I have the honour to submit to the Conference proposals for the Programme of Work and Budget 2000-2001.
It will, no doubt, be immediately apparent to those readers who remember its somewhat voluminous predecessors, that this version is more concise. This move is a direct response to the concerns expressed during the last Conference over the length of this important document. It is also consistent with general efforts throughout the UN system, as both Governing Bodies and Secretariats seek to reverse a trend of programmes of work and budget looking increasingly like encyclopaedias, replete with often indigestible details. The format of programmes of work and budget should indeed be tailored to their intended purpose of providing key figures and programmatic choices to support policy discussions among the membership. The main measures taken to keep the document to a more manageable size, were the removal of the detailed lists of planned outputs and several annexes, hitherto included. This does not imply any loss of information to those interested, as the same is available for consultation in all FAO languages on the Organization's Internet Website.
Besides this clearly apparent thinning out, it is worth stressing that this version of the Programme of Work and Budget is very much of a transitional nature. The Conference will also have before it the Strategic Framework covering the period 2000-2015, for its consideration and eventual approval. Some may have expected to see a direct link between the two documents. However, until they could be endorsed by the membership, the overall long-term policy orientations and attendant objectives proposed in the Strategic Framework could not be used as the formal authority for the programme budget proposals. It is only during the next biennium that Members will be in a position to appreciate the benefits of a fully articulated family of documents, from the Strategic Framework through the Medium Term Plan to the biennial Programme of Work and Budget - and subsequently the relevant ex-post facto accountability reports. Nevertheless, as the same staff have worked on the formulation of both the Strategic Framework and the Programme of Work and Budget, the underlying thinking and analytical work remained broadly consistent, in addressing the longer-term perspective and the more immediate requirements for action in the next biennium.
While transitional in character, this Programme of Work and Budget still goes a long way towards adherence to the principles of the revamped planning and budgeting regime, as approved by the Twenty-ninth Conference in November 1997. From the limited pilot experiment included in the Programme of Work and Budget 1998-1999, the revised programming approach has now been applied to the entire range of FAO substantive programmes. I look forward to the reactions of Members to this new presentation to guide its further refinement.
The formulation of the full Programme of Work and Budget was not easy given the range of wishes and expectations in the Council as to the desirable level of resources for the next biennium, reflecting divided opinion within the membership. In such circumstances, it is the duty of the Secretariat to remain attentive to the various points of view expressed by Members and, therefore, this document contains three scenarios for consideration by the Conference. For ease of reference, use has been made of the acronyms of RG (real growth), ZRG (zero real growth) and ZNG (zero nominal growth). While the body of the document dwells more extensively on describing ZRG proposals, all three are fully explained in the front sections, in particular, under the Programme Framework.
Under all the above scenarios, due emphasis was placed on reflecting the recommendations made during past sessions of FAO Governing and Advisory Bodies. Besides the Plan of Action adopted by the World Food Summit which was still fresh in their minds, FAO staff could benefit from a particularly rich body of guidance. This stemmed from the cycle of Regional Conferences of last year, the meetings of the Technical Committees of the Council earlier this year, supplemented as they were by several important ministerial sessions and, of course, from the guidance of the Council itself and of the Programme and Finance Committees.
Compromises and trade-offs are the essence of any budget formulation exercise. They become especially difficult under the constraints imposed by ZRG - and even more so ZNG - parameters. Clearly, the less total resources available, the more difficult it was for FAO departments and offices to accommodate all identified priorities and specific actions requested from this Organization. One telling example is the improvements sought in language coverage within the broad spectrum of substantive activities implemented by FAO. Corrective measures could obviously be more amply addressed under the RG scenario. However, even under the ZNG scenario presented in this document, a deliberate effort was made at least to initiate progress in the right direction, as part of a longer-term programme.
