UNRWA – Annual report of the Commissioner-General – Addendum

REPORT OF THE COMMISSIONER-GENERAL OF THE UNITED NATIONS RELIEF

AND WORKS AGENCY FOR PALESTINE REFUGEES IN THE NEAR EAST

Addendum

1. This addendum to the Commissioner-General's report to the General Assembly 1/ contains information on the financial results in 1985, the financial performance to date in 1986 and on the Agency's proposed budget for 1987.

2. Direct government assistance to Palestine refugees is provided by the governments in the area of operations. Information on this assistance, shown as reported by the Governments concerned, is given in annex II.

I.  FINANCIAL RESULTS IN 1985

3. With the exception of 1984 when the Agency received a special one-time grant of $8.9 million following the closure of the United Nations Special Emergency Operations Trust Fund, regular contributions to the Agency showed a decline each year from 1980 to 1985. At the beginning of 1985, total regular contributions to the Agency were only $164 million, some $26 million less than in 1980.  The reduction in income was such that the Commissioner-General had no recourse but to severely reduce the budget for i985 and to make a special appeal to Governments for additional contributions. A number of Governments responded to the special appeal and by the close of 1985 the Agency's income for the year totaled $182 million. The Agency was able, therefore, to close the gap between income and expenditure in its General Fund substantially, ending the year with an excess of expenditure over income of only $1.2 million, which was met from its working capital.

II.  FINANCIAL PERFORMANCE IN 1986

4. The Agency's consolidated budget estimates for 1986 were $191.2 million, of which $170.5 million was for the General Fund, $13.1 million for Project Funds and $7.6 million for the Capital Construction Fund. 2/ This budget, adjusted to reflect the exchange rates prevailing in December 1985, was authorized for expenditure by the Commissioner-General.

5. As at the date of this report, the gap between income and 1986 estimated expenditure is $9 million, of which $2 million relates to the General Fund and $7 million to the Capital Construction Fund. The Agency has informed its major donors of the level of 1986 income to date (see annex I) and is hopeful that the additional contributions required for 1986, in particular for the General Fund, will be pledged.

III.  MEDIUM-TERM PLAN

6. The Agency embarked in 1986 on its first multi-year planning exercise.  In order to provide for the orderly development of the three substantive programmes of the Agency – education, health and relief services – and to provide donors with a forecast of the level of financing, that will be required over the planning period, the Agency has prepared a three-year medium-term plan. This plan will be a rolling plan, that is, it will be revised annually by adding a year and dropping the current year. The plan contains a description of the objectives of each programme and sub-programme, the strategies that will be followed to meet the objectives and the methods of evaluating the achievement of the objectives. The plan will thus form the basis for the policies that will govern the preparation of the Agency's annual budgets.

IV.  PROPOSED BUDGET FOR 1987

7. Following the practice adopted in 1985, UNRWA's proposed 1987 budget estimates are being submitted during the forty-first session of the General Assembly as an addendum to the Commissioner-General's report. These estimates are subdivided into three sections: the General Fund, Project Fund and Capital Construction Fund requirements.

A.  Consolidated budget estimates

8. The consolidated budget estimates for 1987, as shown in table 1 (General Fund, Project Fund and Capital Construction Fund), are $200.3 million, an increase of $9.1 million or 4.8 Per cent over the 1986 approved budget. Table 2 contains a comparison of the 1987 budget estimates with the 1986 approved budget by type of expenditure.

9. The preparation of the 1987 budget has been guided by the policies and strategies developed in the Agency's 1987-1989 medium-term plan which also sets out the projected income needs of the Agency over the period. These projections reflect a realistic view of the income the Agency considers it would be possible raise from contributing Governments and others. The meeting of major donors in May 1986 endorsed these projections of income and it is on this basis that the proposed budget for 1987 has been prepared. The policy assumptions on which UNRWA's 1987 budget estimates have been based are that all administrative and support services would be held at the same level as 1986 and that growth in the three substantive programmes would be limited to projections of population increases as set out in the medium-term plan.

