123. In considering the reports of the two sessions of the Programme Committee held in 1988, the Council noted the Committee’s decision to suspend its normal cycle of programme reviews pending the outcome of the general review of the Organization, which the Committee was charged with carrying out jointly with the Finance Committee. In order to devote more time to the Special Joint Sessions on the Review of FAO, the Committee had somewhat shortened its regular sessions. However, in the time remaining it had had in-depth discussions on several important subjects, and the Council welcomed the detailed reports which the Committee had presented on these discussions.
124. The Council concurred with the Committee’s views regarding the UN Programme of Action for African Economic Recovery and Development (PAAERD) and placed particular stress on the fact that the success of the Programme depended on a massive mobilization of resources from within and outside the region. The important contribution of FAO to the implementation of PAAERD was also highlighted.
125. With regard to the consequences of the financial situation for implementation of the Programme of Work and Budget 1988-89, the Council shared the Programme Committee’s regret that it had been necessary to initiate programme adjustments for a total of US$ 20 million, in 1988. It took note of the Committee’s acceptance of the Director-General’s proposals, and received further information on the approach and the criteria pursued by the Director-General in preparing them.
126. The Council received with appreciation the report of the Programme and Finance Committees on progress in implementing Conference Resolution 6/87 on Consideration of a Review of Certain Aspects of FAO’s Goals and Operations. By this resolution the Conference had given a mandate directly to the two Committees, working jointly and assisted by a small number of experts, to undertake the review. The Committees’ conclusions and recommendations were to be submitted by the Director-General, together with his views and comments, to the Council, which was to transmit them together with its views to the Twenty-fifth Session of the Conference.
127. The Council commended the Chairman of the Programme Committee on his clear and detailed presentation of the progress report, which had two parts: the first of these, of an historical and informative nature, covered arrangements made by the two Committees to carry out the Review and to report to the Council in 1989; the second was the result of the Committees’ deliberations on the reform of the programme budget process and was presented to the Council for discussion and decision at its current session.
128. The Council noted that the Programme and Finance Committees had reached a consensus on the following text: “After an in-depth review of the steps already undertaken in this regard in the United Nations and other UN agencies, as well as the debate on the matter at the Twenty-fourth Session of the FAO Conference, the Committees decided:
(a) to request the Director-General to prepare a brief document of about five pages indicating the budget level he intends to use in the preparation of the Programme of Work and Budget 1990-91, together with the main activities to be undertaken;
(b) the document will be made available to the members of the Committees two weeks prior to the Joint Session which will be convened in January 1989 to give early consideration to the document prepared by the Director-General;
(c) the Joint Session will make recommendations for the Director-General’s consideration on the level of the budget and the main activities of the Programme for 1990-91.The Director-General had indicated his readiness to comply with the above request.”
129. The Council was informed by the Legal Counsel that the General Rules of the Organization did not require the Director-General to prepare an outline Programme of Work and Budget. However the Rules would not preclude him from complying with such a request on a voluntary and experimental basis. For the procedure to be established on a long-term basis, on the other hand, it would be highly desirable for the Conference to amend the General Rules. He also referred to a similar situation in connection with the introduction of the process of the Summary Programme of Work and Budget in 1973, after which the Conference had amended the General Rules in 1975.
130. Several members questioned the usefulness of the proposed procedure. They pointed out that the addition of a further step in the process of formulating and approving the Programme of Work and Budget for the next biennium implied additional costs in a time of unprecedented financial stringency, and might result in a pressure for limiting the budget level. Moreover, they pointed out that the introduction of this additional step would not be in accordance with the established principle by which, in order to arrive at the proposed budget level and the Programme of Work and Budget, the comments and recommendations of all main Committees had to be taken into account. A number of members pointed out that for the procedure to be institutionalized it would be necessary for the Conference to amend the General Rules.
131. Most members welcomed the proposal. They noted that it was along lines similar to measures adopted in some other UN bodies, and was designed to facilitate the participation of Member Nations at an early stage in the process of identifying the priorities and making recommendations on the budget level to be used in the preparation of the Programme of Work and Budget for 1990-91.
132. In conclusion, the Council approved on an experimental basis, the proposal put forth by the two Committees for the preparation of the Programme of Work and Budget 1990-91.
133. The great majority of the members of the Council welcomed the fact that the Committees had agreed with the Director-General that a Study of FAO’s Field Operations was appropriate and should be included in the Review. They also welcomed the Management Review that the Director-General had proposed and the Committees had agreed to. While the Study on FAO’s Objectives, Role, Priorities and Strategies and the Study of FAO’s Field Operations were being carried out with the assistance of independent experts, the Management Review had been assigned to management consultant firms.
134. The Council noted the expeditious manner in which the two Committees had reached a consensus at their first Special Joint Session in May 1988, both on the terms of reference of the studies and on the selection of 13 high-level experts. The Council expressed satisfaction with the Committees’ choices, noting the experts’ distinction, proven competence and wide range of experience, and stressed its high expectations regarding their contribution to the review process.
