63. Since it had previously considered the Director-General's provisional proposals and the Summary Programme of Work and Budget in detail, the Council at this session devoted most of its attention to general issues, namely the related questions of the use of national institutions, decentralization, posts and upgradings, programme increases and the budget level.
64. The Council considered that decentralization and the use of national institutions were connected, in that the use of national institutions, especially in developing countries, was one of the means of achieving decentralization, particularly to the country level.
65. The Council recalled that consideration of the increased use of national institutions as a means of implementing Regular Programme activities had originally arisen in order to benefit, where possible, from the competence of these institutions and to have FAO achieve, thanks to this, the attainment of its objectives with maximum efficiency and, in many cases, at minimum cost. This was also examined in connexion with the capacity of the Organization to absorb the additional posts which had earlier been proposed for 1976–77. It had also felt that the increased use of national institutions could also contribute to their strengthening, particularly in developing countries. Increased use of national institutions could also facilitate technical cooperation among developing countries, as well as between developing and developed countries, particularly where an institution from one country assisted in a programme in another or where cooperative activities were undertaken by institutions in two or more countries. The Council therefore confirmed its earlier recommendation to intensify efforts to use national institutions especially in developing countries to achieve FAO's objectives where feasible and suitable.
66. The Council noted that the Organization was already making use of national institutions on a limited scale in implementing the Regular and Field Programmes. There were a number of types of activities which had been or could be appropriately implemented by national institutions. These included such activities as the organization and execution of seminars, training courses and ad hoc consultations, the collection of information, execution of surveys, assessments and studies, reviews, preparation of methodologies, studies of technical developments, case studies and research in many of the fields of concern to FAO.
67. The Council felt that progress should not be held up by rigid rules or formalistic problems, and that these could be resolved in a pragmatic fashion, and felt that considerable flexibility should be given to the Director-General to enable him to pursue the further use of national institutions.
68. The Council generally agreed that the Director-General should request governments to indicate which national institutions were available to assist FAO in carrying out its programmes. FAO should pay special attention to national institutions in developing countries while respecting the criteria of equitable geographical distribution.
69. The Council noted that the funds for the use of national institutions in 1976–77 were included in the various programmes and sub-programmes, but since these funds had not previously been separately identified as such, the Organization could not identify all the activities or specify the amounts involved in past use of national institutions. The majority were of the opinion that a specific amount or percentage of the 1976–77 budget should be earmarked or targeted for the use of national institutions. Others preferred not to earmark amounts or targets at this stage, but to rely on the flexible use of funds already available in the sub-programmes on a case-by-case basis.
1 C 75/3, C 75/3-Annex, C 75/3-Sup.1, C 75/3-Sup.2, CL 67/2, CL 67/PV/2, CL 67/PV/4, CL 67/PV/9.
70. The Council requested the Director-General to make every effort to use national institutions in an effective way and, in stressing the need for close supervision by the governing bodies, to make a progress report to the Autumn 1976 session of the Programme and Finance Committees and to the Council. This should include information on progress made with an inventory of institutions, the extent of their use and appraisal of experience to date. On the basis of this, further consideration should be given to the question of setting targets or earmarking funds.
71. The Council reaffirmed its support for the policy of decentralization and welcomed the careful study of the methods of implementation which had been initiated and would be continued by the Programme Committee. It also supported the intention of the Finance Committee to consider the administrative and financial aspects of decentralization.
72. The Council agreed with the Programme Committee that while the proposals for 1976–77 concerned primarily the Regional Offices, future efforts should also emphasize decentralization at the country level, including the further use of national institutions. The role of the Regional Offices vis-à-vis country offices and field activities would therefore need to be reexamined, as would also the role of the Country Representatives. In the latter case, while the importance of the best possible cooperation with the United Nations Development Programme (UNDP) should be fully recognized, it was suggested that the agreement with UNDP should be progressively reexamined so that Country Representatives could gradually assume more functions and responsibilities under the Regular and Field Programmes. Some members suggested that these Country Representatives could progressively become staff members under the Regular Programme.
73. The Council felt 1 that it was necessary to strengthen the role and authority of FAO Regional Conferences, in order to permit a greater role in making policy decisions, keeping in mind the degree of decentralization adopted.
74. The Council emphasized that whatever the ultimate degree of decentralization, it was essential to plan and carry it out while maintaining FAO's identity as an integral, international organization. Decentralization which should be accompanied by the delegation of responsibilities and powers should not result in more overall staff but should lead to increased efficiency. Some members stressed that decentralization should proceed in such a manner as not to jeopardize the new responsibilities of FAO in terms of the harmonization of policies at the global level with a view to promoting increased agricultural production in developing countries.