B.  General Fund

10. The General Fund budget represents the resources needed to operate the continuing major programmes of the Agency. It includes the staff and other costs necessary to maintain the education, health and welfare services that the Agency provides to serve two million Palestine refugees. Each of these programmes is described in greater detail in the sections that follow.

11. The 1987 General Fund budget estimates amount to $178.3 million, of which $163.0 million represents cash expenditure and $15.5 million expenditure of donated food commodities and services. These figures show an increase of $7.9 million or 4.6 per cent over the approved General Fund budget for 1986.

Table 1.  1986 APPROVED BUDGET AND 1987 PROPOSED BUDGET ESTIMATES

         (Thousands of United States dollars)

a/ The 1986 budget figures have been reclassified to conform with the current presentation.

C.  Project Fund

12. UNRWA continues to implement two types of projects: ongoing projects that are fully funded by special contributions such as those shown in annex III and construction projects that provide new or expanded facilities for the Agency's programmes.  Funding for ongoing projects is estimated at $13.6 million in 19817 an increase of $500,000 over 1986 due to an increase in the valuation of donated food commodities and a small expansion in the number of refugees benefiting from the supplementary feeding programme.

D.  Capital Construction Fund

13. The Capital Construction Fund consists of requirements for the replacement of unsatisfactory facilities and for new facilities to meet the needs brought about by the growth in the refugee population. Funds will be used to build new schools, health clinics, health sub-centres, mother-and child health care-units, sewing centres, distribution centres and warehousing facilities, as well as for additional classrooms to avoid triple-shifting of classes and the replacement and renovation of toilet units in existing schools. In 1986 this requirement was $7.6 million, but only $1.5 million of the proposed projects have been funded as at the date of this report. Accordingly a number of the proposed projects are included in the 1987 budget estimate, which has been increased marginally over the 1986 level. If sufficient funds are not found to enable the Agency to build these much-needed facilities, buildings will have to continue to be rented, which will increase the overall operating costs of the Agency.

E.  Programmes

14. In 1987 the education programme will account for about 58 per cent of the total General Fund budget. Health services represent 14.0 per cent of the budget, relief services equal 11 per cent, operational services 4.8 per cent and common services 12.2 per cent. Each of these programmes is described below.

1.  Education

15. The Agency's education programme includes elementary and preparatory schooling, vocational and professional training in Agency-operated vocational training centres, and a scholarship grants programme to help in the financing of refugee students seeking higher education in or near the Agency’s areas of operation. The general education programme for elementary and preparatory age group students provides schooling for 352,800 pupils enrolled in 638 Agency schools serviced by a teaching staff of 10,200. In addition 8,540 refugee pupils are enrolled in government and private schools. It is projected that the number of pupils serviced by the Agency will increase by 2,840 in the 1987/88 school year, requiring the hiring of about 78 additional teachers in the autumn of 1987.

16. In UNRWA's 8 training centres, 3,660 training places are available to Palestine refugees for vocational and technical training and 850 for teacher training. The type and content of the courses are continually revised by the Agency to enable graduates from the centres to obtain employment so as to be able to contribute economically to the continuing development of the region. During the 1985/86 academic year, UNRWA awarded 360 scholarships for refugees to study at universities.

17. In planning the general education programme for the 1987/88 school year, the Agency has concentrated on lowering the occupancy level of the most congested classrooms so that no class section will have more than 50 pupils. This will require the employment of a further 67 teachers in addition to those required to accommodate normal growth in the school population (see para. 14). An additional 66 teaching staff will be employed in Gaza to eliminate the work-load difference that currently exists between Gaza and the West Bank. The aim of these policies to overcome the effects of the freeze in the number of teaching positions in the 1985/86 school year made necessary by the severe financial constraints that faced the Agency in 1985.

18. The goal of the Agency’s construction programme for education is to provide standard schools to replace rented schools and unsatisfactory or unsuitable Agency schools as well as to provide for the growth in school population. The Agency is able to recover the cost of new standard schools in full in six years through reductions in the number of teachers required. The programme to provide improved sanitation facilities in-current Agency schools that was started in 1986'is being continued in 1987.

19. Expenditure for the education programme is estimated at $102.7 million for 1987, as compared to $100.8 million in 1986.

