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VII. Administrative and financial matters


A. Headquarters removal fund
B. United nations loan
C. Level of working capital fund
D. Currency of working capital fund
E. Establishment of a special fund
F. Scale of contributions
G. Collection of contributions
H. Action to obtain payment of contributions in arrears
I. Currency of contribution payments
J. Residual assets of I.I.A.
K. Audited accounts


A. Headquarters removal fund

The Conference had before it the Director-General's report, Establishment of Permanent Headquarters of FAO in Rome (C50/14) and a note by the Council, Removal of Headquarters (C50/26). The Conference has considered revised estimates of the cost of removal of Headquarters to Rome and noted that these costs have been reviewed by the Committee on Financial Control, the Headquarters Advisory Committee, and the Finance Committee of the Tenth Session of the Council. The Conference thinks that it would be desirable to annex to the 1951 Budget a statement of these costs together with the sources of funds for meeting them, and to this end adopts the following resolution:

The Conference -

Having determined that Headquarters removal costs, based on current estimates will approximate $1.6 million;

Having determined that resources are available to meet such costs without resort to extraordinary financial measures other than a loan of $801).000 from the United Nations;

- Approves the establishment of a Special Headquarters Removal Fund from resources indicated in the attached statement to defray expenses, as shown therein of moving FAO Headquarters to Rome, Italy;

- Directs that the statement of sources and application of the Fund be annexed to the FAO Budget for 1951; and

- Decides

  • (a) that the withdrawal from the Working Capital Fund may exceed the amount shown in such annex; but in no event shall it be more than the amount of the unspent balances of the second and third financial years and the amount of the Pension Fund set-aside transferred to the Working Capital Fund, less such part of the set-aside as is needed to meet any cash deficit resulting from the regular 1950 Program of Work ;

    (b) that FAO Financial Regulations authorizing transfers between chapters of the Budget shall be applicable to this annex only to the extent that future developments indicate a need for transfer from the regular Budget to increase the 1951 Budget allocation to the Removal Fund;

    (c) that Financial Regulations authorizing budgetary within-chapter transfers shall be applicable to the various items of removal costs as shown in such annex; and

    (d) that the Fund shall continue so long as is necessary to meet all removal costs, any balance remaining in the Special Headquarters Removal Fund after all removal expenses have been paid to be considered as an unused balance of the loan from the United Nations, and shall be repaid immediately without regard to any existing repayment schedule.

  • B. United nations loan

    The Ninth Session of the Council of FAO authorized the Director-General to negotiate a loan of $800,000 from the United Nations to be used to cover part of the costs of transfer of Headquarters to Rome. The Conference notes that the Director-General has made formal application to the United Nations for such a loan and that the Fifth Committee of the General Assembly has reported favorably on it.

    The Conference therefore -

    - Recommends that the Director-General proceed with the negotiation of the detailed terms of the loan as soon as he is informed that the General Assembly has approved the loan;

    - Recommends that in his negotiation with the Secretary-General of the United Nations the Director-General seek inclusion of the following principles in the loan agreement:

  • (a) Provision for accelerated repayment of the loan, should FAO find it possible to make additional payments from time to time, or to pay annual installments in advance of their due date;

    (b) Provision that any interest to be charged on a part or all of the loan for any part of the loan period be applicable only to the unpaid principal balance of the loan; and further

  • - Recommends that the loan agreement, when formalized by the Secretary-General of the United Nations and the Director-General be reviewed by the Committee on Financial Control before it is signed on behalf of FAO.

    C. Level of working capital fund

    In accordance with instructions of the Fifth Session of the Conference, the Eighth Session of the Council authorized the Committee on Financial Control to appoint a working party of experts to review existing regulations governing the Working Capital Fund in the light of practices of the United Nations and of other specialized agencies. The Conference has taken note of the report of this working party, together with the comments of the Committee on Financial Control

    The Conference -

    Having revised the Financial Regulations governing the Working Capital Fund, and

    Having considered the necessity for (a) an adequate cash reserve to meet current cash needs, and (b) a liquid asset for possible contingencies;

    - Decides that the Working Capital Fund of the Organization shall, for the financial year 1951, be established at $1,750,000;

