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FINANCIAL AND BUDGETARY MATTERS

352. Agenda item 11 was allocated to Sessional Committee II for consideration. The Committee had before it the following documents: report on the implementation of the Fund programme in 1974 (UNEP/GC/40 and Corr.1-3); review of the Fund programme for 1975, review and approval of the medium-term plan (1976-1979) and approval of the Fund programme for 1976-1977 (UNEP/GC/41 and Add.1 and 2); the establishment of a rationale for the allocation of the expenses of UNEP between the United Nations regular budget and the Environment Fund and the format of the budget of the Environment Fund (UNEP/GC/42); report on the pre-feasibility study on the environmental aspects of the construction of a permanent headquarters for UNEP in Nairobi and the financing of an architectural and engineering survey (UNEP/GC/46); Revolving Fund (Information) (UNEP/GC/47); report on Fund programme reserve activities, 1974 (UNEP/GC/48); revised 1974-1975 budget estimates for programme and programme support costs of the Fund of the United Nations Environment Programme (UNEP/GC/49); proposed budget for programme and programme support costs 1976-1977 (UNEP/GC/50 and Corr.1) revised 1974-1975 budget estimates for programme and programme support costs of the Fund of the United Nations Environment Programme and proposed budget for programme and programme support costs 1976-1977: proposed construction of temporary premises for the United Nations Environment Programme at Nairobi (UITEP/GC/54); report of the Advisory Committee on Administrative and Budgetary Questions on the revised 1974-1975 budget estimates for programme and programme support costs of the Fund of the United Nations Environment Programme and on the proposed budget for programme and programme support costs, 1976-1977 (UNEP/GC/L.26)-, and revised 1974-1975 budget estimates for programme and programme support costs for the Fund of UNEP and proposed budget for programme and programme support costs 1976-1977 (UNEP/GC/L,28), containing the Executive Director's comments on the report of the Advisory Committee on Administrative and Budgetary Questions.

A. Report on the implementation of the Fund Programme for 1974

Executive Director introduced the reports on the implementation 353. The Assistant of the Fund programme in 1974. Several delegations stated that they found the presentation of the various financial reports too complex. They requested that for future sessions, an attempt should be made to simplify the documentation so as to reflect more precisely the agenda items, and that the documents should be available at an earlier date.

354. Several delegations showed concern at the low level of expenditures for all size of many projects. They also Fund programme activities and at the same time pointed out that the volume of so-called internal projects appeared very high. The Assistant Executive Director said he shared the concern expressed regarding the small scale of many projects approved so far; however, small projects had been utilized, particularly in the first phase of operations, in order to explore avenues for larger-scale projects, and the same considerations applied to the large number of projects requiring internal implementation. Several representatives noted that smaller projects were more likely to be appropriate for smaller institutions in developing countries, and ex-pressed the view that a balance should be established between larger and smaller projects. It was noted that pilot projects should, if possible, be of benefit to all regions, and that projects in general should yield visible benefits.

355. One delegation proposed that the secretariat should state to what extent the allocations for 1974, 1975 and 1976 met the real needs of the programme of activities, and pointed out that UNEP still did not have sound criteria for project classification and that too large a -portion of the funds was being used to finance internal, local and regional projects.

356. In reply to a question concerning agency overhead costs, the Assistant Executive Director explained that the Fund assisted agencies in the implementation of their own programmes by placing resources at their disposal for emphasizing the environmental dimension of their activities. It was consistent with that basic rule of UNEP to expect the agencies to share fully the burden of such activities; thus UNEP should not be expected to pay agency overhead costs for such projects financed by the Fund.

357. A number of delegations expressed a wish to receive regularly both information about projects approved and reports on completed projects; it was suggested that such material be supplied on a systematic basis rather than on request. Some delegations added that the relevant experience of other United Nations bodies and agencies should be taken into account, and that special consideration should be given to whether a regular reporting system, such as that of the ILO, could be adopted by UNEP. The Assistant Executive Director said that, although it might create certain logistic problems, the possibility of complying with the suggestions would be studied.

358. One delegation suggested that in future more detailed information should be given, on a project-by-project basis, about actual expenditures against commitments. The Assistant Executive Director said that the information could be made available, subject to the closing of the accounts.

359. One delegation, supported by several others, pointed out that a project for an environmental protection agency in Israel had no priority compared with other regional projects. They therefore opposed the allocation for it, which was out of proportion with other regional allocations for technical assistance, in terms both of financial support and of duration. One of them stated that its Government had requested similar assistance, which seemed to have high priority in the region concerned, and that many other countries would have similarly liked to be so assisted. The Assistant Executive Director explained that the project in question was not of a regional nature, but was in response to a request from a specific country for technical assistance. The delegations concerned expressed their dissatisfaction at that explanation.

360. The Committee recommended for adoption by the Governing Council a draft decision concerning the implementation of the Fund programme for 1974.

Action by the Governing Council

361 At its 39th meeting the Governing Council adopted by consensus the draft decision recommended by sessional Committee II (decision 41 (III), sect- I 30./

B. Report on the pre-feasibility study on the environmental programme aspects of the construction of a permanent headquarters of UNEP at

Nairobi and the financing of an architectural and engineering survey.

362. In the debate on the report, to delegations pointed out that it seemed unlikely that the architectural and engineering survey could be completed in time for the 13th session of the General Assembly, in accordance with, the thirtieth session. P/GC/46); they wondered time for the Executive Director's note (NEP BG/46) intention stated in the surveys One delegation inquired whether a study had been made comparing rental rates at Nairobi with the cost of constructing a permanent headquarters.