135. The Council was informed that the experts had begun their work in Rome in the late summer, had been briefed on their terms of reference by the Chairmen of the two Committees, and had received all necessary documentation and assistance from the Secretariat. Following this, visits had been undertaken by experts studying FAO’s Objectives, Role, Priorities and Strategies to four international funding agencies, to 12 UN bodies and to one international research institute. The experts were accompanied by relevant senior FAO staff on these visits. Those dealing with field operations had joined the other experts for some of these visits, and had also carried out field missions in Brazil, Chile (including the Regional Office for Latin America and the Caribbean), China, Ethiopia and Senegal. They were further scheduled to visit Turkey, another international research institute, the International Centre for Agricultural Research in the Dry Areas (ICARDA) and the Regional Office for Asia and the Pacific in Bangkok. The countries to be visited had been selected on the basis of agreed criteria, which included regional coverage, size of the field programme and mix of funding sources, diversity in subject matter coverage, and the possibility of focusing on such issues as emergency operations, new dimensions, TCDC, environmental problems and collaboration with NGOs. A suggestion was also made that the experts visit the Regional Office for Africa.
136. The Council was informed that for the management review a tender had been issued in August 1988, calling for two studies, one on the Organization’s accounting policies and one on its personnel policies and procedures, and four specific reviews, of treasury operations, buildings maintenance, computer facilities and printing systems. It was also informed that seventeen bids had been received and carefully evaluated, following which the short-listed firms had been interviewed in Rome. Particular attention had been paid, in making the final choice, to the quality of the bids, the reputation of the firms involved, and the professional competence of the individuals who would carry out the work. Two of the three firms selected had already begun their work. Some members regretted that the tender had not included firms in developing countries.
137. The Council noted that the timetable involved the submission of the reports of the two expert groups and of the management consultants to a Special Joint Session of the Programme and Finance Committees in May 1989. The Council was informed by the Chairman of the Programme Committee that it would receive a report at its June 1989 Session. The need to have a substantive discussion on this issue at the June Session was stressed by some members. Nevertheless the Council agreed that an in-depth debate could only be held at the November Session. The Council recognized that the Committees would require time, after their May session, to synthesize their findings and recommendations and finalize their report in the autumn for presentation to the Council in November. The possibility of extending that session by one or two days was mentioned.
138. The Council stressed its own interest, and that of all Member Nations, in the review process. The Council agreed that the experts and Consultants, and the Committees, should be allowed the freedom necessary to complete the tasks assigned to them. Some members emphasized the need to ensure that the parts of the Review should complement each other and urged contacts between the experts and the Consultants. Some members made suggestions on the content of the Management Review. The Council was informed that the Review was expected to identify areas for more subsequent detailed analysis. Some members requested that the proceedings of the Council on this item be provided to the experts.
139. The Council recognized that it was ultimately the responsibility of the two Committees to prepare their own report, drawing on the three studies and on the comments of the Director-General, in order to fulfill the mandate entrusted to them. The Council noted with satisfaction the statement of the Chairman of the Programme Committee that this task was being undertaken with utmost seriousness and in scrupulous adherence to the terms of Resolution 6/87. Many members urged that in accordance with Resolution 6/87, the Committees should devote maximum attention to the need to make progress towards the establishment of a new international economic order within the framework of FAO.
140. In conclusion the Council reiterated that the purpose of the Review was to strengthen the Organization’s capability to better serve its Member Nations, to make FAO’s programmes more responsive to the challenges of the future and to enhance efficiency. The Council welcomed the consensus which had emerged within the Programme and Finance Committees early in the process of carrying out the Review, and expressed the strong hope that this consensus would be maintained through the successive stages of the review process.
141. The Council considered the views of the Programme Committee on the report on the case studies of operational activities at country level (the Jansson report). Although this report was not distributed as a working document of the Council, and therefore there was no request for it to be debated, the views of some Member Nations which had studied the report in depth were heard. The Council, in general, endorsed the views of the Programme Committee. The Council emphasized that the report presented a fair and balanced assessment of the difficulties and problems facing such activities, even though the sample examined (eight countries) was relatively small.
142. The Programme Committee had been in general agreement with the conclusions and recommendations of the Jansson report, with the exception of recommendation “g” of the report. The Council, in general, endorsed the Programme Committee’s view that, while it was important for Trust Fund projects to be well-coordinated, this did not necessarily require the channelling of Trust Fund resources through UNDP.
143. The Council noted that the content and conclusions of the Jansson report were closely linked to the issues and considerations currently being examined by the experts assisting the Committees in the Review of FAO, in particular those studying the Organization’s field programmes. It was emphasized that, in carrying out their work, these experts would need to take the findings of the Jansson report into account. In this connection, the Council noted with satisfaction that Mr Jansson himself was one of the experts.
144, The Council noted that the Programme Committee’s comments on the Jansson report had been submitted to the United Nations Economic and Social Council (ECOSOC) in July 1988. A number of members, while agreeing with the Programme Committee’s comments, wished to offer additional views on the contents and recommendations of the Jansson report, and to have these conveyed to the Director-General for Development and International Economic Cooperation (DG/DIEC) for further submission to ECOSOC and as an input to his forthcoming Triennial Policy Review of the Operational Activities of the UN system. These members raised the issues of the role of the Resident Coordinators, programming at country level, the harmonization of operational procedures, co-location of the system’s country offices, support costs, and the importance of building recipient government capacity.
145. With regard to the role of the Resident Coordinators, it was noted that there was scope for further improvement within existing mechanisms, bearing in mind differing country circumstances and that the governments bore the overriding responsibility in this regard. A few members referred in particular to the Jansson report’s recommendation that, in countries with particularly large UN system development programmes, the assignment of the Resident Coordinator could be separated from that of the UNDP Representative. Some did not agree with this approach.