    - Decides that the Fund shall be established by advances payable by member nations on the basis of membership and scale of contributions to the Budget for 1951;

    - Approves the application of existing credits in the Fund to offset the advances payable by member nations to the Fund;

    - Approves, nevertheless, and notwithstanding the provisions of Regulation 6.5 (b), the retention in 1951 of any excess credits which member nations have in the Fund; and

    - Decides that member nations having less credits in the Fund than the amount of advances payable, should pay in 1951 the additional advances due; except that a member nation experiencing difficulty may agree with the Director-General that payment, in U.S. dollars, may be made over a period of two years.

    D. Currency of working capital fund

    The Conference notes the proposal of the Drafting Committee on amendments to the Constitution, Rules of Procedure, and Financial Regulations, that payments made by a member nation shall be credited first to any advances due to the Working Capital Fund and then to the oldest outstanding contributions due from that member nation. It also notes that this provision was recommended by the Committee on Financial Control, and is incorporated in the Financial Regulations adopted by the United Nations. However, the Conference notes that the enactment of such a regulation might create difficulties if legislative action by a member government were to provide that its contribution be made applicable to a particular year.

    Although the Conference has approved Financial Regulations requiring that any advances to the Working Capital Fund be paid in dollars, some doubts have been expressed as to the necessity of maintaining the entire amount of the Working Capital Fund in U.S. dollars in the future.

    The Conference therefore -

    - Requests the Council to direct the Committee on Financial Control to study the question of the currency of contributions to the Working Capital Fund subsequent to 1951

    Disposition of Unspent Balances

    The Conference notes the recommendation of the Tenth Session of the Council, that the balance of the Pension Fund set-aside of $255,000 should be routed through the Working Capital Fund in order to establish equities for member nations who contributed to this reserve and be used therefrom to cover any 1950 cash deficit, and to defray in part the costs of removal

    The Conference -

    Having determined that there exists in the Pension Fund set-aside a surplus of $255,000;

    Believing that this surplus should be used to meet any 1950 cash deficit of the Organization and to defray in part the Headquarters removal costs;

    Having also considered the recommendations of the Committee on Financial Control and the Report of the Tenth Session of the Council;

    - Decides that the surplus of $255,000 in the Pension Fund set-aside shall be transferred to the Working Capital Fund and there used to absorb withdrawals from that Fund to cover any 1950 cash deficit of the Organization and to defray in part the Headquarters removal costs;

    - Decides that the surplus so transferred to the Working Capital Fund shall be shared equitably by member nations who, through payment of contributions during the second, third, and fourth financial years, contributed to the establishment of the Pension Fund set-aside reserve;

    - Decides that any 1950 cash deficit of the Organization shall be covered by a withdrawal from the Working Capital Fund in accordance with existing Financial Regulations, and shall be charged in the Working Capital Fund against all member nations on the basis of the 1950 scale of contributions;

    - Decides that the withdrawal from the Working Capital Fund to defray in part the Headquarters removal costs shall be charged in the Working Capital Fund against all member nations on the basis of the 1951 scale of contributions.

    The Conference also considers that the unspent balances of the second and third financial years, which were allocated by, the Fifth Session of the Conference to a reserve for defraying in part the expenses connected with the transfer of Headquarters to Rome, should be routed through the Working Capital Fund in order to establish equities for member nations who contributed to this reserve.

    The Conference therefore -

    - Decides that the sum of the unspent balance of the second and third financial years, allocated by the Fifth Session of the Conference to a reserve for defraying in part the costs of removal of Headquarters to Rome, be credited in the Working Capital Fund to the accounts of member nations in proportion to the contributions paid by those member nations in each of' those financial years and that an equivalent sum be debited to the Working Capital Fund, and credited to the Headquarters, Removal Fund, the amounts to be charged against the accounts of member nations in the Working Capital Fund in accordance with the scale of contributions applicable in 1951.