In the Introduction to the Summary Programme of Work and Budget, I indicated that I saw this as being essentially a budget for consolidation. Unfortunately, as intimated to the Council, this was not to be. The impact of an increased demand for services expected from this Organization coupled with the possibility of an ever tighter resource envelope, has obliged me to accelerate the implementation of revised administrative and operational structures in Headquarters and in the Regional Offices, even though we are still in the process of implementing the new systems which are needed to support them. Otherwise, it would have been necessary to permanently reduce the staffing establishment dedicated to technical work. Under both the ZRG and ZNG scenarios, and obviously more so for the latter, additional anticipated savings from administrative and operational areas have been used to avoid the abolition of technical posts. Instead, the proposals reflect the under-funding of a number of vacant posts as a temporary measure for 2000-2001 only, to be reinstated for full funding in the 2002-2003 biennium. The level of non-staff resources (i.e. consultants and travel) was also reduced under ZNG parameters for those areas of the programme that were not designated as protected.
However, while the early implementation of such structural change would avoid the worst of the impact on the technical programmes, it carries with it some risk. It would have been preferable to have the new systems fully implemented, studied the opportunities arising from streamlined processes, and then design the new structures based upon that knowledge. As it is, assumptions have had to be made and relied upon in anticipation of their realization.
The proposals described in this document cannot be seen in isolation from developments in particularly volatile currency markets. Besides the worrisome element of uncertainty they bring to the management of affairs in an international organization which needs to operate in a multi-currency context, the vagaries of exchange rates may have an undue influence on budgetary decisions. The need to address three scenarios, coupled with the eventual impact of different US$-Italian Lira exchange rates, complicates understanding of the proposals. It is, therefore, essential to clarify the overall picture at this stage, transcending the much more detailed information provided in the Programme and Budget Framework sections.
In line with the principle of integrated presentation of income endorsed by the Conference, it will be noted that most figures in this document relate to the total programme of work. However, it is undoubtedly useful to focus here on the net Regular Budget Appropriation, as this is what affects assessed contributions on Members.
Thus, ZRG implies that an accurate estimate be made of anticipated cost increases and added to the approved budget level for the present biennium of US$ 650 million. Using the same rate of exchange (Lira 1,690 to US$ 1) as that approved by the Conference in November 1997, the cost increase provision was earlier estimated at US$ 34.7 million. However, the Programme and Finance Committees and the Council requested the Secretariat to take account of more current Italian Lira/US$ exchange rates than the budget rate set by the Conference two years ago. Therefore, as anticipated at the 115th session of the Council, a budget rate of Lira 1,800 has been assumed and the estimate for cost increases calculated accordingly, also reflecting latest known information. This leads to an estimate of US$ 14.9 million and an attendant net Regular Budget Appropriation under ZRG of US$ 664.9 million.
By definition, ZNG implies that the Budget Appropriation for the next biennium should remain at the same total level, i.e. US$ 650 million. It, therefore, entails the full absorption of the anticipated cost increases of US$ 14.9 million. The approach to meet the required reductions is fully explained in the Programme Framework section.
Finally, the proposed RG scenario involves US$ 22.6 million worth of activities to meet requests from Governing and Advisory Bodies which could not be accommodated under ZRG conditions. Consequently, it would entail a net Regular Budget Appropriation of about US$ 687 million.
It is emphasized again that the above figures are based on the tentative rate of exchange of Italian Lira 1,800 to US$ 1, which at the time of writing (early August 1999) is close to current rates. Any deviation from this rate at the time of the Conference would imply a revised cost increase estimate. Hence, a revised set of figures defining ZRG and RG, as well as the cuts required to reach ZNG.
Members, therefore, have the context, including the hard facts and figures, in which they will have to decide on the level of resources they are prepared to accord to this Organization for the biennium 2000-2001. As we are getting so close, it is commonplace and perhaps overdone to evoke the symbolic significance of a new millennium. Nevertheless, symbols have much value, in a society overburdened with information. I trust that the membership would choose to give a positive message to those who expect much needed and urgent assistance from this Organization. Those lucky enough not to need such direct assistance still look forward to FAO being a centre of excellence and beacon to guide and support fruitful international cooperation in a key economic sector, with a crucial impact on the natural environment. The stagnation in resources - in fact an erosion in real terms - experienced by FAO in the recent past must in my humble view be arrested.
Jacques Diouf
Director-General