75. The Council also agreed with the Programme Committee that a time-frame with specific targets should be established for the implementation of this policy, taking into account the necessary adaptations at Headquarters and in the Regional and Country offices. The 1980–81 Programme of Work and Budget should reflect the completion of the process.
76. The Council agreed to keep under review the progress made and requested the Director-General to submit specific proposals to the Programme and Finance Committees, whose reports it would consider at one of its forthcoming sessions.
77. The Council noted that the proposals contained in the 1976–77 Programme of Work and Budget were related only to Regional Offices and constituted a first step towards decentralization along the lines already agreed upon. Some members expressed concern that this initial step could lead to imbalances due to the several approaches needed to achieve an efficient decentralization, particularly at the country level.
78. The Council recognized that the Director-General had followed its recommendation to reduce the number of proposed new posts. He indicated a reduction in proposed new posts from 626 to 478. Some members also expressed the view that transfer of UNDP Agency Cost posts 1 to the Regular Programme (41 posts) should be included within the proposed figure for new posts.
79. Many members considered that the Director-General should have gone further in making reductions in the number of new posts, particularly in sectors not directly concerned with food production. There was also general concern about the grade distribution of the new posts as well as upgradings. In this connexion, it was noted that economies could be achieved in the overall costs of engaging and maintaining personnel.
80. In view, however, of the difficulties at this stage in proposing specific changes in the individual proposals, the Council requested the Director-General to conduct a further review of the need for, and grades of, new posts and to report on the results to the Spring 1976 Sessions of the Programme and Finance Committees. The Council at a future session would decide on any necessary programme and financial adjustments proposed by the Director-General and endorsed by the two Committees for its approval.
81. While the Council dealt mainly with policy issues, in connexion with the budget level it also made some reference to programme priorities.
82. The Council noted the view of the Programme and Finance Committees that the Director-General had in the main followed the views of the Sixty-Sixth Council Session on programme priorities. Some members felt that the increases should concentrate on those activities which contributed directly to an increase in food production, and reference was also made to excessive increases in the Regional Offices. The Council was concerned that provision for only one year had been made for the International Fertilizer Supply Scheme (IFS) and that some means of keeping the scheme in existence should be found. It was noted that the Commission on Fertilizers would review the scheme and that if its continuation was recommended, funds would need to be provided accordingly. Several members strongly regretted that the Director-General had deleted his original proposal for, and requested that he should restore, investment activities in the Regional Office for the Near East, to carry on cooperative investment identification and follow-up activities with the recently established fund and sub-regional development banks in the Near East, along the line of cooperative activities with Regional Development Banks in other regions. The Council noted that in order to accommodate this item 2 it would be necessary to amend other programme provisions and that operating costs would be borne by the Investment Centre at Headquarters.
83. The Council welcomed the efforts of the Programme and Finance Committees, at the initiative of the Independent Chairman of the Council, to avoid a difference between the programme and budget levels.
84. As regards the proposal that on this basis, the budget level should be $167 million at 670 lire to the dollar, a number of members felt this was a satisfactory solution. Some members of the Council were, however, still concerned about the size of the overall increase proposed, were in favour of a lower level, and were unable to commit their governments at this stage. It was not therefore possible for the Council at this late stage to reach a consensus on the budget level.
1 Estimated by the Finance Committee to cost about $2 million.
2 Estimated to cost about $875 000, including cost increases.
85. The Council recognized, however, that the Director-General was obliged to submit to the Conference a specific proposal, including precise Chapter totals, and agreed to transmit to the Conference the Director-General's proposal, subject to such views as the Conference might express on the points raised above.
86. Bearing in mind the reservations expressed in paragraphs 80 and 84 above, the Council agreed to recommend that the Director-General submit the following draft resolution for adoption by the Conference:
DRAFT RESOLUTION FOR THE CONFERENCE BUDGETARY APPROPRIATIONS 1976–77
THE CONFERENCE,
Having considered the Director-General's Programme of Work and Budget and the conclusion reached by its Commissions,
Approves the Programme of Work proposed by the Director-General for 1976–77,
Resolves that for the financial period 1976–77:
1. Appropriations are voted for the following purposes:
| $ | |
| Chapter 1 - General Policy and Direction | 9 896 870 |
| Chapter 2 - Technical and Economic Programmes | 100 068 060 |
| Chapter 3 - Field Programmes and Development Support | 13 807 500 |
| Chapter 4 - Special Programmes | 3 279 960 |
| Chapter 5 - General Programme Services | 10 498 980 |
| Chapter 6 - General Support | 27 480 630 |
| Chapter 7 - Miscellaneous Expenditure | 1 768 000 |
| Chapter 8 - Contingencies | 200 000 |
| Total effective working budget | 167 000 000 1 |
| Chapter 9 - Transfer to Tax Equalization Fund | 25 700 000 |
| Total Appropriations (Gross) | 192 700 000 |
1 Calculated at Lire 670 = US $1.
2. The appropriations (gross) voted in paragraph 1 shall be financed by assessments on Member Nations, after deduction of Miscellaneous Income in the amount of $3 820 000, thus resulting in assessments against Member Nations of $ 188 880 000;
3. In establishing the actual amounts of contributions to be paid by individual Member Nations, the assessment of each Member Nation shall be reduced by any amount standing to its credit in the Tax Equalization Fund; provided that the credit of a Member Nation that levies taxes on the salaries, emoluments and indemnities received from FAO by staff members shall be reduced by the estimated amounts of such taxes to be reimbursed to the staff member by FAO.
4. The contributions due from Member Nations in 1976 and 1977 shall be paid in accordance with the scale adopted by the Conference at its Eighteenth Session.
87. The Council agreed that the document C 75/24 complied with the recommendations of the Council at its Sixty-Sixth Session that it should deal with FAO's contribution to the achievement of medium-term objectives through its different roles and functions and programmes, and that it should be considered by the Conference in conjunction with documents on item 7 (Review of Longer-Term Trends and Policies), item 12 (Programme of Work and Budget, 1976–77) and item 13 (Review of FAO Field Programmes).
88. The Council agreed that the document provided a valuable input into various discussions leading to preparation of the next Programme of Work and Budget. The majority of members further agreed that the medium-term objectives of FAO should be consistent with Resolutions 3201 (S-VI), 3202 (S-VI) and 3362 (s-VII) of the UN General Assembly, particularly on matters regarding food and agriculture, international trade and transfer of resources and technology.
89. A few members felt that the document was somewhat lacking in specific objectives and that its content and format should be modified to return to the concept of a plan which would include specific objectives and programme priorities, the output of which could be measured, the phasing of priority activities over the six year period of the plan, and an indication as to the resources which would be required to carry them out. There was general agreement, however, that the future form of the document should remain substantially as at present until such time as the future general structure of the United Nations system was known. The addition of a table of contents or index would be useful and revisions should be by updating, eliminating those portions which were no longer applicable, and including additional sections as appropriate.
90. The Council considered that Conference discussion of the document would be most productive if it concentrated on substance and avoided discussion of further changes in format.
91. The Council agreed with the view of the Programme Committee that harmonization of medium-term planning in the United Nations family was valuable but that there should not be harmonization for its own sake. In the case of FAO the needs of the Organization and of its Member Nations, particularly the developing ones, should be kept uppermost in mind with respect to approaches to agricultural development.
92. Some references were made in the discussion to specific points and problems raised in the document but it was recognized that there would be a more ample opportunity for discussion of these during the Conference. Problems mentioned in this connexion included Regular Programme evaluation, the review of extra-budgetary activities, activities initiated under Trust Fund arrangements and later taken over by the Regular Programme, the importance of pre-investment activities and follow-up in stimulating the flow of resources and technology for increasing food production in developing countries, and integration of the various planning activities being carried out in FAO, food production, agricultural price policies, marketing, extension, training, reduction of crop losses, animal diseases especially trypanosomiasis in Africa, fisheries and forestry activities, nutrition for vulnerable populations, trade investment, irrigation, research and a sharper focus of FAO's activities in relation to the New International Economic Order.
93. The Council recalled that the Fourteenth Session of the Conference had authorized the Director-General in exceptional circumstances to convene sessions which he considered necessary and which had not been included in the Programme of Work and Budget. It also recalled that the Director-General had been requested to make regular reports to the Council on the unscheduled sessions approved and on the sessions cancelled.
1 C 75/24, CL 67/2, CL 67/PV/7, CL 67/PV/9.
2 CL 67/2, paras 2.163–2.165, CL 67/8, CL 67/PV/8.
94. The Council noted that since its Sixty-Fourth Session (November 1974) 27 unscheduled sessions had been approved and 42 sessions had been cancelled, thus making a total of 47 unscheduled sessions approved and 59 sessions cancelled during the biennium.
95. Details of the unscheduled sessions approved, and the sessions cancelled since 1 November 1974 are given in Appendix D.