    E. Establishment of a special fund

    The Conference -

    - Authorizes the Director-General to create a special fund under Financial Regulation 6.7 for the maintenance and administration of a gift from the Williams-Waterman Fund Committee, New York, for $15,000 in support of the expenses of an international working group of experts to report on rice enrichment in all its aspects, in line with a resolution adopted by the FAO Nutrition Committee for South and East Asia at its second meeting in London, 30 January to 4 February 1950;

    - Directs that this special fund be administered in accordance with the Financial Regulations.

    F. Scale of contributions

    The Conference has considered the Reports of the Special Committee on the Scale of Contributions, made since the Fifth Session of the Conference.

    The Conference notes that the Special Committee has recommended for use in 1951 a scale of contributions derived from the 1950 scale by eliminating the adjustment known as "Step 7" and the adjustment for agricultural factors, and by adjusting the scale for changes in member ship. The Conference further notes that the Special Committee recommends continuance of relief in 1951 for certain member nations receiving temporary relief in the 1950 scale, and recommends also a method for distributing in the 1951 scale the contributions of member nations newly admitted to membership at the present Session of the Conference.

    The Conference has also considered alternative proposals,

  • a) for adopting the recommendations of the Special Committee except with regard to the elimination of the adjustment for agricultural factors, and

    (b) for continuing to use in 1951 the scale used in 1950, with appropriate adjustment for changes in membership, but has accepted the recommendation of the Special Committee by adopting the following resolutions:

  • The Conference -

    Notes that the Special Committee on the Scale of Contributions, in presenting a scale for use in 1951, has followed the instructions given it by the Conference at its Fifth Session, to eliminate from the 1950 scale the adjustment known as " Step 7, " and has adjusted the scale for changes in membership;

    Notes that the Special Committee, in accordance with its instructions from the Conference to study other changes which might advantageously be made in the scale of contributions to reflect the capacity to pay of member nations and to seek closer comparability with the scale used by the United Nations, has recommended the further elimination of the adjustment for agricultural factors, and has presented a scale embodying, this change also;

    Notes further that the Special Committee has recommended assessments for new members of FAO and has recommended that the contributions of these members be used to diminish proportionately the contributions of all members except those paying the maximum and the minimum contributions;

    - Adopts for use in 1951 the scale recommended by the Special Committee on the Scale of Contributions [See Appendix C], in its report embodying both eliminations and continuing the provision of temporary relief to certain members, and

    - Directs that the assessments of new members be incorporated into the scale of contributions as recommended by the Special Committee.

    The Conference notes also that the Special Committee has recommended the use of national income statistics as the basis for constructing a more fundamental revision of the scale of contributions, as being a more suitable point of departure than the United Nations scale of contributions itself, and has requested guidance from the Conference on this point.

    The Conference accordingly -

    - Confirms the recommendation of the Special Committee that the base for constructing a more fundamental revision of the scale of contributions should be national income statistics as obtained from the United Nations;

    - Instructs the Special Committee to prepare for presentation to the next regular Session of the Conference a revised scale of contributions based on such statistics, making certain that such statistics possess a common basis of comparability, and reporting to the Conference on the nature of that basis.

    The Conference notes the recommendation of the Special Committee, that the present minimum limit, or "floor," of contributions (0.05 percent), be retained in the construction of a revised scale, and recognizes the expressed need of the Special Committee for guidance from the Conference as to the maximum limit to be observed in the assessment of member nations in a more fundamental revision of the scale of contributions.

    The Conference has considered various proposals as to the appropriate "ceiling" figure, including a proposal jointly put forward by several members, that the ceiling be fixed at 33(1/3) percent, as a target to be approached gradually but as rapidly as possible. The Conference has decided, however, to retain for the time being the present ceiling of 27.1 percent, by adopting the following resolution:

    The Conference -

    Noting that the Special Committee on the Scale of Contributions requires guidance as to what the " ceiling " of a permanent scale of contributions for FAO should be;

    Being of the view that contributions to FAO should reflect the capacity of member nations to pay;

    Recognizing however that the application of this principle alone would lead to one member nation's bearing the major part of the expenses of the Organization, and that this is not practicable;

    - Decides that for the time being the present ceiling of 27.1 percent be continued.

    G. Collection of contributions

    The Conference has considered a statement by the Director-General indicating the position of each member government in respect to the payment of its contributions, and reporting on the steps he has taken to obtain payment in full of such contributions.

