FINANCIAL STABILITY FOR UNITED NATIONS WITHIN REACH, WHEN UNITED STATES ARREARS PAID, UNDER-SECRETARY-GENERAL TELLS FIFTH COMMITTEE

22 March 2001
GA/AB/3432

FINANCIAL STABILITY FOR UNITED NATIONS WITHIN REACH, WHEN UNITED STATES ARREARS PAID, UNDER-SECRETARY-GENERAL TELLS FIFTH COMMITTEE

22/03/2001
Press ReleaseGA/AB/3432

Resumed Fifty-fifth General Assembly

Fifth Committee

50th Meeting (AM)

FINANCIAL STABILITY FOR UNITED NATIONS WITHIN REACH, WHEN UNITED STATES ARREARS

PAID, UNDER-SECRETARY-GENERAL TELLS FIFTH COMMITTEE

A new degree of financial stability and liquidity was within reach for the Member States and the United Nations, and that was a good sign for the year ahead, Under-Secretary-General for Management Joseph E. Connor told the Fifth Committee (Administrative and Budgetary) this morning.

Briefing the Committee on the financial situation of the United Nations, he said that he expected the Organization to end the year with a positive cash balance, but it would be a close call.  The two largest contributors -- the United States and Japan – were expected to pay the bulk of their regular budget contributions later in 2001.

On the question of its arrears, the United States had recently informed the Secretary-General that progress was under way towards full implementation of the arrangements reached in December 2000 regarding the scale of assessments, Mr. Connor added.  Once $582 million owed by that country in back dues was received, a large portion of the arrears payment would be immediately used to pay Member States for troops and contingent-owned equipment for those missions where there were certified claims.

Overall in 2000, the Organization had lost ground financially, Mr. Connor continued.  All three components of the United Nations financial health were not as good as they were a year earlier:  cash was down, unpaid assessments rose and debt owed to Member States increased. The aggregate level of unpaid contributions was increasing, but the majority was owed by only a few Member States. 

Regarding 2001, he said that cash collections for the regular budget had been disappointing so far.  Only 54 Member States had paid their regular budget contribution in full by the end of February.  The level of cash contributions actually paid this year totalled only $299 million.  The reasons for that included the transitional arrangements agreed to by the Member States, when they decided to lower the ceiling rate on assessments last year.  Member States other than the United States were asked to pay aggregate assessment amounts about $31 million less than their net assessments for 2001, due to application of a promised additional payment of that amount by the United States against those assessments.  While it was anticipated that the United States would make that additional payment, it had not yet been received. 

Peacekeeping assessments for 2001 were projected at $2.6 billion at this stage, above the level of year 2000 of $2.1 billion, he said.  He expected two out of five major missions would be assessed at levels higher than the year before.

Also this morning, the Committee approved, without a vote, seven texts on various items on its agenda.

Acting on the financing for the United Nations Mission in Ethiopia and Eritrea, it recommended the General Assembly appropriate $180 million gross for the operation of the Mission for the period from 31 July 2000 to 30 June 2001.

On its agenda item of the financing of the International Tribunal for Former Yugoslavia, the Committee recommended the Assembly endorse the review of the emoluments and other conditions of service for the ad litem judges of that Tribunal and authorize the Secretary-General to enter into commitments not greater than $5.29 million gross to support ad litem judges for this year.

The Committee also approved draft decisions taking note of the statistical report of the Administrative Committee on Coordination and of the Secretary-General’s reports on the situation of gratis personnel.  By the terms of the text on gratis personnel, the Assembly would also take note of the related report of the Advisory Committee on Administrative and Budgetary Questions and decide that in the future, reports on the matter would be submitted annually instead of quarterly.

