31. The financial context against which the 2000-01 Programme of Work and Budget is being developed, is summarized below.
General Fund
32. The Audited Accounts for 1996-97 show a surplus under the General and Related Funds of US$ 27.6 million. However, after taking account of US$ 23.7 million due to the Working Capital Fund and US$ 31.9 million due to the Special Reserve Account, there was an accumulated deficit of US$ 28.0 million.
33. The accumulated deficit at 31 December 1996 represented a significant improvement from the 1994-95 biennium, which had ended with a deficit of US$ 113.6 million, the highest accumulated deficit recorded in the history of the Organization.
34. It should be emphasized that the accumulated deficit of US$ 28.0 million is fully covered by arrears in assessed contributions, which at 31 December 1997 and 31 December 1998 stood at US$ 136.7 million and US$ 151.4 million respectively. It, therefore, follows that if all outstanding arrears were paid in full, the Organization would be in a sound financial position.
35. The Council will recall that the Programme of Work and Budget (PWB) 1998-99 incorporates a provision for the cost of medical benefits, including after service medical coverage, for current staff. The 2000-01 budget will continue to provide the necessary after service medical coverage, for current staff, based on the latest actuarial valuations. However, action still needs to be taken to fund the liability for past services, which has been estimated at US$ 195.1 million at 31 December 1997. This liability is unrecorded and unfunded in the accounts of the Organization. At its One-hundred and fifteenth Session in 1998, the Council decided to forward to the 1999 Conference for its approval a draft resolution that provides a plan of action to fund the liability for past services.
36. The evolution of the accumulated deficit in 1998-99 will depend upon a number of factors:
37. At this stage of the biennium, it is difficult to determine the evolution of the accumulated deficit and the likely position at the end of the present biennium: However, the following points are noted:
Working Capital Fund
38. The Working Capital Fund has an authorized level of US$ 25.0 million in accordance with Conference Resolution 15/91. As at 31 December 1997, US$ 23.7 million had been paid up, with US$ 1.6 million outstanding. At that date, the amount paid up had been advanced to the General Fund to finance budgetary expenditures pending receipts of contributions to the budget.
Special Reserve Account
39. The purpose of the Special Reserve Account is to protect the Organization's Programme of Work against the effects of unbudgeted extra costs arising from adverse currency fluctuations and unbudgeted inflationary trends. Net gains or losses on exchange in addition to the currency variance on staff standard costs are also charged to the Special Reserve Account. The authorized level of the Special Reserve Account is set by Conference Resolution 13/81 at 5 percent of the effective working budget (i.e. US$ 32.5 million), and the contributions receivable at 31 December 1997 amounted to US$ 11.0 million.
40. At their session in September 1998, the Joint Meeting of the Programme and Finance Committees approved the use of the Special Reserve Account for up to US$ 5.0 million or such lesser amount as may prove necessary to cover the unbudgeted extra costs arising from the award of the International Labour Office (ILO) Administrative Tribunal with respect to the General Service salaries in Rome. The Director-General has given his assurance that in implementing this decision, he will make every effort to absorb this unbudgeted cost to the extent that he can do so without impairing the implementation of the approved programmes. In this connection, it is expected that the Special Reserve Account will be utilized but the precise figure will not be known until closer to the end of the financial period.