2.  Health

20. Primary health care is provided through curative and preventive medical care services and maternal and child health programmes. These programmes are operated through a network of 98 health centres/health points, polyclinics, hospitals, laboratories and rehabilitation centres, run either by UNRWA or Governments which provide services to about 1,878 million eligible Palestine refugees.

21. Basic community sanitation services are provided by UNRWA in 61 camp locations housing Palestine refugees and displaced persons. These services cover the provision of potable water, sanitary disposal of solid and liquid wastes, drainage of storm water and the control of disease-carving insects and rodents.

22. Three general policy objectives have been incorporated in the 1987 budget estimates. They are to improve specialist medical services by employing a limited number of additional doctors and nurses, to expand clinical laboratory services to areas where they do not currently exist, and to improve dental health services. In the occupied territories, the thrust of the policy decisions is to make available additional hospital beds to refugees in Gaza and to improve sanitary conditions through major capital equipment programmes for garbage collection and for the reconstruction of sewer systems.

23. Estimated costs for the health programme have not increased, although there is a planned expansion in certain areas of operation. Maintaining the budget at the 1986 level of about $25.3 million has been made possible by exchange rate changes in several currencies in the areas of operation.

24. The major goal of the Agency’s relief programme is to assist destitute refugee families through a Special Hardship Case programme which provides basic food needs, blankets, clothing for children, and shelter repair and reconstruction services. Currently this programme services 118,000 beneficiaries. Limited cash grants are given to Special Hardship Cases and adult training programmes are also carried out. Because of increased economic difficulties in the Agency’s areas of operation, the number of Special Hardship Case applications is expected to increase in 1987 by 11,200. Food and clothing are distributed to the eligible refugees through a network of distribution centres and distribution points located throughout the camps, with food distribution being made either monthly or bimonthly, while clothing is distributed twice annually.  With the expansion in the number of beneficiaries in 1987, cash costs will increase.

25. Further development of sewing and women’s activity centres are planned in 1987 with the objective of giving participants skills that can be used to augment their family income. Additional funding will be required to construct and equip planned new centres and to employ trained teaching staff.

26. The 1987 budget estimate for this programme is $19.7 million, which is an increase of about $2.6 million over 1986, brought about principally by the anticipated increase in Special Hardship Cases.

4.  Operational services

27. The three substantive programmes of the Agency are supported by a supply and transport operation and an architectural and civil engineering services group. The supply and transport operation provides procurement, freight transport and passenger transport services in all the areas of operation. In 1986, 23,650 tons of basic commodities and 5,000 tons of general cargo were handled through a network of central and satellite warehouses for final distribution to the beneficiaries of the services provided by the Agency's programmes. The logistics operations of the Agency are carried out by a fleet of vehicles that are used to transport commodities and general stores, for garbage collection, water distribution and sewage clearance services, and for education and health programmes. In total the Agency has a fleet of 462 vehicles. All of these vehicles are maintained by the Agency’s vehicle maintenance staff. The proposed budget for this operation in 1987 is $7.5 million, compared to $7.2 million in 1986.

28. The architectural and civil engineering group is responsible for the design of all new Agency facilities and for the maintenance of existing Agency premises. In 1986 the staff have worked on the design of buildings to the value of $6.6 million, supervised construction worth about $2.8 million and implemented a maintenance programme of about $1.4 million. The budget estimate for architectural and civil engineering services in 1987 is $1.3 million, an increase of $200,000 over 1986. The costs associated with the construction of new facilities is, in most cases, recovered as a direct charge to the Construction Fund.

5.  Common services

29. Common services support all programmes run by the Agency and cover two distinct areas: general management and administrative services. General management consists of the offices of the Commissioner-General and Deputy Commissioner-General the directors in each field, and the functions of legal services, external relations, public information, internal audit and management services. Administrative services include financial, personnel, data processing and related functions.

30. The increase in common service costs is due to two major factors. Firstly, although there have been reductions in programme costs due to more favorable exchange rates in two of the areas of UNRWA operations, there have been increases in costs resulting from less favorable exchange rates in the locations where the majority of the Agency's administrative personnel are stationed (Vienna and Amman). Secondly, the proposed budget for administrative services includes the costs associated with the move of the Agency's headquarters unit in Amman from rented space to space recently made available in Agency- owned premises, saving rent. The one-time cost of approximately $600,000 in 1987 will be recovered through rental savings over the next five years.

