Delegates Concerned about Budget Shortfall, Linking of Payment to Management Reform, as Fifth Committee Discusses United Nations Financial Situation

GA/AB/4245
13 October 2017
Seventy-second Session, 5th Meeting (AM)

Delegates Concerned about Budget Shortfall, Linking of Payment to Management Reform, as Fifth Committee Discusses United Nations Financial Situation

Progress in Implementing Public Sector Accounting Standards Also Reviewed

Voicing alarm that the United Nations financial situation could turn dire as 2017 winds down, speakers in the Fifth Committee (Administrative and Budgetary) called today on those Member States that had yet to pay their assessed contributions to the Organization to do so without delay.

At $351 million, the Working Capital Fund and Special Account contained only enough funds for six weeks of regular budget operations, they said.  They also pondered the flow‑on effects of the nearly $1.1 billion in unpaid assessed contributions to the regular budget, as well as the more than $2.5 billion outstanding in the peacekeeping budget.

Delegations took the floor after Bettina Tucci Bartsiotas, Assistant Secretary-General and Controller of the United Nations, updated the Committee on changes to the Organization’s financial position since Jan Beagle, Under-Secretary-General for Management, gave an overview on 6 October.

For the regular budget, she said, a total of 136 Member States were current on their payments.  Thirty-seven had meanwhile paid their respective designated share for peacekeeping.  [The total number of Member States is 193.]

Cuba’s representative said concerns over bigger debts to the United Nations budget centred around one Member State — the same Member State, she noted, which benefited from a distortion in the way the scale of assessments was calculated, and also the one that profited from hosting the Organization on its territory.

The representative of Singapore, on behalf of the Association of Southeast Asian Nations (ASEAN), acknowledged how difficult it was for some Member States to pay their dues.  Others, however, did have the ability to pay, but had not yet done so, compromising the Organization’s effectiveness.

Speaking on behalf of the “Group of 77” developing countries and China, Ecuador’s representative questioned policies that sought to link the payment of assessed contributions to the Secretary-General’s reform efforts.  “Withholding funds for approved budgets creates artificial political leverage that undermines the established principles of governance of the United Nations on the basis of the sovereign equality of Member States,” she said. 

She added that the Under-Secretary-General’s withholding of information from this year’s financial overview set an unhealthy precedent and contradicted the Secretary-General’s commitment to transparency.  The speaker for ASEAN said Member States deserved a full, holistic and honest picture of the United Nations financial health, stressing: “The Secretariat should not shy away from presenting these facts, whether pleasant or not.”

Australia’s representative, speaking also on behalf of Canada and New Zealand, said late payments not only caused inequity between Member States, but also put a financial burden on those countries waiting to be compensated for their troop and police contributions to peacekeeping missions.

The European Union’s representative said financial health depended not only on the reliability of funds coming in, but also on the standards applied to the way that money was spent.  In that regard, the Organization must keep striving to spend more wisely, more accountably and more in line with agreed budget levels, he said.

In other business, the Committee, acting without a vote, today approved a draft resolution on programme planning.  By its terms, the General Assembly would endorse the conclusions and recommendations of the Committee for Programme and Coordination on proposed revisions to, among other things, the Regulations and Rules Governing Programme Planning.

Also during the meeting, the Assistant Secretary-General and Controller introduced the Secretary-General’s tenth and final progress report on the Organization’s adoption of the International Public Sector Accounting Standards (IPSAS), which the Assembly decided in 2006 to adopt as a replacement for the United Nations System Accounting Standards.

The Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions introduced the corresponding ACABQ report, describing IPSAS as a “successful transformation project” and encouraging the Secretariat to further utilize it at all management levels to inform decision-making.

Also speaking today were representatives of China and Japan.

The Fifth Committee will meet again at a time to be announced in the Journal.

Action on Draft Resolution: Programme Planning

Acting without a vote, the Fifth Committee (Administrative and Budgetary) approved a draft resolution entitled “Programme planning” (document A/C.5/72/L.3).  By its terms, the General Assembly, stressing the need for Member States to participate fully in the budget preparation process, would endorse the conclusions and recommendations of the Committee for Programme and Coordination on proposed revisions to the Regulations and Rules Governing Programme Planning, the Programme Aspects of the Budget, the Monitoring of Implementation and the Methods of Evaluation (article VII and annex), on evaluation, on the annual overview report of the United Nations System Chief Executives Board for Coordination (CEB) for 2016 and on the United Nations system support for the New Partnership for Africa’s Development.

Progress on Adoption of International Public Sector Accounting Standards

BETTINA TUCCI BARTSIOTAS, Assistant Secretary-General and Controller of the United Nations, introduced the Secretary-General’s tenth and final progress report on the adoption of the International Public Sector Accounting Standards (IPSAS) by the United Nations (document A/72/213).  Recalling the Organization’s sustained compliance with IPSAS to date, she said the report focused on progress made and challenges experienced during the institutionalization of IPSAS compliance.  The Secretariat was pleased to note that the Advisory Committee on Administrative and Budgetary Questions (ACABQ) was a success story.  The Organization now was turning its focus to implementation of a comprehensive internal control framework, which would demand its full attention in order to attain greater transparency and accountability.