    The Conference notes with concern that, in spite of the steps taken by the Director-General. substantial amounts of contributions remain in arrears. In addition. the Conference has consider Ed the extraordinary cash requirements of the Organization early in 1951 in connection with the removal of Headquarters and financing the regular program.

    The Conference therefore -

    - Urges all member governments to fulfill their financial obligations to the Organization as early as possible; and

    - Appeals to all member nations to make arrangements to pay their 1951 contributions as soon as possible after 1 January 1951.

    H. Action to obtain payment of contributions in arrears

    The Conference has considered the proposals of the Committee on Financial Control and the comments of the Tenth Session of the Council on methods of securing payments of contributions in arrears. In line with the recommendation of the Council.

    The Conference -

    - Requests that the Director-General refrain, in principle, from sending missions or experts to. or holding meetings or conferences financed from its regular budget in, any member country of FAO the amount of whose arrears equals or exceeds the amount due from it for the two preceding financial years, except when he is satisfied that such refusal would be directly prejudicial to the interests of neighboring member nations or to the Organization as a whole;

    - Requests that, in addition to the relevant information furnished to the United Nations for its press releases, the Director-General dispatch to all member governments, in the usual manner, quarterly statements showing contributions received and all contributions in arrears; and

    - Points out to member governments concerned the desirability of taking such steps as may be necessary or appropriate to permit each member government to meet the payment of its contributions immediately when they fall due.

    I. Currency of contribution payments

    The Conference notes that Financial Regulation 5.5 as now adopted determines the currency of payment of contributions for 1951 only. In view of the complexity of the problem, the considerable divergence of views on principles of equity, and the necessity- to safeguard the interests of the Organization, member nations and the government of the country in which the Organization has its permanent seat, further consideration of the pertinent permanent regulation is required.

    The Conference therefore -

    - Requests the Council to instruct the Committee on Financial Control to study this problem further, and in particular,

  • (a) to study thoroughly the prospective requirements of the Organization for United States dollars and currencies of other member nations from the time of arrival in Rome and in subsequent years with a view to economizing dollar expenditures;

    (b) to study the problem of losses which may arise from fluctuation of exchange rates in relation to the payment of contributions;

    (c) to obtain and consider the views of the Italian Government thereon;

    (d) to consult the experience of other United Nations agencies in soft-currency areas:

    (e) to prepare a draft of regulations regarding the currency of contributions, to be applicable commencing with 1952. for the consideration of the next Session of the Conference.

  • J. Residual assets of I.I.A.

    The Conference has noted from the report of the Council that on 30 June 1950 an amount of $11,640.95 remained unallocated as of 1 January 1951 from the residual assets of the International Institute of Agriculture. In accordance with the Council's recommendation,

    The Conference -

    - Decides that not only the balance of $11,640.95 but also any other funds realized from this source in the future shall be used by the Director-General to provide for additions to the FAO Library and to continue through 1951 the Legislative Service in its present reduced form.

    K. Audited accounts

    The Conference -

    Having examined the audited accounts of the fourth financial year (1949) and the Auditor's report thereon,

    - Approves the audited accounts of the fourth financial year, ending 31 December 1949.

    REFERENCE LIST, ADMINISTRATIVE AND FINANCIAL MATTERS

  • Report of the Committee on Financial Control (C50/5)
    Report of the Special Committee on the Scale of Contributions. and Currency Problems (C50/10)
    Supplementary Report of the Special Committee on the Scale of Contributions and Currency Problems (C50/10 Supp.)
    Report of the Committee on Financial Control: Part I, Working Capital Fund (C50/11)
    Report of the Committee on Financial Control: Part II (C50/12)
    Establishment of Permanent Headquarters of FAO: Report by the Director-General (G50/14)
    Staff Pension Fund (C50/18)
    Proposals Received Regarding the ,Agenda of the Special Session (C50/23)
    Contributions from Member Governments (C50/25)
    Removal of Headquarters: Note by the Council (C50/26)
    Financial Matters Referred by the Council to the Special Session of the Conference (C50/27)

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