146. The advantages of joint and integrated programming approaches were stressed by some members, in particular in connection with UNDP-sponsored Roundtable processes, Nat CAP (National Technical Cooperation Assessment a Programming exercises, and UNDP Country Programmes. In all such cases, the Council emphasized that FAO and UNDP should consult at the earliest stages and FAO should be in a position to make available its full range of expertise and capacities to recipient countries where food and agriculture was often the predominant sector. The importance of policy and sectoral-based advice was also emphasized, and in particular support and training for improved sectoral and sub-sectoral coordination as reflected in the Programme Committee’s comments. Particular stress was laid on the need for FAO to assist the recipient countries in building up their capacity to plan agricultural and rural development programmes and coordinate external assistance, including those cases where structural adjustment was being undertaken. Some members felt that a greater decentralization of design and implementation of projects at country level would help strengthen governments’ capacity, and transfer technical and management expertise.
147. Several members noted current weaknesses in UNDP Country Programming, as described in the Jansson report. They expressed the view that to be useful for purposes of coordination, country programmes should be more closely linked with overall national planning and should contain substantive analysis provided by Specialized Agencies such as FAO. They also stressed that, as UN system assistance normally comprised only a minor share of total development assistance in a given country, such programming should take due account of bilateral assistance as well as that provided by development financing institutions. The Council noted that UNDP was currently undertaking a thorough analysis of its country programming practices and underlined the importance of FAO’s full participation in this exercise.
148. Several members emphasized the importance of haromizing operational procedures, as advocated in the Jansson report. It was recognized that, while scope existed for further work in this direction, progress had recently been achieved in such key areas as reporting, evaluation, and standardization of project documents which, in appropriate cases, could be utilized for Trust Fund as well as for UNDP projects. There was also progress with regard to administrative procedures, fellowships, and procurement where FAO was cooperating within the framework of the Inter Procurement Services Unit (IAPSU). The role of the Consultative Committee on Substantive Questions (Operational Activities) (CCSQ(Ops)) and FAO’s active contribution to that Committee, was underlined in this connection.
149. In noting the Programme Committee’s appreciation of the advantages of common premises for the system’s field offices (co-location), the Council agreed with that Committee on the need for a pragmatic case-by-case approach to this matter, taking full account of the wishes of host governments which sometimes preferred FAO Representations to be located within or near the relevant agricultural ministry. The view was expressed that “co-location” in and of itself did not necessarily ensure better country-level coordination and cooperation among the organizations of the system and that, in many cases, what counted most was the quality and capacities of the individual representatives concerned. A few members said they felt that what was needed was integrated use of UN system resources to achieve common national objectives. Because of the co-location issues, one member requested information on the cost of FAO’s individual country offices.
150. Several members raised the issue of support costs in relation to the efficiency and quality of operational activities. Some members expressed the view that present support cost arrangements had become increasingly inadequate given the changing needs of countries for technical cooperation, It was noted that, in accordance with UNGA Resolution 42/196 and subsequent decision 88/50 of the UNDP Governing Council, UNDP was undertaking an examination of new support cost arrangements to apply from the beginning of its Fifth Programming Cycle (1992). In recognizing that adequate and appropriate support cost reimbursements were essential to ensure the efficacity of FAO’s field activities, the Council noted with satisfaction that FAO was actively cooperating with UNDP and other agencies in the preparation of these “successor arrangements” for support costs, and that the FAO Governing Bodies would be duly consulted with a view to their deciding on the measures to be accepted.
151. The Council was informed that the views expressed by it on this item would be conveyed to the United Nations in compliance with the request contained in UNGA Resolution 42/196.
152. The Council reviewed the two reports of the Finance Committee and noted the information regarding the implementation of the Programme of Work and Budget and the resulting evolution of the financial situation. Its considerations and findings are reported under paras 177 to 187.
153. The Representative of the United States of America announced that a
154. The Council also recalled its earlier expression of appreciation of the efforts made by a number of members, despite their economic difficulties, to meet their obligations.
155. The Council endorsed the approval given by the Finance Committee or an extension of the use of the Terminal Payment Fund to cover Repatriation Grant payments arising from the Support Cost (Trust Fund) Programme, in addition to those arising from the Trust Fund Programme proper.
156. The Council confirmed its support for the actions tending to improve the level of reimbursement of actual support costs incurred by the Organization in implementing extra-budgetary programmes. In this regard, the Council urged funding sources to consider the acceptance of appropriate project servicing charges when requested by the Director-General.
157. The Council supported the proposal that a comprehensive report be made to the next Conference on arrangements regarding the level of support costs, which would be submitted to the Council for its prior consideration.
158. The Council considered the report of the Finance Committee regarding the treatment of Miscellaneous Income for assessment purposes. It noted the Report’s comments on the possible impact of changing the current practice of deducting estimated income when calling for the payment of assessed contributions. Such a change would contribute to the financial soundness of the organization. However, this would entail a one-time increase in the level of the net payment for assessed contributions from Member Nations.
159. The Council requested the Finance Committee to keep the matter under review, taking into account the views expressed during the discussion and to take suitable action.
160. The Council noted that decisions taken by the Forty-second Session of the UN General Assembly (1987) on the recommendations of the International Civil Service Commission (ICSC) had moderated to some extent the general deterioration in the conditions of service of staff in the Professional and higher categories.