96. The Council noted with concern that until recently there had been a serious deterioration in 1975 in the rate of collection of current assessments compared to previous years. The situation was such at the time of the Thirty-Fifth Session of the Finance Committee that the Committee had recommended that the position be examined at the current Session of the Council so that, if necessary, the Director-General be authorized to negotiate and contract borrowings as required to avoid temporary cash shortages.
97. Since the Thirty-Fifth Session of the Finance Committee there had been a very substantial improvement in the flow of contribution income so that it was no longer necessary for the Director-General to seek a borrowing authority from the Council.
98. The Council nonetheless suggested that the Conference might wish to appeal to all Member Nations to arrange for prompt settlement of contributions in 1976 and 1977.
1 CL 67/2, CL 67/2-Corr.1, CL 67/PV/8.
99. A statement of contributions outstanding at 4 November 1975 is attached as Appendix E. A summary of contributions collected to 4 November 1975, compared to 1974, is as follows:
| Contributions collected 1 January – 4 November | ||
| 1975 | Comparative figures for 1974 | |
| $ | $ | |
| Current Contributions | 47 753 912 | 46 169 283 |
| Arrears of Contributions | 2 429 791 | 2 030 979 |
| 50 183 703 2 | 48 200 262 3 | |
2 Includes $41 818 credited to Miscellaneous Income.
3 Includes $35 018 credited to Miscellaneous Income.
100. The Council was informed that since its last Session, four Member Nations had remitted sufficient amounts to ensure their right to vote at the Eighteenth Session of the Conference in accordance with Article III-4 of the Constitution.
101. The Council noted however that four Member Nations (Central African Republic, Chad, Dominican Republic and Haiti) were still in jeopardy of losing their voting rights at the Conference. 4
102. The Council noted that the Finance Committee had examined the financial and constitutional implications of the approach made by the Government of Laos with a view to being exempted from paying its outstanding contribution and from assessment of contributions for the next five years. Bearing in mind that the contribution position of Laos was not such that it would be in the danger of losing its voting rights during the forthcoming Conference session, that the points raised in the Finance Committee Report had been communicated to Laos by a letter of the Director-General and that the Government had not so far pursued the matter and had apparently not approached other Agencies in the United Nations system with a view to obtaining similar exemptions, the Council took note of the comments contained in the Finance Committee Report. In case the Government were to formulate a formal request, the Director-General would submit it to the Conference for consideration.
103. The Council recalled that at its Sixty-Sixth Session it had recommended that the Eighteenth Session of the Conference adopt a Scale of Contributions for 1976–77 derived directly from the United Nations Scale of Assessments as in force in 1975 and that it had attached such a Scale to its Report. 2
104. Subsequently the UN General Assembly had adopted a rate of 0.08 percent for Bangladesh for 1975 as opposed to 0.10 percent, as previously anticipated. As a consequence, and assuming that the Conference would decide to base the FAO Scale of 1976–77 on the UN Scale for 1975, the rate of assessment for Bangladesh in such an FAO Scale would be 0.10 percent and not 0.13 percent as indicated in CL 66/REP, Appendix G.
105. The Council noted that this decrease in the rate of assessment for Bangladesh would be more than offset by the rates of assesment of States expected to be admitted to membership at the coming Conference. A revised Scale of Contributions would be issued after the Conference had decided on applications for membership, taking into account the assessment of such newly admitted States.
106. The Council was informed that Bahamas, Cape Verde, Grenada and Papua New Guinea had applied for membership in the Organization, and that the Government of Surinam intended to apply for membership on attaining independence on 25 November 1975.
107. The Council was further informed that the assessment rates for Bahamas and Grenada in the United Nations had been approved by the UN General Assembly at 0.02 percent, the minimum rate, The Organization had been advised by the Secretariat of the UN Committee on Contributions that the “theoretical probable” assessment rate for Cape Verde, Papua New Guinea and Surinam was also 0.02 percent each.
108. The Council noted that the contribution due for the last quarter of 1975 from each of the above states would be $2 650 in accordance with established procedures and practice. The advance due from each to the Working Capital Fund would be $900 based on the present level of the Fund of $4.5 million.
109. The Council noted that since its previous consideration of this question, the Director-General had instituted further savings measures and that there had been a net improvement in the situation in certain respects, including the latest estimate that some $3 million in programme savings would be achieved over the biennium.
