FC 95/10

Finance Committee

Ninety-fifth Session

Rome, 25 - 29 September 2000

Role of the Finance Committee in the Management of Arrears


1. At its last session in May 2000, the Committee expressed concern over the number of Member Nations whose arrears were at such a level as to jeopardise their right to vote and recalled that at the last session of the Conference substantial problems had been encountered in this connection by the General Committee. The Finance Committee asked the secretariat to consider ways in which the Finance Committee could take a more pro-active role in the management of arrears.

2. The current practice for the collection of assessed contributions and arrears is that a communication is sent to all Member Nations at the beginning of each calendar year informing them of contributions due in accordance with Financial Regulation 5.4. Subsequently, Member Nations are reminded on a quarterly or half-yearly basis of the amounts that remain due.

3. In the case of Council members who risk losing their seat in accordance with General Rule XXII .7, specific communications are sent, well in advance of the respective sessions of the Council, informing them of the situation and advising of the minimum amount that would be payable to ensure the retention of the seat. In the absence of payments required, the Member Nation is considered to have resigned its seat and is not invited to attend the Council session.

4. Article 3.4 of the Constitution of FAO states that a .... "Member Nation which is in arrears in the payment of its financial contributions to the Organization shall have no vote in the Conference if the amount of its arrears equals or exceeds the amount of the contributions due from it for the two preceding calendar years. The Conference may, nevertheless, permit such a Member Nation to vote if it is satisfied that the failure to pay is due to conditions beyond the control of the Member Nation". In this connection, it is the practice of the secretariat to communicate with those Member Nations in risk of losing their voting rights well in advance of the Conference session, once again advising them of the minimum payment that would be required to ensure their active participation in the voting of the Conference.

5. At the beginning of the Conference session, the General Committee considers the situation of those countries at risk of losing their voting rights. It is, however, customary to allow all Member Nations to vote on the requests for admission to the Organization of new Member Nations. Following this preliminary vote, the voting situation of countries with arrears is reviewed and requests for "special consideration" are examined by the General Committee. Should a Member Nation so request, an instalment plan for the repayment of arrears over a period of several years is also considered and, where appropriate, the General Committee recommends to the Conference approval for the retention of voting rights by appropriate resolution.

6. The Secretariat recognizes that the reasons for falling in arrears in the payment of financial contributions to the Organization are different for different Member Nations and, therefore, it is difficult to adopt a general approach for resolving them. Experience over the years show that the problem needs to be approached and resolved on a case-by-case basis. Given the nature and diversity of the issues involved, it is not clear that recommendations from a Committee can help much in finding a solution. On the other hand, it might be more efficient to maintain direct contacts with the Governments concerned at the highest political level.

7. The secretariat welcomes any alternative solutions that the Committee may wish to recommend to assist in the management of arrears.