I take pleasure in submitting to the Council, through the Programme and Finance Committees, the proposed Medium Term Plan for the period 2006-11.
The revamped Medium Term Plan (MTP) is now a well entrenched practice in the Organization. It is worth recalling that it stems from the landmark decisions by the Conference at its session of November 1999, when it endorsed both a long-term Strategic Framework (SF) and an enhanced programme - budget process for FAO.
In building on the preceding two versions of the MTP, which appeared to have been appreciated by the Governing Bodies, this document includes a number of innovations, such as the application of the new programme model to the “non-technical and technical cooperation” areas in addition to the “technical programmes”. Therefore, Part II now covers the entire PWB programme structure, showing that it is possible to apply a results-based approach to all activities. Other innovations are the addition of chapters on “Regional Dimensions” and “Capital Budgeting”.
In line with the desire expressed by the concerned Bodies to see a more concise document, a major effort was made this time to adhere more closely to the concept of a “rolling” plan. This concept implies indeed that each version of the plan should primarily focus on change over the previous version, therefore avoiding unnecessary repetition of details in terms of both explanations of the contexts or planned activities for those entities which have not substantially changed. And in fact, there is no loss of information as it is always possible for delegations to consult FAO’s Web site to obtain more details if they so wish.
While Part II follows the established programme structure of the PWB, to which Members are accustomed, Part I shows how the Corporate Strategies and the Strategies to Address Cross-Organizational Issues (the SACOIs) of the Strategic Framework are to be translated into effective action. Priority Areas for Inter-disciplinary Action (PAIAs) which facilitate inter-disciplinary responses to problems which cannot be satisfied with simple sectoral solutions are similarly treated. The approach to Part I in the MTP will, if it meets with Members’ expectations, be followed in the PWB and eventually in the Programme Implementation Report (PIR) as already tentatively done in the PIR 2002-03 which is also before the Committees and the Council at the same sessions.
Traditionally, the MTP includes indicative resource projections over its six-year period of coverage. When resource requirements for the future are to be addressed, they cannot be artificially divorced from the experience of the recent past and the situation prevailing at the present time. One needs again to recall the unfortunate history of budget decisions reached in FAO in the last few biennia. In November 1993, the Conference adopted a budget level for the following biennium of US$ 673.1 million. This was followed by a nominal decline to US$ 650 million and a period distinguished by so-called zero nominal growth, since on three successive occasions the Regular Budget Appropriation was held at US$ 650 million. A ray of hope came in November 2001, when for the first time in many years the budget was approved on the basis of zero real growth, even if this involved a level of only US$ 651.7 million.
The compromise reached in the Conference in early December 2003 involved a substantial nominal increase in the budget to meet part of the anticipated cost increases for the present biennium and, more significantly, the currency impact, both of which are factors beyond the control of the Organization. But the Membership was not in a position to endorse again a zero real growth budget which would have required an increase of close to US$ 150 million simply to maintain purchasing power. Regrettably, this led to further cuts to the programmes and to reductions in staff in order to meet the reduction in the budget of just over US$ 50 million in real terms. On the positive side, there was a parallel decision to adopt a split currency system of assessments, which should remove the need for much of the discussion on the impact of exchange markets on PWB proposals in the future.
The search for complementary extra-budgetary resources will obviously be pursued as a major preoccupation for all concerned units. However, Members have repeatedly emphasized that the core programmes of this Organization, the capital of expertise and the unique platform it offers for concerted action at a time when daunting challenges are facing humankind generally and in the food and agriculture sector in particular, must be adequately funded under its Regular Budget. With this imperative in mind and recalling the erosion of resources by 24% in real terms experienced since 1994-95, this MTP continues to make the case for the needed resumption of real growth.
The proposed percentage of overall real growth is only 2.2% per annum. This is in line with the net GDP growth currently experienced and forecast for countries in the euro area – selected as they were forecast as being the slowest growing group of OECD countries. The rationale for this growth rate is to keep the evolution of FAO’s resources in line with the minimum GDP growth expected amongst the major contributors to the Organization’s budget. Is it far fetched for an international Organization, the mandate of which covers a key sector of the world economy and which moreover has experienced prolonged budgetary restraint over so many years, to contemplate a level of real growth which simply evolves in harmony with the GDP of those countries which are also the major contributors to its budget?
It needs to be stressed that the real growth proposed in the MTP, beyond being quite modest, is not applied “across the board”. It is deliberately focused on a limited number of high priority areas. While all FAO units have been invited in the first instance to firm up their plans based on existing resource levels in the aggregate, they were subsequently asked to develop a restricted set of real growth proposals. These are highlighted in the document through special “boxes” under the applicable programmes.
In summary, the real growth has been applied to:
Other important needed investments or one-time expenditures are proposed under the Capital Budgeting facility set up by the last Conference, as explained in Part IV of the document.
As befits the formulation of an MTP, every effort was made to reflect in the proposals known concerns and expectations of the Membership. Clearly not all can be accommodated if resources remain as tight as they are at present under so many areas. As per established practice, the Committees on Agriculture, Fisheries and Forestry will also have the opportunity at their scheduled sessions of 2005 to provide advice on those activities falling under respective mandates and their views will be given due consideration in the budget preparation process for 2006-07.
I trust that the Programme and Finance Committees and the Council could see their way to endorse in principle the proposals in this Medium Term Plan 2006-11, while detailed observations and requests for adjustments will of course be given full consideration in the PWB preparatory process.
In this light, I look forward to a positive outcome from the discussions in the Committees and the Council.
Jacques Diouf
Director-General