110. The Council noted that, nevertheless, it would be necessary to use all the expected savings arising from favourable currency fluctuations. First, it was necessary to reimburse the Working Capital Fund for the $500 000 withdrawn, as authorized by the Seventeenth Session of the Conference 1, to cover the costs of preparation for and servicing of the World Food Conference. The Council recommended that the Conference approve such reimbursement in accordance with Financial Regulation 6.5(b).
111. Secondly, in order to cover unbudgeted inflationary costs, it would be necessary to call upon the remainder of the expected currency savings plus a considerable portion of the provision of $2 million in the Suspense Account for unbudgeted inflationary costs.
112. The Council endorsed the views of the Finance Committee that the currency savings should be called upon first before recourse was made to the Suspense Account. On this basis, it approved the use of the remaining currency savings and the necessary withdrawal, to the extent necessary, from the Suspense Account, under paragraph 2 (ii) of Resolution 6/73 of the Seventeenth Session of the Conference, to cover the net deficit remaining at the end of the biennium. It noted that such withdrawal would be charged to Member Nations' equities in the Suspense Account in proportion to these equities.
- United Nations Development Programme 1974
- World Food Programme 1974
113. The Council reviewed the above accounts and noted the External Auditor's comments thereon.
114. It noted that the Intergovernmental Committee on the World Food Programme had reviewed, at its Twenty-Eighth Session (Rome, 29 September – 3 October 1975), the comments made at the Thirty-Fifth Finance Committee Session on the accounts of the World Food Programme for 1974 and on the External Auditor's report thereon.
115. The Council forwarded the above audited accounts together with those reviewed by it at its Sixty-Fourth Session 3 to the Conference in accordance with the provisions of Rule XXIV-3(b) GRO and recommended the following draft resolution for adoption by the Conference.
DRAFT RESOLUTION FOR THE CONFERENCE
AUDITED ACCOUNTS
THE CONFERENCE,
Having considered the reports of the Sixty-Fourth and Sixty-Seventh Sessions of the Council,
Having examined the following audited accounts and the External Auditor's Reports thereon:
| Regular Programme 1972–73 | C 75/5 |
| United Nations Development Programme 1973 and 1974 | C 75/6; C 75/8 |
| World Food Programme 1973 and 1974 | C 75/7; C 75/9, |
1. Adopts the above audited accounts.
2 C 75/8, C 75/9, CL 67/2, paras 3.162–3.178, CL 67/2-Corr.1.
116. The Council recalled that at its Sixty-Sixth Session (June 1975) it had reviewed the Director-General's proposal, endorsed by the Finance Committee, that the Working Capital Fund be increased from $4.5 million to $6.5 million. The Council had decided at that time that it would reconsider the subject at its Sixty-Seventh Session. 2
117. The Council noted from the Report of the Thirty-Fifth Session of the Finance Committee (September 1975) that withdrawals made from the Working Capital Fund during the last ten years had not been large at any time. The Council recognized, however, that experience in past years might not necessarily set a pattern for the future. It noted in this respect that in 1975 the rate of collection of contributions during the period to 22 September (the date of the Finance Committee's Report) had seriously deteriorated as compared with that in previous years 3, and that sound financial management required an adequate Working Capital Fund. The Council noted in this connexion that the Working Capital Fund at its increased level would cover just one average month's expenditure under the proposed 1976–77 Programme of Work and Budget.
118. Although a number of Member Nations questioned the need for an increase in the level of the Working Capital Fund, the Council agreed to recommend to the Conference that the level of the Fund be increased from $4.5 million to $6.5 million.
119. The Council also considered and recommended approval of the Director-General's proposal (endorsed by the Finance Committee), to raise his authority to withdraw funds from the Working Capital Fund for livestock and crop pest emergencies from $750 000 to $1 million, with the proviso that not more than $700 000 may be withdrawn in any one biennium for either livestock emergencies or crop pest emergencies.
120. The Council was informed that the Organization expected that the 1974–75 biennium would close with a substantial cash surplus. The Council therefore recommended to the Conference that to the extent necessary, notwithstanding Financial Regulations 6.1(b) and 6.2(b)(v), Member Nations' shares in any 1974–75 cash surplus be applied to raise Member Nations' advances to the Working Capital Fund as of 1 July 1976 to the amounts appropriate to a Working Capital Fund of $6.5 million.