BABOU SENE, Vice-Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing its related report (document A/72/7/Add.4), described the introduction of the international standards as a “successful transformation project” and encouraged the Secretariat to further utilize it at all levels of management in order to inform decision-making.  The Group recommended that the General Assembly request the Secretary-General to include further information on the implementation of the internal control framework, which had experienced delays.  Quantifiable and distinct benefits related to IPSAS or to Umoja, the Organization’s enterprise resource planning system, should be an essential part of future reports of the Secretary-General, he added.

AMÉRICA LOURDES PEREIRA SOTOMAYOR (Ecuador), speaking on behalf of the “Group of 77” developing countries and China, recalled General Assembly resolution 60/283 by which it had approved IPSAS implementation as a way to improve the Organization’s accounting standards and hence efficiency in financial management.  The Group concurred with the Advisory Committee’s view that, despite implementation in 24 United Nations organizations and subsequent qualified audit opinions, much work remained to be done, including further utilizing the information gathered by IPSAS at all levels of management to better inform decision-making and to benefit Member States. 

Calling for relevant future reports to provide clarity on the benefits attributable to IPSAS adoption and Umoja‑related system enhancements, she said the Group also concurred with the Advisory Committee that the Secretary-General had not included relevant information in the final progress report, due to the six‑month delay in preparing the statement of internal control.  She asked the Secretary-General to continue to coordinate all aspects related to the transmission from the United Nations System Accounting Standards to IPSAS, including the need to gather, analyse and disseminate relevant information so as to further refine the Organization’s implementation plans and strategies.

Improving the Financial Situation of the United Nations

Ms. BARTSIOTAS, Assistant Secretary-General and Controller, updated the Fifth Committee on several developments related to the United Nations financial situation.  For the regular budget, Jamaica had paid in full, bringing the total number of Member States current on their payments for the regular budget to 136.  For peacekeeping operations, Australia, Jordan and Kuwait had paid all peacekeeping assessments currently due, bringing the total number of Member States who had paid in full for that category to 37.  The payments received from Australia and Kuwait after the recent presentation had resulted in their addition to the list of Member States paying their assessments in full for all categories, bringing that total to 33 Member States.

Ms. PEREIRA (Ecuador), speaking on behalf of the Group of 77, noted with concern that the Organization’s financial situation could become dire in the final months of 2017 as regular budget cash was currently exhausted and reserves were at low levels.  She was further concerned about the levels of the Working Capital Fund and Special Account, which at $351 million would suffice for only six weeks of regular budget operation.  Reiterating the need for financial stability for the Organization to fully implement its mandates, she encouraged Member States to take urgent steps to address non‑payment and settle their contributions to the regular budget to avert consequences that could gravely impact the Organization’s work.  She noted that the Under-Secretary-General had chosen to withhold information from this year’s presentation.  “This sets an unhealthy precedent and runs counter to the Secretary-General’s commitment to transparency to Member States,” she said.  “The Group calls for full transparency, honesty and accountability on the financial health of the Organization so that Member States can understand why the United Nations continues to face financial difficulties, especially as we discuss the financial future of the Organization and the United Nations ability to implement the mandates that it has been entrusted with.” 

As changing demand for peacekeeping activities made it difficult to predict financial requirements, Member States should be ready to address such inconstant tendencies, she said, urging them to pay their respective shares of the peacekeeping budget to avoid undermining and reversing hard‑won peacekeeping gains.  As most contributors were developing countries unable to sustain troop and equipment commitments on their own for extended periods, the Secretariat must continue efforts to expeditiously process payments for contributors of troops and contingent‑owned equipment.  States must pay their assessed contributions in full, on time and without conditions, and also empathize with those States which were temporarily unable to meet their financial obligations due to genuine economic difficulties.  She strongly rejected all unilateral coercive measures contrary to international law which obstructed or impeded payments from members of the Group to the different United Nations budgets.  She also voiced concern about policies of withholding financial obligations due to the United Nations to create links with the Organization’s reform.  “Withholding funds for approved budgets creates artificial political leverage that undermines the established principles of governance of the United Nations on the basis of the sovereign equality of Member States,” she stressed.

DIANA MINYI LEE (Singapore), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), said it was deeply concerned that the regular cash budget was exhausted and reserves were at low levels.  ASEAN took note of the Under-Secretary-General’s warning that severe cash problems could emerge in the final months of this year unless sufficient contributions were received.  It was genuinely hard for some Member States to pay their assessments, while others had done so despite challenges at home.  But there were also Member States which had the ability to pay, yet had not done so.  Failure to fulfil legal and financial obligations to the Organization in full, on time and without preconditions compromised its effectiveness, she said adding that the Secretary-General’s reform proposals for the Working Capital Fund should not distract from Member States’ basic responsibility to meet their legal and financial obligations.