Acting on the reports of the Board of Auditors, the Committee recommended the Assembly to accept the Board’s qualified audit opinions regarding the United Nations Development Programme, the United Nations Population Fund and the United Nations International Drug Control Programme for the period ended 31 December 1999.  The organizations in question would be requested to adhere to the plans they submitted to the Board of Auditors to correct the deficiencies which led to the qualified audit opinions and to take all the necessary steps to prevent such shortcomings from occurring again.

A statement of programme budget implications of the Assembly’s draft resolution A/55/L.80 regarding inclusion of Senegal in the list of least developed countries was also recommended to the Assembly.

The drafts before the Committee were introduced by the Committee’s Chairman Gert Rosenthal (Guatemala); its Vice-Chairman Collen Vixen Kelapile (Botswana); and Ayman Elgammal (Egypt) Anne Merchant (Norway).  Rita Fletcher, Senior Programme Budget Officer of the Office of Programme Planning, Budget and Accounts, responded to a question from the representative of the United States.

The Committee will meet again at 10 a.m. tomorrow, 23 March, to take up the financing of United Nations Mission in Sierra Leone.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to hear a statement by Under-Secretary-General for Management Joseph E. Connor on the financial situation of the Organization and to act on a number of drafts on various items on its agenda, submitted by the Committee's Chairman and Vice-Chairman following informal consultations.  It also had before it a note of the Secretary-General regarding financial implications of a draft resolution before the Assembly.

The first draft decision before the Committee concerned the statistical report of the Administrative Committee on Coordination (ACC) (document A/C.5/55/L.41).  By the terms of that text, the Committee would recommend the General Assembly take note of the report (document A/55/525).

By the terms of the draft on the financing of the International Tribunal for former Yugoslavia (document A/C.5/55/L.42), the Assembly would take note of the relevant report of the Secretary-General and the recommendations of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the matter and authorize the Secretary-General to enter into commitments in an amount not to exceed $5.29 million gross to support ad litem judges for this year.  The Secretary-General would be requested to report on the matter at the fifty-sixth session of the General Assembly.

By the draft resolution on the conditions of service and compensation for the ad litem judges for the International Tribunal for former Yugoslavia (document A/C.5/55/L.43), the Assembly would endorse the recommendations of the ACABQ on the matter and decide to review the emoluments and other conditions of service for the ad litem judges of that Tribunal.  Such a review would be undertaken in conjunction with the comprehensive review of the emoluments, pensions and other conditions of service for the members of the International Court of Justice and the judges of the two international tribunals during the fifty-sixth session, in accordance with resolution 53/214.

By the terms of the draft decision on gratis personnel provided by governments (document A/C.5/55/L.45), the Assembly would take note of the reports of the Secretary-General on the situation of gratis personnel and other entities and the related report of the ACABQ.  It would further decide that commencing with the period ending 31 December 2000, reports on the matter would be submitted annually instead of quarterly.

In approving its draft resolution on the financial reports, audited financial statements and reports of the Board of Auditors (document A/C.5/55/L.44), the Committee would recommend the General Assembly endorse the observations and recommendations contained in the report of the ACABQ on the matter and accept the qualified audit opinions of the Board of Auditors regarding the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA) and the United Nations International Drug Control Programme for the period ended 31 December 1999. 

The organizations in question would be requested to adhere to the plans they submitted to the Board of Auditors to correct the deficiencies which led to the qualified audit opinions of the 1998-1999 financial statements, and to take all the necessary steps to prevent such shortcomings from occurring again.

By the terms of a draft resolution on the financing of the United Nations Mission in Ethiopia and Eritrea (UNMEE) (document A/C.5/55/L.46), the Assembly would appropriate $180 million gross ($177.87 million net) for the operation of the Mission for the period from 31 July 2000 to 30 June 2001, inclusive of the $150 million gross authorized by Assembly resolution 55/237.  It would also request the Secretary-General to report at the earliest possible time on how the concept of operations affected and could justify the proposed structure of the Mission, including its senior staff component.  The Secretary-General would be also requested to ensure efficient administration of the Mission and encouraged to continue efforts to recruit local staff for the Mission against General Service posts.