121. The Council recommended furthermore that the small balance of $90 055 of the 1972–73 cash surplus which, at its Sixty-Fourth Session (November 1974), it agreed be withheld to the end of 1975 4, should, because of the relatively small amount involved, continue to be withheld until 1 January 1977 and released as of that date along with any balance of the 1974–75 cash surplus that would remain after funding the increase in the Working Capital Fund and the new Suspense Account. 5
1 CL 67/2, paras 3.87–3.104, paras 3.123–3.127.
122. The Council accordingly recommended the following two draft resolutions for adoption by the Conference:
DRAFT RESOLUTION FOR THE CONFERENCE
AUTHORITY FOR THE DIRECTOR-GENERAL TO UNDERTAKE EMERGENCY ACTION FOR THE CONTROL OF LIVESTOCK DISEASES AND TO CARRY OUT INITIAL CONTROL ACTIVITIES AGAINST THE DESERT LOCUST AND OTHER CROP PESTS IN EMERGENCIES
THE CONFERENCE,
Recalling its Resolution 17/69, whereby it had authorized the Director-General to withdraw up to $750 000 from the Working Capital Fund,
to finance initial emergency measures for the control of outbreak of livestock diseases under emergency circumstances which constitute a potential epizootic threat to livestock of other countries; and
to finance initial control activities against the desert locust in emergencies,
provided that not more than $500 000 may be withdrawn in any one biennium under either of the above headings,
Having examined the proposal endorsed by the Council that in the light of rising costs the authority to withdraw funds from the Working Capital Fund be increased to $1 million,
Concurring in the proposal likewise endorsed by the Council that the authority to withdraw funds for initial control activities against the desert locust in emergencies be extended to cover also other migratory or introduced crop pests creating a major potential threat,
1. Authorizes the Director-General with effect from 1 July 1976 to withdraw up to $1 million from the Working Capital Fund:
to finance initial emergency measures for the control of outbreak of livestock diseases under emergency circumstances which constitute a potential epizootic threat to livestock of other countries,
to finance initial control activities against locusts and other migratory or introduced crop pests creating a major potential threat,
after consultation with the Chairman of the Finance Committee or another member of that Committee designated by him and in the light of the recommendations of the pertinent Advisory Panels of technical experts established under Conference Resolutions 35/65 and 17/69 provided that not more than $700 000 may be withdrawn in any one biennium under either of the above headings;
2. Decides that the Advisory Panels on Epizootiology and on Desert Locust Control established under Conference Resolutions 35/65 and 17/69 respectively, be maintained and that for the purpose of recommending withdrawals from the Working Capital Fund as provided for in this resolution, the role of the latter be extended to cover also the control of other migratory or introduced crop pests creating a major potential threat;
3. Requests the Director-General to report to the Council or to the Finance Committee, whichever meets first, immediately after funds have been withdrawn from the Working Capital Fund in accordance with this resolution.
DRAFT RESOLUTION FOR THE CONFERENCE
INCREASE IN THE LEVEL OF THE WORKING CAPITAL FUND
THE CONFERENCE,
Recalling its Resolution 34/65, by which the level of the Working Capital Fund was fixed at $4.5 million,
Also recalling its Resolution …/75, by which the Director-General was authorized to withdraw up to $1 million from the Working Capital Fund for financing initial emergency measures for the control of livestock diseases and desert locusts,
Conscious of the need to conserve an essential minimum relationship between the level of the Working Capital Fund and the level of the Budget, in order to safeguard the financial liquidity of the Organization,
Noting that the Council, at its Sixty-Seventh Session, concurred in the recommendations made by the Finance Committee at its Thirty-Fifth Session to the effect that the level of the Working Capital Fund be increased to $6.5 million,
Noting further that if Member Nations pay their contributions in good time, there will be a cash surplus in the 1974–75 biennium, which could be used to the extent necessary to fund such increase,
1. Decides that as from 1 July 1976 the authorized level of the Working Capital Fund shall be $6.5 million and that:
Member Nations shall be reassessed in accordance with the provisions of Financial Regulation 6.2(b) (iv) and on the basis of the Scale of Contributions for 1976–77;
such reassessment shall take place as from 1 July 1976 notwithstanding the provisions of Financial Regulation 6.2(b)(v);
such portion of each Member Nation's share in any 1974–75 cash surplus as needs to be withheld to bring up its advance to the Working Capital Fund after reassessment to the required level, shall be applied towards such advance as of 1 July 1976, notwithstanding the provisions of Financial Regulation 6.1(b);
any excess credits on reassessment due to Member Nations shall be released on 1 January 1977, notwithstanding Financial Regulation 6.2(b)(vi);
the balance of the 1972–73 cash surplus of $90 055 shall be withheld, notwithstanding Financial Regulation 6.1(b), until 1 January 1977, when it shall be released along with any excess credits due to Member Nations.