She went on to note measures taken by the Secretariat to improve processes, such as giving Member States the option of getting assessment letters via email.  It was mystifying, however, that that spirit of innovation did not extend to streamlining the Under-Secretary-General’s presentation to Member States, which deserved a full, holistic and honest picture of the United Nations financial health. “The Secretariat should not shy away from presenting these facts, whether pleasant or not,” she said.

CAITLIN WILSON (Australia), speaking also on behalf of Canada and New Zealand, expressed concern about the flow‑on effects of the nearly $1.1 billion in unpaid assessed contributions to the regular budget, as well as the more than $2.5 billion outstanding in the peacekeeping budget.  Not only did that create inequity between Member States that had paid their assessed contributions and those which had not, but it also compelled troop- and police-contributing countries to shoulder the financial burden while waiting for outstanding contributions to be paid, she said, urging all 58 Member States that had not yet paid their contributions to do so without delay.  Should issues arrive, all eligible Member States should make use of mechanisms in play to help them with their outstanding contributions.  She went on to reiterate strong support for the Secretary-General’s proposed reforms, emphasizing that Member States must provide the United Nations with the support necessary to improve processes, develop cost-saving tools and adapt to a rapidly changing world.

JAN DE PRETER, speaking on behalf of the European Union delegation, emphasizing that promoting the strong financial situation of the United Nations was a priority for the bloc’s member States, noted that the Under-Secretary-General had made clear that the Organization would suffer from severe cash problems in the final months of 2017 unless sufficient contributions were received.  Encouraging Member States to pay their assessed contributions in full as soon as possible — and those Member States that had unpaid assessments for 2017 to address the matter as a priority — he said more progress could also be made on peacekeeping, and noted with concern the decrease in the amount of total cash available in that area.  “Financial health depends not only on the reliability of funds coming in,” he said, but also on “the standards applied to how the funds are spent.”  The United Nations must continue to strive to spend more wisely, more accountably and in line with agreed budget levels. 

ANA SILVIA RODRÍGUEZ ABASCAL (Cuba), associating herself with the Group of 77, said the United Nations could only achieve its ambitious but necessary goals through joint efforts.  Despite some positive signs in the Organization’s financial situation, she expressed regret that for the peacekeeping budget and the regular budget, outstanding assessments still represented 41 per cent and 42 per cent, respectively, of the amounts approved.  Describing as a matter of concern the recurrent issue that the bigger debts to the United Nations budget continued to focus around one Member State, she said that same State benefited from the main distortion in the methodology of calculating the scale of assessments and obtained profits for hosting the Organization on its territory.  For the Secretary-General’s reform efforts to be successful, Member States must meet their financial obligations to the United Nations on time, in full and without conditions.  Cuba itself had done so despite enduring a 55‑year‑long economic, commercial and financial embargo, which violated the norms and principles of international law and the United Nations Charter, she said.

FU DAOPENG (China), associating himself with the Group of 77, said the acute shortfall in the regular budget, if not addressed promptly, would further aggravate the shortage of funds towards the end of the year.  China hoped that problem would be properly dealt with.  Despite the enormous pressure of improving the lives of its people, the Government of China still pulled out all the stops to pay its assessed contributions on time, in addition to providing additional assistance, including the establishment of the Peace and Development Fund.  China called on those Member States in a position to do so, not least those with sizable arrears, to promptly and unconditionally pay up their assessments.  He went on to state that any budget management reform must be aimed at improving the efficient use of financial resources, strengthening accountability, upholding budgetary discipline and, ultimately, managing and utilizing well every penny paid by Member States’ taxpayers.

KATSUHIKO IMADA (Japan) said that despite its long-standing domestic financial difficulties, Japan had faithfully fulfilled its obligation to pay its assessments in full and on time.  It would continue to do so.  At the same time, the capacity of Member States to pay was not unlimited, he said.  When resource requirements were elaborated and deliberated, realistic levels must be set, he said, emphasizing the need to adhere to budgetary discipline.  He went on to reiterate Japan’s request that the budget approved as necessary for the Secretariat to deliver its given mandates continued to be utilized in the most efficient, effective and accountable manner.

Ms. BARTSIOTAS, reiterating that on‑time, in‑full payments were absolutely critical to ensuring the United Nations healthy functioning, said payments would be made immediately to peacekeeping operations as soon as funds were received, including through off‑cycle payments.  Transparency was a priority for the Secretariat, she stressed, adding that all details related to the assessments of Member States were available online.  As stated, the regular budget situation was not in a healthy state, and the successful completion of the United Nations various mandates would depend on the receipt of payments in the next few months.  In that regard, she hoped that in the future the United Nations would enjoy a healthy cash‑flow situation “as needed”.

For information media. Not an official record.