Also before the Committee was the Secretary-General's statement regarding programme budget implications of draft resolution A/55/L.80 (document A/C.5/55/41).  According to that document, should the Assembly endorse the recommendation of the Economic and Social Council to add Senegal to the list of the least developed countries, an additional appropriation in the amount of $29,600 would be required under section 1, Overall policy-making, direction and coordination, of the programme budget for the biennium 2000-2001, for the travel of up to five representatives of Senegal to attend the fifty-sixth session of the General Assembly and the travel of one representative or alternate representative of Senegal to attend the special session of the General Assembly in 2001.  The requirements for 2002-2003, estimated at $27,400, for the travel of up to five representatives to attend the fifty-seventh and fifty-eighth regular sessions of the General Assembly, would be included in the proposed programme budget for the biennium 2002-2003.

      Statement by Under-Secretary-General for Management

Briefing the Committee on the financial situation of the Organization, JOSEPH E. CONNOR, Under-Secretary-General for Management, said that 2000 had been the year when a careful assessment of the United Nations capacity to effectively support peacekeeping missions had begun.  A comprehensive staff security assessment was initiated and a remedial plan developed, and the Organization responded to the request of Member States for a Capital Master Plan to completely refurbish the United Nations ageing Headquarters complex.  The list of achievements also included the successful completion of the Integrated Management Information System (IMIS).

None of those activities would be successful or sustainable without an adequate financial footing, he said.  This continued to be defined in terms of three components -- cash on hand, the level of assessments and their payment and the amount of debt owed to Member States.  Overall, 2000 did not live up to the more optimistic expectations.  In fact, the Organization had lost ground -- taken a step backward. 

In 2000, all three components of the United Nations financial health were not as good as a year earlier:  cash was down, unpaid assessments rose and debt owed to Member States increased.  At the end of the year, aggregate cash on hand was at the $1 billion mark, some $100 million lower than in 1999.  Unpaid assessments exceeded the levels of the last four years -- over $2.2 billion.  Outstanding debt owed to Member States for troops and contingent-owned equipment also increased to $917 million, exceeding the levels of the last four years. 

Regarding the cash situation, he said that in his last presentation in October 2000, he had discussed possible year-end scenarios, all of which depended on the level of regular budget payments that the United States might make by year-end 2000.  The Organization was able to avoid deficits because of a late payment equal to its current full year’s assessment from the United States, unlike the situation in 1995 through 1998, and the need to cross-borrow at year-end from peacekeeping funds to compensate for the regular budget deficit was therefore eliminated.  He hoped the pattern of complete payment of the amount of current year regular budget assessments would continue in future years.

Turning to the second component of the financial picture -- service requirements placed upon the United Nations by its Member States -- he said that the best expression of their extent was the level of assessments voted by the Member States.  The aggregate assessment level for year 2000 went somewhat higher than originally forecast, reaching $3.4 billion.  While it was not the highest ever, it was closer to the peak levels reached back in 1994 and 1995.  It also far exceeded the 1999 level of $2.064 billion.

Regular budget assessments were $1.089 billion in the year 2000, he continued, and had remained constant.  There had been no growth over the entire 1994 to 2001 period.  In fact, regular budget assessment levels were lower by $100 million than they were eight years before.  Assessments for the international tribunals in 2000 were $166 million, somewhat above the previous year.  Peacekeeping assessment levels showed an erratic pattern:  very high amounts in 1994 and 1995; diminishing amounts each year from 1996 to 1999; and a very rapid rise in 2000.  The jump in total peacekeeping assessments was mainly due to assessments for four large peacekeeping missions:  United Nations Mission in Sierra Leone (UNAMSIL), United Nations Mission in East Timor (UNTAET), United Nations Interim Administration in Kosovo (UNMIK) and United Nations Organization Mission in the Democratic Republic of the Congo (MONUC).  All but MONUC had assessments over $500 million and most were expected to exceed, in 2001, their level of assessments for 2000.