123. The Council considered the proposal of the Director-General that in the light of continuing currency instability, a new Suspense Account be established for 1976–77, to help protect the Organization's programme against adverse effects of currency fluctuations in 1976–77. The Council noted that the Finance Committee had endorsed the proposal in principle, but that it had recommended that the level of the account be set at $2 million rather than $3 million as proposed by the Director-General.
124. The Council noted that the Report to the UN General Assembly of the Working Group on Currency Instability indicated that the Group had not been able to recommend any protective measure or set of protective measures to meet the specific needs of the United Nations and the Specialized Agencies 1 stemming from currency instability and inflation. The Group recognized “that currency fluctuations and inflationary pressures were likely to continue and that there would probably be no early return to fixed values. The issues before it were highly complex and susceptible to rapid change in the light of changing circumstances in the world financial scene. Moreover, the Group was keenly aware of the fact that any measures proposed would need to be sufficiently flexible to be able to accommodate the individual circumstances of the various organizations within the United Nations system, each of which was affected differently by currency instability and which, in addition, had differing budgetary and financing arrangements”.
125. Bearing in mind the decision taken by the Conference in 1973 2 that the Suspense Account established for 1974–75 was to be closed at the end of 1975 and noting the continuing wide fluctuations in the exchange rate of the Italian lira to the US dollar in 1974–75, the Council agreed with the proposal to establish a new Suspense Account for 1976–77.
126. The Council noted that the Finance Committee had proposed that all Lira currency savings on staff costs accruing during the biennium be credited to the Account and that if currency savings credited to the Account up to 1 July 1976 should not have provided the sum of $2 million, the balance required to bring the amount of the Suspense Account up to $2 million be transferred to the Account from the balance of the expected 1974–75 cash surplus.
127. The Council considered that the purpose of the Fund was to protect the approved programme from currency fluctuations and expressed the view that other uses of the Fund should not jeopardise that function. In this regard the Council was informed that it was not intended that the Suspense Account be used for programme increases.
128. After thorough consideration of various aspects of the problem including the level of the Account, restrictions on its use and the funding of the Account, the Council agreed to recommend that:
a new Suspense Account to assist in protecting the Organization's Programme against the effects of adverse currency fluctuations in 1976–77 be established as of 1 January 1976;
all savings on staff costs arising from favourable differences between the lira exchange rate used in calculating the budget and the effective UN rate in 1976–77 be credited to such Suspense Account;
if currency savings credited to the Suspense Account up to 1 July 1976 should not have provided the sum of $2 million, the amount of the Suspense Account be brought up to that sum from the balance of the expected 1974–75 cash surplus, if adequate, after funding the increase in the Working Capital Fund; 3
the account could be used to meet additional staff costs stemming from adverse currency movements after review by the Finance Committee;
loans from the funds in the Suspense Account to the General Fund could be made whenever the Working Capital Fund was insufficient for financing budgetary expenditure pending receipt of contributions;
any use of the Account other than that referred to under (d) and (e) above required Finance Committee review and Council approval;
the Suspense Account be closed at the end of 1977 and any unused balance transferred to the General Fund.
129. The Council accordingly recommended the following draft resolution for adoption by the Conference:
DRAFT RESOLUTION FOR THE CONFERENCE
AUTHORITY TO ESTABLISH A NEW SUSPENSE ACCOUNT
THE CONFERENCE,
Aware of the possible impact on the Organization's Programme of Work and Budget for 1976–77 of unbudgeted extra costs should there be adverse movements in currency exchange rates,
Having considered the recommendations of the Council at its Sixty-Seventh Session as regards measures to assist in the financing of unbudgeted extra costs as may have to be met during the 1976–77 biennium as a result of fluctuations of the lira exchange rate against the US dollar,
Conscious of the need to ensure that adequate cash resources are available to the Organization to finance the Programme of Work approved by the Conference for 1976–77,
1. Decides to establish a Suspense Account as of 1 January 1976 to assist in protecting the Organization against the effects of adverse currency fluctuations;
2. Directs the Director-General to credit in 1976–77 savings on staff costs arising from favourable differences between the lira exchange rate used in calculating the budget and the effective UN rate in the 1976–77 biennium to such Suspense Account, using an appropriate statistical formula for the purpose;
3. Authorizes the Director-General, after prior review by the Finance Committee, to charge additional staff costs arising from adverse differences between the lira exchange rate used in calculating the budget and the effective UN rate in the 1976–77 biennium to such Suspense Account using the same statistical formula referred to in paragraph 2 above;
4. Decides that except as provided in paragraph 7 below any other use of the Suspense Account requires prior Finance Committee review and Council approval;
5. Noting that if Member Nations pay their contributions in good time there will be a substantial cash surplus in the 1974–75 biennium which could be used, after having first increased the Working Capital Fund (Resolution …/75), to fund the Suspense Account;
6. Therefore authorizes the Director-General, notwithstanding the provisions of Financial Regulation 6.1(b), to transfer from the balance of such cash surplus the funds necessary to bring the amount of the Suspense Account up to $2 million as at 1 July 1976, should currency savings, credited to the Account up to that date under paragraph 2 above, not have already provided that sum;
7. Also authorizes the Director-General to loan funds in the Suspense Account to the General Fund to finance budgetary expenditure pending receipt of contributions to the budget whenever the Working Capital Fund is insufficient for this purpose, such loans to be repaid as soon as adequate contributions are received;
8. Further decides that at the end of 1977 the Suspense Account shall be closed and any unused portion transferred to the General Fund.