161. The Council noted that the recommendations of ICSC to the Forty-third Session of the General Assembly (1988) were still subject to review by the Fifth Committee. It also noted that if these recommendations were adopted by the General Assembly, the dependency allowance for a child and for a secondary dependant would increase with effect 1 January 1989
162. The Council also noted that ICSC had been requested by the Forty-second Session of the General Assembly to undertake a comprehensive review of conditions of service in the Professional and higher categories in order to provide a sound and stable basis for the remuneration of these categories. It also noted that the preliminary report of the Commission to the Forty-third Session of the General Assembly had covered a large number of areas, including the identification of highest paid national civil services, post adjustment, and the effect of inflation and currency depreciation on the remuneration amounts.
163. The Council was informed of the developments in conditions of service of the staff, which were reviewed by the Finance Committee, It noted that a further increase in the salaries for the General Service category was granted based on the current methodology which kept General Service staff salaries in line with salaries paid by leading employers on the local market, while salary adjustments for the Professional and higher categories continued to be frozen. The salary situation for Professional staff and above had not improved in spite of the cost-of-living survey conducted in November 1987. The Council shared the concerns expressed by the Finance Committee over the deterioration in salaries for this latter category which affected the ability of the Organization to recruit and retain highly-qualified Professional staff.
164. On pension matters, the Council was informed that the Forty-second Session of the UN General Assembly had approved the increase in the rate of contribution to the Pension Fund to 22.20 percent on 1 July 1988, and to 22.50 percent on 1 July 1989. It was also informed that a study on the UN pension system was being undertaken by the UN Joint Staff Pension Board at the request of the General Assembly.
165. The Council noted that the Finance Committee had reviewed in detail the Statistics of Personnel Services and had expressed its satisfaction with the improvements introduced that led to greater transparency and a better understanding of the staff resources of the Organization. The Council endorsed the Finance Committee’s request that the Secretariat continue to refine the statistics, providing in particular more details on temporary services.
166 The Council noted the status of contributions at 11 November 1988, compared to the same date in 1987, as well as the details of receipts in 1988 and outstanding contributions of all Member Nations as shown in Appendix E to this Report.
| (for comparison) | ||
| 1988 a b | 1987 | |
| US$ | US$ | |
| Current assessments | 240 920 000.00 c | 198 575 000.00 c |
| Contributions in arrears | 93 876 857.21 | 78 069 434 69 |
| Total | 334 796 857 21 | 276 644 434 69 |
| Receipts 1 January to 11 November | ||
| Current assessments | 157 168 156.23 | 131 100 629.30 |
| Contributions in arrears | 37 561 450.58 | 47 694 669.46 |
| Total | 194 729 606 81 | 178 795 298.76 d |
| Amounts outstanding at 11 November | ||
| Current assessments | 83 751 843 .77 | 67 474 370 .70 |
| Contributions in arrears | 56 315 406 63 b | 30 374 765.23 |
| Total | 140 067 250.40 | 97 849 135.93 |
aAppendix E sets out full details of receipts during 1988 (US$194 729 606.81) and outstanding contributions of all Member Nations.
bContributions in arrears include arrears payable under Conference authorizations by instalments due in 1988 (in 1987 in comparative figures) and in future years (on 1 January 1988, US$48 100.58 due in 1988 and US$267 834.98 due in future years).
cOf which US$600 000.00 relates to the Tax Equalization Fund.
dReceipts include the release on 1 January 1987 of cash surplus of 1984-85 biennium: US$17 354 871.34 applied to current assessments (8.73%) and US$11 744 610,66 to arrears.
167. The month-end cumulative percentages of 1988 assessments received during the eleven months of 1988, as compared to receipts during the preceding four years, is shown in the following statistics.
| 1988 | 1987 a | 1986 | 1985 b | 1984 | |
| % | % | % | % | % | |
| January | 7.01 | 10.41 | 10.37 | 24.69 | 6.28 |
| February | 20.62 | 24.25 | 15.89 | 28.25 | 8.73 |
| March | 31.10 | 32.40 | 24.50 | 30.95 | 14.21 |
| April | 33.94 | 44.75 | 30.26 | 37.31 | 27.09 |
| May | 43.51 | 50.38 | 36.10 | 47.89 | 30.92 |
| June | 53.03 | 61.00 | 40.67 | 51.35 | 51.90 |
| July | 54.38 | 63.25 | 62.48 | 59.63 | 55.42 |
| August | 60.96 | 63.78 | 63.00 | 60.14 | 57.44 |
| September | 61.89 | 64.47 | 63.40 | 63.33 | 60.66 |
| October | 65.20 | 65.77 | 64.75 | 73.52 | 86.34 |
| November | 65.23 c | 66.15 | 65.86 | 91.35 | 91.44 |
| December | 66.17 | 66.96 | 92.50 | 92.60 |
a Includes US$17 354 871.34 (8,73% of 1987 assessments) as distribution of the cash surplus of the 1984-85 biennium applied as of 1 January1987.
b Includes US$41 005 487.00 (20.72% of 1985 assessments) as distribution of the cash surplus of the 1982-83 biennium applied as of 1 January 1985.
c Receipts at 11 November; preceding years at month end as well as at 31 December.
168. At 11 November 1988, the position of Member Nations (and the number of Member Nations with arrears) with comparative figures at the same date during the preceding four years, was as follows:
| Number of Member Nations | ||||||
| Current-Assessments | Arrears | |||||
| % Receive | Paid in Full | Part-paid | No Payment | Total | ||
| 1988 | 65.23 | 73 | 31 | 54 | 158 | 43 |
| 1987 a | 66.16 | 91 | 19 | 48 | 158 | 41 |
| 1986 | 66.50 | 74 | 23 | 61 | 158 | 54 |
| 1985 b | 92.40 | 85 | 19 | 54 | 15 | 41 |
| 1984 | 92.00 | 78 | 23 | 55 | 156 | 53 |
a To facilitate comparisons, applications of the cash surplus (9.20%) to the current assessments of 80 Member Nations are excluded from the Number of Member Nations.
b To facilitate comparisons, applications of the cash surplus (20.72%) to the current assessments of 84 Member Nations are excluded from the Number of Member Nations.