In 2000, 141 Member States had paid regular budget assessment in full for that year and all preceding years, he said.  That was a rather remarkable picture of solid progress.  Twenty-seven Member States owed approximately one year or less in assessment amounts.  Only 19 Member States owed unpaid assessment in excess of one year’s assessment.  Of the Member States not fully paid up for the regular budget, the United States owed $165 million, or 74 per cent, of the aggregate unpaid amount.  Brazil owed $22 million, or 10 per cent, of the total amount.  Argentina owed $12 million, or 5 per cent, of the aggregate unpaid amounts and 43 other Member States had outstanding amounts of some $23 million, or 11 per cent.  The arrears level had been cut almost in half, from $417 million in 1998 to $222 million in 2000 -- down $195 million.

Regarding the tribunals, he said that for the first time ever, cash insufficiency had necessitated cross-borrowing in 2000.  That could represent a developing problem.  One hundred and six Member States had unpaid tribunal assessments at the end of 2000, but three Member States -- the United States, the Russian Federation and France -– accounted for the largest amounts.  Each of the three owed about $12 million -– roughly 25 per cent each of the total uncollected.  Peacekeeping arrears added up to $1.989 billion.  There was real concern that the amount due and unpaid was climbing rapidly.  The United States and Japan had markedly increased their level of arrears by the end of the year.  Fortunately, several other Member States, principally the Russian Federation, had made significant efforts to pay down their long-outstanding debt.  It should also be pointed out that France paid a substantial portion of its prior years’ outstanding contributions in early January.  This morning, information had been received that Japan had paid $367 million, thus eliminating all of the arrears it owed on 31 December 2000.

Regarding the arrearage situation on 31 December, he said that the aggregate level of unpaid contributions was increasing.  Three Member States owed 89 per cent of outstanding regular budget amounts.  Five Member States owed 89 per cent of outstanding assessments for the international tribunals.  Six Member States owed 91 per cent of the outstanding peacekeeping assessments.

The full payment of peacekeeping payments was especially praiseworthy in light of the increased assessments last year and the fact that assessments were not issued just once but several times throughout the year, he continued.  The countries that had “paid in full” were:  Australia, Canada, Finland, Grenada, Honduras, Kuwait, Liechtenstein, Micronesia, Monaco, Norway, Poland, Republic of Korea, South Africa, Sweden and the United Kingdom.

Determining the amount of debt owed to Member States, and projecting how much of that debt the Organization planned to pay to Member States, was a difficult exercise, he said.  Significant estimates were required and were subject to changing evaluations.  The Secretary-General wanted Member States to be fully informed on the matter, and hopefully repaid as soon as possible.  Regarding debt owed to Member States, the Organization began 2000 owing $800 million.  Most of that amount was for contingent-owned equipment.  A smaller amount was owed for troops.  At the end of 2000, debt to Member States was $917 million -- $117 million more than the amount owed at the beginning of the year.  During the year 2000, payments were completed to Member States for 1999 obligations and 1999 arrears -- $91 million and $71 million, respectively.

However, actual obligations increased in 2000 (to $491 million), vastly outstripping an earlier projection of a total in obligations of $365 million, he said.  There was a downward revaluation of debt -- some $47 million -- that partially cushioned the effect of new obligations.  Payments to Member States of $165 million were made, which was about what had been anticipated.  Unfortunately, no arrears collections were received during the course of 2000 and, as a result, no additional pay down could be made in amounts owed to Member States.  Year-end debt was reasonably close to earlier projections.  Based on the current assessment of peacekeeping cash reserves, an additional post year-end payment in the amount of $100 million against the year 2000 obligation would be made shortly - $66 million for troops and $34 million for contingent-owned equipment.  As a result of additional 2000 payments, debt to Member States would be reduced by another $100 million to $817 million For the first time in several years the Secretary-General has not been able to fully pay to Member States new obligations incurred during the current year.

