna observación.
Muchísimas gracias señores delegados, se da por aprobado y se levanta la sesión.
Paragraphs 1 to 8 approved
Les paragraphes 1 à 8 sont approuvés
Los párrafos 1 a 8 son aprobados
Draft Report of Commission III. Part 2. was adopted
Le Projet de Rapport de la Commission III. deuxième partie, est adopté
El Proyecto de Informe de la Comisión III. Parte 2. es aprobado
The meeting rose at 13.00 hours.
La séance est levée à 13 heures.
Se levanta la sesión a las 13 horas.