169. Receipts at 11 November 1988 of the 1988 assessments were more favourable than those of 1986, but less favourable than those of 1984, comparable years without a cash surplus distribution.
170. As at 11 November 1988, only 73 Member Nations had paid their assessments in full, while 31 Member Nations had made only a partial payment, leaving 54 Member Nations who had made no cash payment at all in 1988.
171. The Council was informed that, at 11 November 1988, a total amount of US$56 315 406.63 of arrears of contributions remained outstanding, including US$42 410 211.57 overdue from the largest contributor. As at 11 November 1988, 79 Member Nations had made cash payments, of which 19 had paid their arrears in full. Amounts of more than US$1 million were due from eight Member Nations, totalling US$53 359 579.59 and representing 94.7 percent of arrears outstanding.
172. The Council noted that, of the total amounts due at 1 January 1988 amounting to US$12 309 000.00 and US$3 742 050.00 , respectively, 71 Member Nations had made cash payments as at 11 November 1988, leaving balances of US$4 581 022.57 and US$1 351 243.12, respectively, outstanding on 11 November 1988.
173. The Council was informed that it was not possible to prepare a realistic cash-flow forecast for 1989 in view of the lack of information from Member Nations as to the expected timing and amount of contribution payments. It noted that while such information was always requested by the Organization, it was rarely received. The Council recognized that if the same irregular contribution pattern experienced in 1988 were repeated during 1989, the Organization could expect to be in a cash deficit position at various times in 1989.
174 Notwithstanding the positive response made by many Member Nations to the Director-General s special appeal in July 1988 for payment of their arrears and outstanding contributions, 85 Member Nations made no payment, or only partial payment of 1988 assessed contributions, and 43 Member Nations owed arrears for 1987 and prior periods. In this connection, information available regarding the receipt of assessments due from the largest contributor also continued to be of great uncertainty.
175. The Council emphasized the responsibility of every Member Nation, irrespective of the amount of its assessed contribution, to fulfill its financial obligation to the Organization as called for in the Financial Regulations, including payment of contributions when assessed.
176. The Council appealed to all Member Nations with outstand contributions and particularly to those which were in arrears, 6 7 to a Of which US$224 350.00 of credits applied as follows: US$72 475.00 against 1987 arrears and US$151 875.00 against 1988 assessments.
remit the amounts due as a matter of urgency, in order that the Organization could fulfill its mandate. It further urged all Member Nations to pay their 1989 assessed contributions, and also to inform the Organization in advance as to the timing and amount of payment as early as possible. This would permit the preparation of a reliable 1989 cash-flow forecast which was required to manage the financial situation in a prudent and efficient manner.177. The Council expressed its concern with the financial situation faced by the Organization and noted the cash-flow forecast of 1988 showing that the shortfall of available cash could be in the amount of US$2 million to US$5 million at year-end.
178. The Council was informed that at 11 November 1988, Us$83.7 million or 34.8 percent of the 1988 assessments, remained unpaid. Also, the amount owed for 1987 and prior year arrears, US$56.3 million at 11 November 1988, was the highest in history for 11 November of any year. It was further informed of the deficit of expenditure over income in the amount of US$46.8 million carried over from the past biennium with zero balance in the Working Capital Fund and the Special Reserve Account. The deficit was expected to increase at year-end by another US$8 million to US$10 million.
179. The Council noted that the financial results projected for 1988 showed a continuation of a serious financial condition compelling the Director-General to institute a US$20 million slow-down in expenditure. The deficit caused by the excess of expenditure over income was expected to be somewhat lower for 1988 than for 1987 because of the forced slow-down in expenditures coupled with the receipt of US$15 million from the generous contribution of the Italian Government to support the TCP Programme. However, at year-end there would be a substantial increase in the amount of arrears to be carried over to 1989. Some members suggested that information regarding the breakdown of budget appropriation and expenditure by major programmes, similar to that provided in Conference document C 87/LIM/41, be available to the wider membership at the present Council session. The Secretariat clarified the difficulties of meeting this request, and subsequently agreed that this information would be provided to the Finance Committee. The Council noted the situation on the matter
180. Members of the Council stated their concern for the seriousness of the ongoing financial condition and invoked Member Nations to pay all outstanding contributions with urgency. The Representative of the United States of America announced that the US Government had informed the Director-General the previous week that the United States had initiated action to pay US$25 million to FAO shortly. The Council noted that call letters to Member Nations for the payment of contributions for 1989 assessments were intended to be despatched in early December 1988 with a view to payments of contributions due on 1 January 1989.
181. While recognizing that all Member Nations bore the same responsibility to pay their contributions in a timely manner, the Council considered that the severe financial difficulties suffered by the Organization were due to the lack of timely payments of assessed contributions by many Member Nations. The greatest impact to the financial situation was caused by delays in payment of its contribution by the major contributor. The Council welcomed information from the Representative of the United States of America that its President intended to submit to the US Congress, in January 1989, a request for appropriation of the full amount of US obligations to UN organizations for the US fiscal year 1990. The Council was also informed by the Representative of the United States of America that the President had asked for a plan regarding payment of all arrears due to UN organizations.
