Palestine refugees – UNRWA financing – report

UNITED NATIONS RELIEF AND WORKS AGENCY FOR PALESTINE

REFUGEES IN THE NEAR EAST

Report of the Working Group on the Financing of the United Nations Relief and Works Agency for Palestine Refugees in the Near East

Rapporteur: Mr. Ole Peter KOLBY (Norway)

I.  INTRODUCTION

A. Origin and background of the Working Group

1.  The Working Group on the Financing of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) was established by the General Assembly under resolution 2656 (XXV) of 7 December 1970 to study all aspects of the financing of the Agency.  In the resolution, the Assembly requested the Working Group to assist the Secretary-General and the Commissioner-General of UNRWA in reaching solutions to the problems posed by the Agency's financial crisis.

2.  At the twenty-fifth and succeeding sessions, the General Assembly considered the reports submitted to it by the Working Group, 1/ and adopted resolutions commending the efforts of the Working Group and requesting it to continue them for a further year. 2/

3.  The Working Group consists of the representatives of France, Ghana, Japan, Lebanon, Norway, Trinidad and Tobago, Turkey, the United Kingdom of Great Britain and Northern Ireland and the United States of America. The Chairman of the Working Group is Mr. A. Coskun Kitea of Turkey.

B. Consideration of the reports of the Working Group at the thirty-seventh session of the General Assembly

4.  The report of the Working Group on its activities in 1982 3/ was considered by the General Assembly at its thirty-seventh session under agenda item 65, entitled "United Nations Relief and Works Agency for Palestine Refugees in the Near East". At its 4th plenary meeting, on 24 September 1982, the Assembly decided to include this item in its agenda and to allocate it to the Special Political Committee, which considered it at its 24th, 26th to 32nd, 42nd, 44th and 45th meetings, held between 9 November and 6 December.

5.  At the 32nd meeting of the Committee, on 18 November, the representative of the Netherlands introduced a draft resolution (A/SPC/37/L.10) entitled "Working Group on the Financing of the United Nations Relief and works Agency for Palestine Refugees in the Near East", sponsored by Austria, Bangladesh, Canada, Denmark, Germany, Federal Republic of, India, Indonesia, Liberia, Mali, the Netherlands, New Zealand, Nigeria, Pakistan, the Philippines, Spain, Sri Lanka, Sweden and Yugoslavia.

6.  Under the terms of the draft resolution, the General Assembly would:

(a) Commend the Working Group for its efforts to assist in ensuring the Agency's financial security)

(b) Take note with approval of the report of the Working Group)

(c)  Request the Working Group to continue its efforts, in co-operation with the Secretary-General and the Commissioner-General, for the financing of UNRWA for a further period of one year)

(d)  Request the Secretary-General to provide the necessary services and assistance to the Working Group for the conduct of its work.

7.  At its 44th meeting, on 3 December, the Committee adopted the draft resolution without a vote.

8.  At its 108th plenary meeting, on 16 December, the General Assembly considered the draft resolution regarding the Working Group, which had been recommended by the Special Political Committee together with other draft resolutions under this item. |; The Assembly adopted the draft resolution unanimously as resolution 37/120 A.

II.  ACTIVITIES OF THE WORKING GROUP DURING 1983

9.  Throughout the year the members of the Working Group have followed with .concern the difficulties experienced by the Agency and the serious financial situation it continued to face. They noted the completion of the report of the Joint inspection Unit on UNRWA (A/38/143), circulated by the Secretary-General in .August 1983. That report had been prepared in pursuance of decision 36/462 of 16 March 1983, in which the General Assembly, acting on the recommendation contained in the special report of the Working Group (A/36/866 and Corr.l) of March 1982, had requested the Joint Inspection Unit to carry out a comprehensive review of the Agency's organization, budget and operations with a view to assisting the Commissioner-General to make the most effective and economical use of the funds available to the Agency.

10. At a meeting with the Working Group on 28 September, the Deputy Commissioner-General provided it with up-to-date information on the financial situation of the Agency (see sect. Ill below). He also made available the comments of-the Commissioner-General on the report of the Joint Inspection Unit, which he had found ! both constructive and helpful. The Deputy Commissioner-General indicated that the future ability of the Agency to finance its educational, medical and social welfare programmes at existing levels throughout the five fields of its area of operations remained uncertain.  In 1983 planned expenditures had been reduced through the elimination of the general ration programme, except in Lebanon, and an up-dating of estimated increases in staff costs. Moreover, the conversion of gifts in kind into cash had been of great value to the Agency. In addition to its normal programmes, he pointed out, UNRWA had been faced with carrying out emergency operations in Lebanon since the Israeli invasion of Lebanon in June 1982. Special appeals had been made both for emergency relief and shelter programmes and for reconstruction of UNRWA facilities such as schools and refugee housing. He also drew attention to the problem arising from the necessity for the Agency of carrying the burden of the contingent liability for paying termination indemnities to locally-recruited staff in the event of mass redundancies, which the Joint Inspection Unit had urged the General Assembly to review.  In conclusion, he indicated that the financial outlook for UNRWA in the future could be improved only by greatly increased contributions from donors or by the planned reduction or elimination of its programmes, either uniformly throughout its area of operations or field by field.