Regarding 2001, cash collections for the regular budget have been disappointing, he said.  In 2000, 64 Member States had paid in full by the end of February.  In 2001, only 54 Member States have paid their regular budget contribution in full in the comparable period.  In 2000, by the end of February, $381 million had been received from Member States.  This year, the level of cash contributions actually paid totalled only $299 million.  The Organization was running some $82 million behind.  There were several factors contributing to that decrease.  First, several payments from major contributors were not received until March instead of February.  The second factor was the effect on cash flow of one of the transitional arrangements agreed by the Member States when they took the decision to lower to 22 per cent the ceiling rate on assessments for year 2001.

Member States other than the United States were asked to pay aggregate assessment amounts about $31 million less than their net assessments for 2001, due to application of a promised additional payment of that amount by the United States against those assessments, he said.  While it was anticipated that the United States would make that additional payment, it had not yet been received.  In addition to current year assessment payments received in January and February, a number of large regular budget payments had been made in March, including a full payment of $12 million by Belgium and $51 million from Italy, and a number of large partial payments had been also made since January by Japan, the United Kingdom and Germany.

The projected 2001 cash balance was a positive figure but showed a slight regression, he said.  Receipts were expected to peak at the beginning of the year.  It was expected that the two largest contributors, the United States and Japan, would pay the bulk of their regular budget contributions later in 2001.  As a result, periods of negative regular budget cash were expected, as was the need to cross-borrow from August onward.  He expected to end the year with a positive cash balance, but it would be a close call.  Progress on reducing the number of times cash fell below the zero line could be accomplished by: on-time payment by Member States; accelerated payment when Member States had before paid late in the year; and full payment in any case by year's end.

Peacekeeping assessments for 2001 were projected at $2.6 billion at this stage, higher than their level of 2000 of $2.1 billion, he said.  Two out of five major missions would be assessed at levels higher than last year.  UNAMSIL had the potential for the largest increase, possibly reaching $800 million.  UNTAET would follow, at about $550 million, and UNMIK would be at the $450 million level.  UNMEE would be some $200 million and United Nations Mission in Bosnia and Herzegovina (UNMIBH) some $144 million.  Although it was currently not possible to provide a projection of MONUC’s requirements in 2001, it was likely that they would be substantially higher than for the year 2000 level.  Increased assessments did not automatically mean an increase in cash.  Mission cash balances might be unfavourably impacted by the slow collection of assessments, on the one hand, and by simultaneous ongoing cash needs for payment of mission costs, in particular payroll requirements, contractual liabilities, and payments to governments for letters of assist.  Year-end peacekeeping cash levels were projected at a lower level than the previous two years at $873 million.  Year 2001 looked like a re-run of the peak peacekeeping years.

He said that 2000 ended with debt to Member States aggregating $917 million.  Payments delayed from 2000 were currently being made to Member States.  Those additional payments totaled $100 million for new troop obligations incurred in 2000 and for contingent-owned equipment.  He anticipated that new obligations for troops and contingent-owned equipment amounting to $504 million would be incurred in 2001.  The Secretary-General intended to keep current this year as much as possible with new obligations.  He planned to pay $417 million in 2001 to Member States to partially liquidate new obligations for that year.  However, that amount fell short by about $90 million of the total of expected new obligations 2001.  Given the high level of payments made in 2000, and the high level of obligations expected for 2001, the Secretary-General intended to be both conservative as well as prudent in deciding on the amount to be paid.

Unpaid debt to Member States for troops and contingent-owned equipment would amount to $904 million at year-end 2001, which was not much of a change from the beginning of the year, he continued.  On the question of United States arrears, that country had recently informed the Secretary-General that progress was under way towards full implementation of the arrangements reached in December regarding the scale of assessments.  Quoting what had been communicated to the Secretary-General by the United States, he said that the legislative process would be a quick one and that $582 million would be paid shortly.  The commitment of the United States to prompt payment was a major financial factor to be taken into consideration in the projection.

