Fifty-sixth General Assembly
6th Meeting (AM)
AFTER SEVERAL YEARS IN RED, FINANCIAL STABILITY FOR UN ‘CLOSE AT HAND’
Under-Secretary-General for Management Paints Broadly Optimistic Fiscal Picture
His latest statement on the financial situation of the United Nations was not going to repeat the recurring theme of “doom and gloom” of previous years, the Under-Secretary-General for Management, Joseph E. Connor, told the Fifth Committee (Administrative and Budgetary) this morning. The good news for 2001 was that Member States were expected to contribute more to the United Nations in assessed payments than ever before. Some $4.72 billion, which had already been paid or was expected in the next three months, far exceeded the $2.89 billion paid in 2000.
Presenting the latest information available, as he does twice a year,
Mr. Connor explained to delegates that the timing and amount of cash inflows were central to the decision-making process and determined, in large measure, the Organization's financial situation. The three main indicators of United Nations financial health were the level of unpaid assessments, cash balances, and debt to Member States.
Currently, unpaid assessments were down; cash was up; and debt to Member States had been drastically reduced, he said. Financial stability and security were close at hand. The infusion of payments expected for 2001 meant that for the first time in many years the United Nations might have a secure basis with which to do business. Such issues as troops and equipment reimbursements, cash deficits and cross-borrowing could be dealt with and corrected, where necessary.
The United States had informed the United Nations that its domestic legislation for making payments to the Organization had been mostly finalized and that payment of sizeable amounts was at hand. In 2001, the United States was expected to pay some $1.67 billion to the United Nations. Most of that amount would be received between October and December. Payments in 2001 by other Member States would aggregate about $3.05 billion, and most of that amount had been received.
Regarding peacekeeping payments, he said that it was not an exaggeration to state that a sea change would occur during the next three months: unpaid peacekeeping assessments, which were currently high, were expected to “swing around” and fall significantly lower by 31 December. Some $505 million would be paid out to 48 Member States against their claims for 14 missions, immediately following receipt of the arrears payment from the United States.
Combined year-end cash was projected to amount to some $1.26 billion at
31 December 2001, consisting of some $1.24 billion in peacekeeping, $24 million in International Tribunals cash, and $2 million in regular budget cash. It was a balanced picture. While not good in all respects (but better than earlier years), it was at least a step in the right direction. However, the situation was still tenuous for an Organization that had no reserves, no capital and no borrowing capacity. Among the unusual factors that the Organization faced this year were reduced revenues resulting from the closures of the Headquarters Building last summer and since 11 September.
When the Committee resumes its work at 10 a.m. tomorrow, 11 October, it is scheduled to begin its consideration of several items related to the current regular budget biennium.
Statement by Under-Secretary-General for Management
JOSEPH E. CONNOR, Under-Secretary-General for Management, said that although his previous presentations had had a recurring theme of “doom and gloom”, that would not be the case with today’s statement. The good news was that Member States in 2001 were expected to contribute more to the United Nations in assessed payments than in any prior year. An aggregate amount of some $4.72 billion had already been paid by 30 September or was expected in the next three months. That amount far exceeded the $2.89 billion paid in 2000. Projected amounts were based on current information received from the United States and from several other Member States, together with the Secretariat's analysis of prior payment practices.
In 2001, the United States was expected to pay some $1.67 billion, he reported. Most of that amount would be received between October and December. Payments in 2001 by other Member States would aggregate about $3.05 billion, and most of that amount had been received. The projected United States payments were based on the information provided by that Member State that domestic legislation for such payments had, for the most part, been finalized, and that payment of sizeable amounts to the United Nations was at hand. Components of amounts to be paid by 31 December included: $582 million for peacekeeping arrears (the second tranche of the United States arrears payment); $572 million for additional payments of the current year's peacekeeping assessments; $23 million as an additional payment towards the International Tribunals; the intention to pay in full the 2001 regular budget assessment of some $267 million, of which
$251 million was left to be paid, and an additional contribution of $31 million made possible by Ted Turner.
Together, payments and projected payments by all Member States should aggregate some $4.72 billion, or 111 per cent of total assessments of
$4.25 billion anticipated for 2001, he continued. Payments by the United States would aggregate some $1.67 billion, while payments by other Member States would total about $3.05 billion. Expected payments would, therefore, exceed assessments voted so far by Member States in 2001. The ratio of payments made to assessments rendered was not only positive, but it was also markedly higher than had been the case in recent years. When that ratio exceeded 100 per cent, the United Nations would have funds in excess of its current requirements, restoring a measure of financial flexibility.
Turning to the regular budget, he said the assessment aggregated some
$1.07 billion. Payments both actual and projected should aggregate about
$1.08 billion. While most of the payments from the United States were in the "projected" category, most payments from other Member States had already been received. Some $755 million had been received, and an estimated additional
$323 million would be paid by the end of the year. With some $1.08 billion in total, payments were at the same level as assessments. With a flexibility ratio of 100 per cent, cross-borrowing would not be required for the year as a whole, although the month-by-month picture might be different.