130. The Council endorsed the views of the Finance Committee on the need for closer coordination and control of travel funds in certain respects and agreed that the Director-General should report in due course on the computerization of the travel schedule.
131. The Council requested the Finance Committee to carry on with a continuing review of the use of travel funds. In this connexion, noting that members of the Council and of the Programme and Finance Committees had voluntarily accepted economy class travel for themselves, the Council supported continuing attention to the question of the class of travel for Assistant Directors-General and the Deputy Director-General.
132. The Council, in reviewing the Finance Committee's report on time recording, stressed the importance which it attached to time recording not only as a feature of programme budgeting but also as a basic source of information for the Cost Measurement System. It noted that the Cost Measurement System had now gained wide acceptance as a valuable management tool and hoped that it would continue to be used as a basis for improving efficiency and cutting costs.
133. The Council concurred with the Finance Committee that there was a need to make the time recording system meaningful and useful to various levels of Management and to overcome by training, as well as improvements, resistance to the accurate implementation of the system.
134. The Council noted the rapid growth of Trust Funds, rising over the past 7 years from $8.9 million in 1968 to $40.6 million in 1974. The Council noted with concern that the Cost Measurement System had indicated that the net subsidy provided by the Regular Programme in 1974 for Trust Fund activities amounted to $2.2 million.
135. The Council concurred with the Finance Committee that rather than revise upwards the rates of Project Servicing Costs levied on Trust Funds, the better approach would be to inculcate a greater sense of cost consciousness in those who are responsible for the negotiation of Trust Funds so that such funds are accepted in the future on a more selective basis.
136. The Council agreed with the Finance Committee that the Director-General should be authorized to continue using his discretion in accepting Trust Funds and that support costs incurred in excess of Project Servicing Cost earnings should continue to be paid from the Regular Programme subject to review by the Finance Committee on an annual basis of the results of the Cost Measurement System.
1 CL 67/2, paras 3.105–3.111, CL 67/PV/8.
137. The Finance Committee had re-emphasized the need for an effective Cost Measurement System. The Council concurred with this and also agreed on the need for selectivity in accepting Trust Funds, particularly as regards small Trust Funds which are more costly relatively in terms of support than larger projects.
138. The Council noted developments concerning the lease of additional premises (Building G) contained in the Report of the Finance Committee and endorsed the request of the Finance Committee for a further detailed report on the costs incurred in renting the additional premises together with the cost of moving. It also noted the request of the Committee for information regarding discussions with the Italian Government on the subject of longer-term needs for Headquarters accommodation.
139. The Council noted the Finance Committee's report and was pleased to acknowledge the improvement of management/staff relations in the Organization. It expressed the hope that these would continue to improve through concerted efforts from both management and staff.
140. The Council was informed of the review made by the Finance Committee on the increasing differential between bottom and top of the General Service Salary scales through cost-of-living adjustments, and on the overlap between General Service and Professional scales. It noted the Finance Committee's decision not to reopen the whole issue on these matters since the International Civil Service Commission will be making a thorough examination of the question of General Service salaries over the next two years.
141. The Council also noted the Finance Committee's review of the operation of the Associate Expert Scheme and in particular of the employment of associate experts at Headquarters. It was informed of the criteria used by the Organization for the establishment of such posts. It noted the intention of the Finance Committee to further study the matter.
142. A number of members raised the question of geographic distribution of staff at different levels, in particular at the decision-making level. On the other hand, the Council was informed that the matter was being reviewed by the United Nations and that some new and global proposals could be expected as a result of that review. The Council requested the Director-General to give increased attention to this problem and to submit concrete solutions.