Once cash was received, and depending on which missions the payment was applied to, he said that the Secretary-General intended to use a large portion of the arrears payment immediately to pay Member States for troops and contingent-owned equipment in those missions where there were certified claims.  Some $400 million in prospective payments had been so certified.  The remaining amount of arrearage collection –- some $182 million -– would be paid as quickly as possible when pending claims were processed and certified.  No part of the arrearage collection from the United States would be diverted for any other purpose. 

The arrears collection, when finally received, would, therefore, be used to substantially reduce the current debt level from $904 million to a new level of around $322 million, he said.  The much anticipated reduced level of debt to Member States might finally be achieved, which was a major financial event for both Member States and the Organization.  For both the Member States and the Organization, a new degree of financial stability and liquidity was within reach and for the year ahead.

Action on Drafts

AYMAN ELGAMMAL (Egypt) introduced the draft resolution on the audited financial statements and reports of the Board of Auditors (document A/C.5/55/L.44), informing the Committee about the outcome of informal consultations in that regard.  He said that agreement had been reached on the text by consensus, and he hoped that it would be adopted by the Committee in the same manner.

The Committee then approved the text without a vote.

The text on the gratis personnel (document A/C.5/55/L.45) was introduced by the Committee’s Chairman, Gert Rosenthal (Guatemala).

The decision was then approved without a vote.

Turning to the statistical report of the Administrative Committee on Coordination, the Chairman introduced the draft decision before the Committee (document A/C.5/55/L.41).

The Committee then approved the draft without a vote.

ANNE MERCHANT (Norway) then introduced two draft resolutions on the resource requirements of the International Tribunal for former Yugoslavia:  the first one on the resource requirements to support ad litem judges for the year 2001 (document A/C.5/55/L.42), and the second one on the conditions of service and compensation for the ad litem judges (document A/C.5/55/L.43).  Both drafts had

been a subject of informal consultations, where agreement had been reached.  She recommended that the texts be approved without a vote.

The draft resolution on the resource requirements for ad litem judges in 2001 was then approved without a vote.

The Committee proceeded to approve the draft on the conditions of service of ad litem judges without a vote.

As the Committee turned to the text on financing of the United Nations Mission in Ethiopia and Eritrea, Vice-Chairman of the Committee, COLLEN VIXEN KELAPILE (Botswana) introduced the draft (document A/C.5/55/L.46).  He said that he had coordinated informal consultations on the matter.  The draft should be approved without a vote. 

The Committee then approved the draft without a vote.

As the Committee turned to the financial implications of General Assembly resolution A/55/L.80 regarding the inclusion of Senegal on the list of least developed countries, the Chairman informed delegates about the amounts involved, which had been transmitted by the ACABQ.

THOMAS A. REPASCH (United States) said he did not have any objections to the proposal.  He wanted to receive some clarification regarding the amount of money required for travel, however.  The two figures provided in the statement of programme budget implications were different from each other.   

Responding, RITA FLETCHER, Senior Programme Budget Officer of the Office of Programme Planning, Budget and Accounts, said the difference in figures could be accounted for by the fact that for 2000-2001, the figures for the regular session related to the travel of five delegates -- one first class and four economy.  For the three special sessions, the entitlement was for one first-class ticket for three trips, which explained the difference.

Mr. REPASCH (United States) said that in view of the explanation, the text of the statement should refer to three special sessions instead of one.  That would make the matter clearer.

The Committee decided to inform the Assembly that should it adopt the draft, an additional appropriation in the amount of $29,600 would be required under section 1, overall policy-making, direction and coordination of the programme budget for 2000-2001. 

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For information media. Not an official record.