182. The Council, in general, clearly stated its support for the manner in which the Director-General had managed the implementation of the Programme of Work and Budget for 1988 through budgetary savings and cuts, slow-downs in expenditure and entering into contracts for the forward purchase of Lire. The Council also welcomed the assistance from receipt of a generous extraordinary contribution from the Host Government. Such actions were necessary for the Organization to plan its work even though it could only be accomplished at a reduced level during 1988. Some members sought advice on the rationale adopted by the Secretariat in effecting cost savings. The Council noted that the subject had been considered by the Programme Committee at its Fifty- fourth Session in May 1988, and was included in its report.
183. The Council regretted that it had been found necessary to reduce FAO services by US$ 45 million over 1987 and 1988, which had affected all beneficiaries, particularly developing countries. Furthermore it weakened the Organization’s capacity at a time when demand for its services continued to increase.
184. The Council recalled that at its Eightieth Session, 9 by Resolution 2/80, confirmed by Conference Resolution 14/83, it had given a standing authority to the Director-General to borrow in view of the deterioration in the timing of the payment of contributions. It had taken this decision after noting the recommendations of the Finance Committee and of the Committee on Constitutional and Legal Matters (CCLM).
185. In this regard, the Director-General informed the Council that he had taken all possible measures to ensure prudent management of the financial crisis, whilst taking account of his legal mandate to implement fully the Programme voted by the Conference. He further confirmed that he could not envisage further budgetary reductions without damaging the Organization’s vital staff resources, and that he would use his authority to borrow should the cash flow situation further deteriorate. The Director-General indicated that in such an instance he would first make recourse to internal borrowing before resorting to commercial banks for the provision of lines of credit for temporary coverage of any cash shortage during 1989. In any event the Director-General would keep the Finance Committee fully informed.
186. A few members of the Council, while showing concern for the financial situation, stated that the Organization should manage within its means even if this meant further reductions of expenditure and they indicated strong opposition to external borrowing. The Council in its large majority, however, felt strongly that in the present financial situation it was for the Director-General to exercise the authority to borrow under the most favourable conditions.
187. The Council, in general, agreed that no further budget cuts should be made for 1989, as it was felt that such cuts would damage the Organization and reduce staff resources to the detriment of future capacity to cope with the mandate and the expectations of Member Nations. The Council concluded that bearing in mind the views expressed in the debate, the Director-General should, in conformity with the mandate given to him by the Conference, take any measures he deemed necessary to carry out the Programme of Work and Budget approved by the Conference.
188. The Council reviewed the reports on the above accounts. It noted that in the Report for each of the three Programmes, the External Auditor had expressed the opinion that the financial statements presented fairly the financial position at 31 December 1987 and the results of the operations for the period then ended; that they were prepared in accordance with the stated accounting policies which were applied on a basis consistent with that of the preceding financial period; and that the transactions were in accordance with the Financial Regulations and legislative authority.
189. With regard to the Regular Programme accounts, the Council noted the External Auditor’s Report on the Control of Manpower and the Summary and Conclusions contained within the Report and agreed with the importance given to this subject. The Council was informed that a copy of the External Auditor’s Report dealing with manpower had already been provided to the Management Consultants reviewing personnel activities.
190. The Council further noted the External Auditor’s suggestions regarding the administration of Trust Fund projects and that, resources permitting, the Organization intended to put them into effect, including the review of the UNDP’s guidelines on project administration with a view to a possible standardization of field project procedures.
191. With regard to the UNDP accounts the Council noted that the External Auditor had made several constructive suggestions for improvements in project formulation and evaluation, procurement and progress reports. The Council also noted with satisfaction that, subject to the availability of funds, the Organization intended to implement the Auditor’s recommendations.
192. The Council, in general, endorsed the views of the Finance Committee to the effect that the reports of the External Auditor on the Regular Programme and UNDP accounts be communicated to the experts involved in the ongoing Review of FAO and that a progress report on the implementation by the Secretariat of the Auditor’s suggestions be presented to the Finance Committee.
193. In his opening statement, the Executive Director of WFP stated that he was not going to comment on the substance of the part of the Finance Committee’s report which dealt with the certification of the WFP accounts, paragraphs 4.43 to 4.52, since the Finance Committee had decided to consider this matter at its 1989 Spring Session. He welcomed the Finance Committee’s decision since the review was intended to encompass “the manner in which the Member Nations intended the Joint Report to be interpreted’. He also indicated that the CFA would no doubt take into account the comments of both the Finance Committee and the Advisory Committee on Administrative and Budgetary Questions (ACABQ).
194. In referring to the second part of the Finance Committee’s report, paragraphs 4.53 to 4.56, the Executive Director stressed that these comments related to the management of development projects and not to the financial accounts which had not been commented on or qualified by the External auditor. He further underlined that he had encouraged the External Auditor to undertake such audits since it was of great help to him, as the person responsible for the management of the Programme, to have as much information as possible about aspects of the running of this very large and complex operation.
195. The Executive Director further stated that he had felt impelled to make his intervention to dispel any misunderstanding on the External Auditor’s findings He wished the Council members to know that the External Auditor had informed the Finance Committee that he did not consider his report on the management of WFP development projects to be unduly critical or significantly different from his comments on the management of FAO and its Trust Funds.
196 The Executive Director pointed out that the CFA had yet to examine the External Auditor’s report and that further information on all the matters would be given at that time, including progress in implementing the findings and conclusions.