Regarding payments made to the two International Tribunals, assessments had totalled some $169 million, he continued. Payments at year-end should aggregate $173 million. By the end of September, Member States had paid some $145 million. A further collection of about $28 million in the last quarter of the year was expected, bringing paid and projected collections to some $173 million, or 102 per cent of assessments made in 2001.
On peacekeeping payments, assessments should by year-end aggregate over
$3 billion and payments should aggregate about $3.47 billion, he said. As of the end of September, Member States had paid some $1.71 billion against peacekeeping assessments issued in 2001. A further collection of about $1.76 billion was expected by year-end. Paid and anticipated collections would aggregate 115 per cent of assessments made in 2001, representing an extremely high collection rate. The infusion of payments expected for 2001 meant that for the first time in many years the United Nations might have a secure basis with which to do business. Issues such as troops and equipment reimbursements, cash deficits and cross-borrowing could be dealt with and corrected where necessary.
The timing and amount of cash inflows were central to the decision-making process and determined, in large measure, the Organization's financial situation, he added. Three indicators with which to judge the Organization's financial situation included the level of unpaid assessments, the level of cash balances, and the level of debt to Member States.
Continuing, he said that some $4.25 billion in aggregate assessment levels projected for year 2001 was a major increase over 2000. Almost all of the increase related to peacekeeping. Regular budget assessment levels had been static over the last eight years, and the year 2001 -- at just over $1 billion -- would be in line with that situation. The level of regular budget assessments was clear confirmation of the Organization's attention to financial discipline. Over the eight-year period, real costs had been sufficiently reduced to absorb inflation, special mission and other unforeseen costs relating to peace and security, producing a regular budget which was lower today than in 1994. Among the challenges of the year 2001 were higher inflation, volatile and less favourable exchange rates and increased demands for services by Member States. Tribunal assessment levels had steadily increased over the past five years. Combined assessments for both International Tribunals for 2001 totalled some $169 million.
Peacekeeping showed an erratic picture, with assessment levels varying from year to year, depending on mission requirements and objectives, he added. This year would be just slightly below the highest level reached in 1994. By the end of the year, the peacekeeping assessments level was expected to reach over
$3 billion. Peacekeeping assessments were concentrated in five large missions including the missions in Sierra Leone, East Timor, Kosovo, the Democratic Republic of the Congo, and Ethiopia and Eritrea. By year-end, they might total over $2.4 billion. Assessments for the remaining seven missions totalled just about $600 million.
Turning to the first key indicator, unpaid assessments, at 30 September, unpaid assessments aggregated some $3.89 billion, up from some $3.09 billion the year before, he said. All three budgetary areas showed increases in unpaid amounts, compared to a year earlier. While the regular budget increased modestly to $541 million, unpaid peacekeeping assessments moved to an unprecedented high of some $3.28 billion. Unpaid Tribunal assessments increased to about $71 million. The balance of unpaid assessments at the end of September would significantly change, based on projected payments by other Member States. As of 31 December 2001, aggregated unpaid assessments were projected to fall to some $1.8 billion, which was a marked improvement.
At 30 September, the United States owed 83 per cent or some $447 million of the total regular budget unpaid assessments, he said. All other contributors owed $94 million, with Brazil and Argentina owing $33 million and $19 million, respectively. Based on projections for the last quarter, however, at 31 December 2001, unpaid regular budget assessments would decrease to $217 million, with the United States position dropping to 76 per cent.
The steady increase in the number of Member States which had paid their regular budget assessments in full had become a bright spot in the United Nations financial picture, he continued: by last year, 141 Member States had fully paid all their regular budget assessments for all prior years. The Secretary-General appreciated those efforts. As at 30 September this year, however, only 122 Member States had paid their assessments in full, compared with 131 Member States at this time last year. As of today, two additional full payments had been received, and now full payment was needed from at least 18 more Member States in order to avoid a fallback at the end of the year.
Unpaid assessments for the International Tribunals stood at $71 million at 30 September, he said. The United States unpaid amount stood at $38 million,
53 per cent of the total. Two Member States -- the Russian Federation and Brazil -- accounted for the next largest component, totalling $21 million. Remaining Member States owed $12 million. Out of the projected payments expected to be received from the United States by year-end, $23 million related to the International Tribunals. Accordingly, amounts due from that Member State would be reduced to $15 million. By year-end, projected United States unpaid amounts would amount to 34 per cent of the total.
Turning to unpaid peacekeeping assessments, he said that at the end of September they had reached a high of $3.28 billion, reflecting, in part, the issuance at the end of July of an assessment aggregating over $1.4 billion. At the end of September, the United States owed $1.84 billion, or 56 per cent of unpaid peacekeeping assessments. The other 14 principal contributors owed
$1.04 billion, or 32 per cent, and the remaining unpaid peacekeeping assessments totalled $403 million, or 12 per cent.