III.  FINANCIAL SITUATION OF UNRWA

11.  The Deputy Commissioner-General informed the members of the Working Group of the revisions to the budget for 1983 that had been made since it was first presented in the Commissioner-General's report for the period 1 July 1981 to 30 June 1982. 4/ Estimated expenditure for 1983 as set out in that report had been reduced from $271.4 million, first to $235.9 million (as reported to the Working Group in October 1982 (A/37/591, para. 16)) and subsequently, in February 1983, to $207.5 million, a net decrease of $63.9 million. Two major elements had contributed to this reduction of planned expenditure; the elimination of the general ration programme, except in Lebanon, and an up-dating of estimated staff cost increases.  Income, however, had fallen short of expectations and as at October 1983, amounted to only some $166 million.  Unless additional contributions were received before the end of the year, the deficit remaining, some $41 million, would be met by deferring non-cash items (such as liabilities for termination indemnities and repatriation of local staff), by the non-implementation of some budgeted items and by drawing down cash.

12. Despite the ability of the Agency to maintain its programme throughout 1983 without threat of serious reductions, the outlook for 1984 gave cause for deep concern. Budget expenditure for 1984 was estimated at $233 million, an increase of $25 million over 1983. The increase was the result of expected inflation and additional costs associated with the increase in the school population served by the Agency. Recurrent expenditure would increase in 1984 by $19.3 million, the greater part of which was related to increased emoluments for the 17,000 staff members, arising from normal salary increments, and continued inflation. The Deputy Commissioner-General pointed out that staff costs constituted 72 per cent of the budget in 1983 and 73 per cent in 1984.

13. While it was possible for the Agency to estimate the level of expenditures required to maintain its programmes at established levels, its estimates of income represented no more than aspirations, which might or might not be fulfilled. The Deputy Commissioner-General pointed out that, since about 96 per cent of the Agency's income was dependent on voluntary contributions, it served little purpose to estimate income for 1984.  He recalled, however, that income so far in 1983 amounted only to some $166 million, $16 million less than for 1982. Moreover, it represented only 80 per cent of revised budgetary expenditure for 1983, and he pointed out that revised budgetary expenditure for 1984 was estimated to increase by $25 million. As noted in paragraphs 199 and 202 of the Commissioner-General's report for the period 1 July 1982 to 30 June 1983, 5/ after deducting the costs of the international staff borne by the United Nations, the World Health Organization (WHO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO), the amount for which the Agency must appeal to the international community to enable it to maintain its regular programmes at existing levels in 1984 is $225.2 million.

14.  The Deputy Commissioner-General also drew attention to the Agency's cash balances, which, at the beginning of January 1983, stood at $25.3 million.  On current indications, however, cash balances at the beginning of 1984 were expected to stand at less than one month's expenditure (which, it was estimated, would run at approximately $17 million in 1984), which was not a safe working level.  It was important, therefore, that Governments made payments of their pledges early in the year.

15. The Deputy Commissioner-General further informed the Working Group of the financial situation of the Agency's emergency operations in Lebanon, for which Separate accounts were maintained. The cost of providing emergency relief to Palestine refugees in Lebanon from June 1982 to June 1983 had been $52.8 million, total of $43.3 million had been contributed by Governments and voluntary agencies, leaving an uncovered requirement which had been met by drawing on existing stocks and using available cash balances. The Commissioner-General had lunched a further appeal for $13 million to cover the first stages of reconstruction of UNRWA facilities, particularly schools and refugee housing. The response to that appeal had been very meagre and, if further essential reconstruction was to be undertaken by the Agency, the cost might have to be borne by the Agency's regular budget.

16. As noted in paragraph 10 above, the Deputy Commissioner-General noted that the aversion of gifts in kind into cash, as recommended to the General Assembly by e Working Group, had been of great value to the Agency. He also underlined the benefit to the Agency if the Assembly were to assume the contingent liability for paying termination indemnities to the staff in the event of mass redundancies, should this become necessary to avoid bankruptcy.

IV.  CONCLUDING REMARKS

17.  The Working Group was concerned to note that, in 1983, UNRWA will again have insufficient funds to finance its budgeted expenditure, even at the revised and reduced levels established at the beginning of 1983.  The financial situation, however, has not been as critical as was the case, especially in 1981 and 1982, when the Agency's vital education programme was threatened. Nevertheless, with expected income in 1983 at $166 million and revised budgeted expenditure at $207.5 million, the shortfall of some $41 million is disturbing.  The Working Group recognized that this gap will be bridged by deferring some non-cash items, but cannot fail to express concern that the major portion will be met by drawing down cash balances, which will seriously affect the Agency's cash position at the beginning of 1984. The shortfall of income during 1983, which has given rise to these measures, is of particular concern when it is noted that income for the regular programme actually decreased by $16 million as compared with income for 1982, despite some sizeable conversions of contributions in kind into cash. This was due to lower contributions from some of the traditional donors, partly as fa result of increases in the value of the dollar against the currencies in which they contribute and partly to the absence of special additional contributions which, in recent years, have been significant.