197 Several members, while recognizing the difficulty under which the Programme worked and the progress that had been made through the introduction of the new Project Cycle, urged the Programme to consider the findings of the External Auditor with the utmost seriousness, especially as they concerned reporting and projects involving counterpart funds, and to respond to the recommendations with alacrity. The Executive Director reminded the Council that, in fact, the recommendations were few in number and that the External Auditor himself had indicated that corrective actions were in most cases underway. He assured the Council, however, that the WFP Secretariat would provide due attention to the resolution of the problems noted.
198. Questions were raised concerning the system for establishing priorities for new activities, and the proportion of the global portfolio accorded to different regions. The Executive Director described the principles which governed the portfolio allocation process, and noted that the regional balance was fairly stable over time and reflected a consensus in the CFA concerning its appropriateness.
199. Some members stated their intention to recommend that at the next CFA session, the WFP be asked to undertake an assessment during 1989 of the project cycle reforms. The results would be available for presentation to the CFA Spring 1990 Session and in time to facilitate the broader review of reporting and monitoring which the Finance Committee had asked the External Auditor to undertake in his next report.
200 The Council noted the necessity of continued close collaboration between FAO and WFP. Some members noted that it was particularly important that food aid policies should be applied in conformity with world and national strategies and priorities in the context of food security plans and should be carefully orchestrated with FAO and guided by policies evaluated by the Committee on Food Security (CFS). Other members, however, underlined the importance of general policy issues regarding food aid being dealt with under the aegis of the CFA.
201. Several members drew attention to the fact that, as had been noted in the minutes of the Finance Committee, the Executive Director, rather than the Director-General, had for the first time certified the WFP biennium accounts. The Executive Director and the representative of the FAO both explained their respective views of the circumstances which led to this fact.
202. The Council noted the Chairman of the Finance Committee’s description of his Committee’s deliberations in this regard, and agreed that it was appropriate for the next Finance Committee Session to take this matter under further consideration. The Council agreed that it was in the interest of all, but especially of the poorest countries, that the difficulties which had arisen between the Organization and the Programme be resolved with respect for relevant statutes and standards. Some members called the Council’s attention to the possible implications of the issue on the juridical linkage between FAO and WFP and noted that, in their opinion, this linkage should not be altered.
203. The Council endorsed the Finance Committee’s recommendation and agreed to forward the following resolution to the Conference for adoption:
THE CONFERENCE,
Having considered the report of the Ninety-fourth Session of the Council,
Having examined the following audited accounts and the External Auditor’s Report thereon:
| Regular Programme 1986-87 | C 89/5, C 89/5-Corr.1 |
| United Nations Development Programme 1986-87 | C 89/6 |
| World Food Programme 1986-87 | C 89/7, C 8917-Corr.1 |
Adopts the above audited accounts.
204. The Council considered a report from the Director-General on a preliminary proposal for the return of the Regional Office for the Near East to the Region.
205. The Council recalled Conference Resolution 20/79 on the Regional Office for the Near East and action pursuant to that Resolution by which the Regional Office in Cairo had been closed and the Office had continued implementing the regional programmes for the Near East from FAO Headquarters.
206. The Council took note of the desire of the Member Nations attending the Nineteenth FAO Regional Conference for the Near East (Muscat, Oman, 13-17 March 1988) that the Regional Office for the Near East be returned to the region and of the request to the Director-General to include this issue in the Provisional Agenda for the forthcoming Twenty-fifth Session of the Conference of FAO, to be held in November 1989. The Council recognized that since the decision of the closure of the Office in Cairo had been taken by the Conference, its eventual reopening would also have to be decided upon by the Conference.
207. The Council fully endorsed the desire of the Member Nations of the Near East Region that the Regional Office should return to the Region. It agreed that while programmes for the Region had been implemented effectively from Headquarters, the quality of implementation and the impact of the programmes would be significantly enhanced if the Office were to operate once again in the Region.
208. The Council noted the interest of the Government of the Arab Republic of Egypt to resume the provision of host facilities for the Office. The Council generally expressed appreciation for this offer. At the same time, it did not wish to exclude consideration of any other offer that might be made by any other Government of the Near East Region and felt that it would be desirable for them to be consulted in the matter. It requested the Director-General to take the necessary measures for this consultation.
209. The Council noted some preliminary estimates in connection with the return of the Office to the Region, relating to the relocation of staff and dependants and acquisition of furniture and equipment. It was recalled that when the Office had been moved to Rome, a number of Member Nations of the Region had provided voluntary contributions to help finance the cost of that relocation and that the unutilized balance of these funds might be agreed to by the same governments for the return of the Office to the Region.
210. The Council noted that the Director-General would consult the governments which had provided voluntary contributions for the relocation of the Office in Rome on whether they would agree to their share of the unutilized balances being used for the return of the Office to the Region. The Council agreed that the Director-General should submit a full proposal on the return of the Office to the Region to the Council, for forwarding to the Conference at its Twenty-fifth Session in November 1989. In this connection a few members referred to the relevance of the Review of FAO currently underway.
211. The Council noted that the proposals of the Director-General for the Programme of Work and Budget for 1990-91 would include budgetary provision for the relocation of the Regional Office in the Region so that, if the proposal were accepted by the Conference, the transfer of the Office could be effected during the forthcoming biennium.
212. The Council recalled that the Director-General reported to it once a year on the unscheduled sessions approved and on the sessions cancelled.