F.  Staff costs

31. Staff costs make up a large part of UNRWA's operating budget, as is illustrated in table, 2, and are carefully controlled and monitored throughout the operating year. In preparing the 1987 budget, administrative staff have been held to the 1986 level while staff in the substantive programmes have been increased to a limited extent to provide for the growth in the refugee population and eliminate work-load anomalies. Table 2 shows the estimated expenditure for staff funded by the regular budget and by extra-budgetary funds, while table 3 contains the staffing table of the Agency, also subdivided by source of funding (regular budget and extra-budgetary funds), and shows the total number of staff employed. Efforts are continually being made to improve the productivity of staff by providing additional training and through the introduction of automated equipment. As posts become vacant, their functions are carefully analyzed to ensure that they are still required before action is taken to fill them.

32. In 1987, 270 additional staff will be required in the education, health and relief programmes. Also a small number of reclassifications are included in the budget estimates to allow for the correction of some post classifications and the redistribution of duties and responsibilities where this will result in improved efficiency and effectiveness.

33. Estimated staff costs in 1987 are $137 million compared to $134.9 million in 1986.

Table 2. Summary of the 1987 regular and extra-budgetary cost estimates

classified by expenditure groups

(Thousands of United States dollars)

Table 3. Staffing table

G.  Non-staff costs

34. Expenditures in 1987 will increase for the maintenance of buildings and facilities, supplies, replacement of unserviceable equipment and for subsidized hospital services in Gaza and other fields.  Estimated expenditure in 1987 for goods and services is $41.6 million compared to $38 million in 1986.

V.  FINANCING THE 1987 BUDGET

35. The cash and in-kind income that will be required to finance the 1987 UNRWA budget is shown in the following table:

36. UNWRA has no reserves on which to draw to finance the 1987 budget. Funds for the operations of the Agency's programmes will be totally dependent, therefore, on the contributions received from donors. Contributions to UNRWA are made in two forms: cash and in-kind donations of basic commodities (principally food) and services.

A.  Cash requirements

37. To continue to provide basic education, health and relief services to refugees, UNRWA will require $163 million to finance its General Fund. This compares with estimated income for 1986 of $154.6 million. In addition to the cash resources required for General Fund operations, UNRWA has unmet Capital Construction Fund deeds in 1987 of $8.3 million. Donors will be sought for these projects. Continuing support of about $7.14 million is anticipated from current donors for the funding of the remaining ongoing projects.

B.  In-kind requirements

38. In-kind requirements for 1987 are estimated to be $21.7 million. Several donors have customarily made in-kind contributions of basic commodities and services to UNRWA. It is expected that they will be in a position to continue their support in 1987. In 1984 and 1985, the quantities of food products donated to the Agency had fallen off. Last year the Agency issued a special appeal for flour in order to rebuild stock reserves for emergency purposes, such as in Lebanon, and received a positive response from a number of Governments. This flour has been delivered and reasonable stock balances are now held by the Agency.

Notes

1/ Official Records of the General Assembly, Forty-first Session, Supplement No. 13 (A/41/13).

2/ Ibid., Fortieth Session, Supplement No. 13 (A/40/13/Add.1), para. 9.

ANNEX I

Contributions pledged to 30 September 1986

(United States dollars)

ANNEX II

Direct government assistance to Palestine refugees a/

(1 July 1985-30 June 1986)

Note. All data in the table below are shown as reported by the Governments concerned and are expressed in United States dollars computed by applying United Nations operational rates of exchange.

____________________________________________________________________________________

a/ This assistance was rendered direct to the refugees, in addition to contributions to UNRWA (see annex 1).

b/ Figures not received.

c/ Health services are included in social welfare services.

d/ Housing and miscellaneous services are included in administrative costs.

e/ Security and miscellaneous services are included in administrative costs.

ANNEX III

Ongoing Projects that are fully funded by donors for 1987

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