Projected and committed payments from a number of Member States over the next three months were expected to pay the amounts owed for peacekeeping assessments, he said. Specifically, over $1.1 billion in peacekeeping payments were to be received from the United States, including $582 in arrears payment. Accordingly, at 31 December 2001 the amount due from the United States for unpaid peacekeeping assessments would stand at $683 million, or 45 per cent of the total. Significant payments from other Member States were expected to reduce the amount owed by them to $844 million, or 55 per cent of the aggregate.
In summary, said the Under-Secretary-General, it was not an exaggeration to state that a sea change would occur during the next three months. Unpaid peacekeeping assessments, which were currently high, were expected to "swing around" and fall significantly lower by 31 December.
Turning to the second key indicator -- the Organization's current and projected cash situation -- he said that the pattern in that respect had become all too familiar in recent years. The recurring cash deficit during the last three months of each year had become a chronic situation. It would only be set right when all Member States paid their regular budget assessments at the time when they were due: on or about 31 January.
The United Nations had started the year with a positive regular budget cash balance of $66 million, followed in the first six months of the year with receipts for the most part in excess of all disbursements, he said. That was the end of the positive picture, however. While July through September showed cash balances around the zero line, at the end of September, the Organization had gone into a cash deficit of minus $22 million. The deficit was expected to continue and deepen through October (minus $92 million), and November (minus $147 million). Based on the expected receipt from the United States of the full balance of its regular assessment for 2001 (although some conditions could apply), at 31 December the Organization would have a regular budget cash amount of $2 million.
Among the unusual factors that the Organization faced this year, he continued, were reduced revenues as a result of the closure of the Headquarters Building in summer (due to the holding of two special sessions) and the current closure since 11 September. While those amounts were not as important as payments from Member States, the fall-off in revenues did not help the recurring cash deficit situation.
Regarding peacekeeping cash for year 2001, he said that the situation was, in many respects, the opposite of the regular budget cash. It was characterized by low balances at the beginning of the year and larger balances at year-end. From January to August, balances were relatively at a base level, but they began to build in September. The United States arrears payment of $582 million, as well as its current assessment payments totalling $572 million, would contribute to high inflows in the last months of the year. October and November would see a new high in cash balances at approximately $1.8 billion -- a large increase from the preceding month. However, peacekeeping cash balances would fall to $1,238 million at year-end, as a result of the payouts to Member States for troops and contingent-owned equipment (COE) obligations long in arrears.
Combined year-end cash was projected to be at the level of $1.26 billion at 31 December 2001, consisting of some $1.24 billion in peacekeeping, $24 million in Tribunal cash, and $2 million in regular budget cash, he said. It was a balanced picture, not good in all respects but better than earlier years -- it was at least a step in the right direction, but still tenuous for an organization that had no reserves, no capital and no borrowing capacity.
Regarding the debt to Member States, he said that it was the Organization's intention to effect the payment for all certified COE claims, now totalling
$505 million, as soon as it received the arrears payment of $582 million from the United States. That amount was expected to be received in two parts -- a cash payment of $475 million and a credit beneficial to the United Nations of $107 million arising out of the application by the United States of troop, COE and letter of assist obligations owed to its other outstanding peacekeeping assessments. The credit arising from the application of obligations due to the United States in effect saves the United Nations $107 million that would otherwise require the disbursement of cash.
Payment of any amounts to Member States for troop and COE debt required certification, he said. Those payments would be made to 48 Member States in respect of nine completed missions and five active ones. The remaining portion of $77 million would be held until claims currently being processed were certified.
At 1 January 2001, the debt to Member States stood at $917 million
($164 owed for troops and $753 for COE), he explained. As for current payments applicable to prior year obligations, the United Nations had expected to pay
$100 million to Member States for 2000 obligations, but it did better and paid $131 million. However, new obligations for 2001 were forecast to be higher than expected due to the fact that several missions (UNAMSIL, UNMEE and MONUC) had larger COE components than most other missions. Also, the General Assembly had recently approved higher rates of reimbursement for troops and equipment, and the Department for Peacekeeping Operations had revised estimated amounts due. Thus, the forecast for new 2001 obligations was now at $668 million instead of
The second COE progress payment amounting to some $16 million had been paid in the first week of October, he said. It was also projected that payments would be made in November and December for both troop and COE in the amount of
$380 million. Thus, total reimbursement payments for new 2001 obligations would aggregate $450 million. In addition, he hoped that a further payment to Member States would be made in 2002 for $166 million in connection with the remaining obligations in 2001. If that amount were paid, the debt would be reduced by
71 per cent. “Our original forecast for debt was $904 million; our new forecast -- $256 million.” Based on that plan of action, with the exception of some
$37 million for certified claims for UNTAC, ONUMOZ and MINURCA, the Secretariat would be current in terms of paying troop-contributing countries.
Summarizing the financial situation, he said that unpaid assessments were down; cash was up; debt to Member States had been drastically reduced. Financial stability and security, which the Organization might now need more than ever, were close at hand.
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