18. The financial outlook for 1984 gives rise to very serious concern. The Commissioner-General has projected expenditures for 1984 to $233 million, an increase of about $25 million over 1983. The increase is the result of expected inflation and additional costs associated with the annual increase in the refugee population served by the Agency.  If income in 1984 does not exceed the level of 1983 there will be a shortfall of $66 million for the financing of the Agency's activities.  The Working Group is confident that the Commissioner-General will, as in the past, continue to maintain the strictest economies and to use the resources placed at his disposal in the most efficient manner. Nevertheless, it was agreed that the international community must increase its financial support of UNRWA.

19. The Commissioner-General, the Working Group on several occasions emphasized that the highest educational programme of UNRWA- The willingness to convert their contributions in kind into cash their contributions for cash has been a decisive educational programme at its current level. The that the contributors concerned will continue to and the refugees themselves have priority should be assigned to the of some of the major contributors or to allow the Agency to sell factor in maintaining the Working Group expresses the hope assist the Agency in this respect.

20.  The Working Group also considered the implications of the Agency's contingent liability for termination indemnities to its staff, amounting to $59 million if UNRWA should be forced to close down its operations.  It was recognized that the Joint Inspection Unit has recommended that the General Assembly review this matter. During the Working Group's consideration of this question it was pointed out that, if the responsibility for termination indemnities could be assumed by the regular budget of the United Nations, the Agency would be able to carry on its programmes for several more months during which strenuous attempts could be made to solicit additional contributions.  On the other hand, it was also pointed out that the proposal represented a financial risk to the United Nations, since there was a possibility that the United Nations might have to fulfil its obligations.  It would also be contrary to the principle of voluntary financing for operational activities in the United Nations system.

21. UNRWA was created to provide humanitarian assistance to the Palestine refugees pending a political settlement of the refugee problem. The General Assembly has repeatedly stressed the urgency of such a settlement. The Working Group shares this goal.  In the meantime, the humanitarian services of UNRWA remain indispensable and should have the whole-hearted support of all the international community.  It is essential that Members of the United Nations make the necessary financial contributions to ensure a continuation of the Agency's humanitarian assistance to the Palestine refugees.

22.  The Working Group therefore urges:

(a)  Governments that have not contributed to UNRWA to start to contribute;

(b)  Governments that have so far only made relatively small contributions to make more generous contributions;

(c)  Governments that generously made special contributions to UNRWA last year or earlier to do so again in 1983 and 1984;

(d)  Governments that have made generous contributions to UNRWA throughout the year to continue to make generous contributions and strive to increase them;

(e)  Governments to make payment of their contributions as early as possible in the calendar year.

Notes

1/  Official Records of the General Assembly, Twenty-fifth Session, Annexes, agenda item 35, document A/8264; ibid., Twenty-sixth Session, Annexes, agenda item 38, document A/8476; ibid., Twenty-seventh Session, Annexes, agenda item 40, document A/8849; ibid., Twenty-eighth Session, Annexes, agenda item 43, document A/9231; ibid., Twenty-ninth Session, Annexes, agenda item 38, document A/9815; ibid., Thirtieth Session, Annexes, agenda item 54, documents A/10268 and A/10334; ibid., Thirty-first Session, Annexes, agenda item 53, document A/31/279; ibid., Thirty-second Session, Annexes, agenda item 55, document A/32/278; ibid., Thirty-third Session, Annexes, agenda item 50, document A/33/320; ibid., Thirty-fourth Session, Annexes, agenda item 50, documents A/34/567; ibid., Thirty-fifth Session, Annexes, agenda item 53, document A/35/579; and ibid., Thirty-sixth Session, agenda item 60, document A/36/615.

2/  Resolutions 2791 (XXVI) of 6 December 1971, 2964 (XXVII) of 13 December 1972, 3090 (XXVIII) of 7 December 1973, 3330 (XXIX) of 17 December 1974, 3419 (XXX) of 8 December 1975, 31/15 C of 23 November 1976, 32/90 D of 13 December 1977, 33/112 D of 18 December 1978, 34/52 D of 23 November 1979, 35/13 D of 3 November 1980 and 36/146 E of 16 December 1981.

3/  Official Records of the General Assembly, Thirty-seventh Session, Annexes, agenda item 65, document A/37/591.

4/  Ibid., Supplement No. 13 (A/37/13) .

5/  Ibid., Thirty-eighth Session, Supplement No. 13 (A/38/13

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