213. The Council noted between 1 January and 1 October 1988, 12 unscheduled sessions had been approved and 45 sessions had been cancelled. Details are given in Appendix F to this report.
214. The Council expressed its deep regret that the current financial difficulties affecting the Organization had led to the cancellation of so many sessions, depriving Member Nations of their usefulness. It again expressed the hope that this situation would be transitory and that implementation of approved programmes under the Regular Programme would be resumed.
215. The Council considered proposals for a revised calendar of sessions for 1988-89, both as regards its own sessions as well as the sessions of those bodies which report to it.
216. After a searching debate, the Council concluded as follows:
(d) that the Fifty-seventh Session of the Committee on Commodity Problems would be postponed by one week and would be convened from 3 to 7 July 1989.
217. The revised Calendar of Sessions for 1988—89 of the Council and of those Bodies which report to it is given in Appendix G to this report.
1 CL 94/3; CL 94/4; CL 94/PV/l2; CL 94/PV/13; CL 94/PV/17.
2 CL 94/4; CL 94/PV/12; CL 94/PV/13; CL 94/PV/17.
3CL 94/3 paras 3.4 - 3.10 and 3.46 - 3.121; CL 94/4, para. 4.69 - 4.83; CL 94/PV/12; CL 94/PV/17.
4CL 94/4 paras 4.69 - 4.88; CL 94/PV/12; CL 94/PV/17.
5CL 94/4, paras 4.12 - 4.38; CL 94/LIM/l; CL 94/PV/2; CL 94/PV/3; CL 94/PV/16; CL 94/PV/17.
6 The delegation of the United States of America stated that it supported paragraph 176 as submitted by the Drafting Committee, and objected to the attempts of Cuba and Colombia to alter the impression of concern about payment by each and every country which was in arrears into an erroneous impression of concern solely about US payments.
The United States of America noted that FAO document CL 94/LIM/l reported that, as of 11 November 1988 (a date which preceded a US payment of $25 million to FAO) a large number of member countries had failed to pay their assessed contributions. Many of the outstanding contributions, as a percentage of the amount owed in 1988, were proportionately greater than the outstanding contributions of the United States of America.
Countries other than the United States of America which had outstanding contributions were: Antigua and Barbuda, Argentina, Bahrain, Benin, Bolivia, Brazil, Burkina Faso, Burma, Burundi, Cape Verde, Central (cont.)
African Republic, Chad, Chile, Comoros, Congo, Cook Islands, Costa Rica, Côte d’Ivoire, Cuba, Democratic Kampuchea, Dominican Republic, Ecuador, El Salvador, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana, Greece, Grenada, Guatemala, Guinea, Guinea-Bissau, Haiti, Honduras, India, Indonesia, Iran (Islamic Republic of), Iraq, Israel, Kuwait, Laos, Lesotho, Liberia, Libya, Malawi, Malaysia, Maldives, Mali, Mauritania, Mauritius, Mexico, Mozambique, Namibia, Niger, Nigeria, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Samoa, Sao Tome and Principe, Saudi Arabia (Kingdom of), Senegal, Seychelles, Sierra Leone, Somalia, St Christopher and Nevis, St Vincent and the Grenadines, Sudan, Suriname, Syria, Tanzania, Togo, Tunisia, Turkey, Uganda, United Arab Emirates, Uruguay, Venezuela, Yugoslavia and Zaire.
The countries other than the United States of America in arrears were: Argentina, Burkina Faso, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Cuba, Democratic Kampuchea, Dominican Republic, Ecuador, Equatorial Guinea, Gabon, Gambia, Grenada, Guatemala, Guinea-Bissau, Iran (Islamic Republic of), Israel, Liberia, Libya, Mali, Mauritania, Mozambique, Nigeria, Paraguay, Peru, Poland, Romania, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, St Christopher and Nevis, St Vincent and the Grenadines, Suriname, Syria, Tanzania, Turkey, Uganda and the United Arab Emirates.
Expressed as a percentage of 1988 outstanding contributions, the outstanding contributions of the following countries exceeded those of the United States of America: Argentina (195%), Burundi (337%), Cape Verde (265%), Central African Republic (290%), Comoros (240%), Congo (174%), Côte d’Ivoire (231%), Cuba (205%), Democratic Kampuchea (561%), Dominican Republic (271%), Equatorial Guinea (313%), Guatemala (273%), Guinea-Bissau (263%), Iran (Islamic Republic of) (242%), Liberia (235%), Libya (259%), Nigeria (305%), Paraguay (261%), Peru (265%), Poland (189%), Romania (497%), Sao Tome and Principe (313%), Senegal (191%), Sierra Leone (250%), Suriname (313%), Syria (251%), Tanzania (251%), Turkey (182%) and Uganda (293%).
7The delegations of Colombia and Cuba stated that the above text misinterpreted their position which was that the timely payment of contributions would permit the normal operations of FAO.
8CL 94/4, paras 4.22 - 4.38; CL 94/PV/2; CL 94/PV/3; CL 94/PV/16; CL 94/PV/17.
9CL 80/REP, paras 73 - 85.
10C 89/5 and C 89/5-Corr.1; C 89/6; C 89/7 and C89/7-Corr.1 (English only); CL 94/4 paras 4.39 - 4.57; CL 94/PV/14; CL 941PV/17.
11CL 94/17; CL 94/PV/14; CL 94/PV/l7.
12CL 94/7; CL 94/PV/15; CL 94/PV/17.
13CL 94/14; CL 94/PV/15; CL 94/PV/17.