363. The Chief 3f the Division of Administration indicated that it would not be possible for the survey to be completed in time for the thirtieth session of the General Assembly, and that the current target date for its completion was by the thirty-first session. It would be necessary to await the results of the survey, which would provide cost estimates for the proposed building, in order to ascertain the comparative benefits of constructing a permanent headquarters versus the rental of premises,

364. The Committee recommended for adoption by the Governing Council a draft decision concerning the Executive Director's report and the financing of the architectural and engineering survey.

Action by the Governing Council

365. At its 39th meeting, the Council adopted by consensus the draft decision recommended, by Sessional Committee II (decision 42 (III), sect. VII). 30/

C. Revolving Funds (Information)

366. The Committee noted that UNEP had obtained the services of an expert from a major specialized agency in formulating the rules of the Revolving Fund (Information), but that it had not been -possible to bring the Fund into existence during 1974.

367. One delegation asked if the allocation approved by the Governing Council at its second session had lapsed, and if it were therefore necessary to approve a new allocation. Another expressed a wish to see expenditures on the Revolving Fund broken down into specific categories, such as wages and printing. The Assistant Executive Director confirmed that the previous allocation had expired and explained that, in the reports which were required to be submitted annually to the Governing Council on the use of the Revolving Fund, expenditures would be attributed to the various purpose s the Fund was designed to serve* In response to a question by one delegation, he said that UNEP publications could in fact be funded from several sources of finance.

368. The Committee recommended decision concerning the Revolving Fund (Information).

Action by the Governing Council

369. At its 39th meeting, the Council adopted by consensus the draft recommended by Sessional Committee II (decision 42 (III), sect. III). 30/

D. Review of the Fund programme for 1975, review and approval of the medium-term plan 1976 to 1979 and approval of the Fund programme_ for 1976 to 1977

370. Opening the debate, the Assistant Executive Director outlined the necessity for preliminary consideration of agenda items 11 (b) and (c), to determine the amounts which could be made available for Fund programme activities in the years 1975 to 1977, in order to enable Sessional Committee I to consider agenda item 7 (c) on Fund -programme activities. The decision taken would not be final, but would be indicative for the other Committee. Introducing the medium-term plan for 1976-1979, he pointed out the necessity of examining proposals beyond the five-year period 1973-1977 previously used as a planning figure for Fund resources and activities; the Executive Director had decided to make such projections on the basis of an appropriate level of activities, rather than of an assumed level of resources.

371. During the debate, one delegation asked whether the projected level of Fund programme activities for the medium-term plan had taken into account inflationary trends and currency fluctuations. One delegation noted that for the second biennium a clearer indication should have been given on proposed Fund programme activities and their financial consequences, in order to enable Governments to decide on their future commitments. Several delegations expressed concern at the large carry-over of funds from one year to the next, -particularly for 1975; they wished to see the level of expenditure by the Fund increase as rapidly as was practicable. Several delegations also noted that, in 1974, there had been a substantial lag between appropriations for Fund programme activities and actual expenditure for such activities, and requested an explanation of that situation.

372. The Assistant Executive Director replied that, in the formulation of the medium-term plan, inflationary trends and currency fluctuations were taken into account. He indicated that the carry-over foreseen for 1975 and 1976 reflected desire to see the resources of the Fund utilized according to thoroughly consider4 programme priorities, a carefully developed managerial "capacity to spend" and a satisfactory programming method with agencies, rather than to engage in spending just because funds were available. The development of such elements required sOI4 time, and it would be in 1977 that equilibrium would be reached between resources: and expenditures. Furthermore, it would be administratively unsound at the preset stage to spend all the money available in any one year, since that could lead to undesirable fluctuations in the level of UNEP activity.

373. One representative noted the proposed deficit for the year 1977 and thought it would be desirable to reduce the level of Fund programme activities for that year rather than show such a deficit. The Assistant Executive Director said the Executive Director was confident that the level of resources for 1977 would be increased through further pledges and that the deficit would thus be eliminated.

374. It was agreed that the Chairman of the Committee should address a letter to the Chairman of Sessional Committee I stating that, after preliminary review of the medium-term plan proposals of the Executive Director, the Committee had decided to allocate provisionally for Fund programme activities $20 million for1975, $27 million for 1976 and $35 million for 1977, and that those figures should serve as an order of magnitude for consideration by Sessional Committee I of the Executive Director's proposals under agenda item 7 (c). Furthermore, the Chairman was asked to notify Sessional Committee I that, if it were found necessary to recommend additional allocations, in particular for the United Nations Conference on Desertification and Habitat, the necessary resources could be made available, and that Sessional Committee II would like to be kept informed of progress in the consideration of item 7 (c) so that it could finally approve the amounts allocated for Fund programme activities in the year 1975-1977.

375. Having been informed by the Bureau of the proposals of Sessional Committee regarding revised allocations for 'Fund programme activities, the Committee resumed its consideration of agenda item 11 (b) and (c).

376. One delegation expressed the view that inflation should not be built into calculations of the level of the Fund programme reserve, and proposed -hat the reserve should be maintained at the same level throughout the period of the medium-term plan. Several delegations stated that the Fund programme reserve served a limited purpose only and that any funds not allocated for Fund programme reserve activities could be allocated to Fund programme activities. The growth of the programme would be reflected in the growth of the Fund programme activities.

377. One delegation, supported by other delegations, said that it was appropriate for UNEP activities to grow, that the Fund programme reserve should grow concomitantly and that there should be some relationship between a growing level of fund programme activities and the Fund programme reserve activities. He stated further that inflation was a reality which should be acknowledged and reflected in the level of the Fund programme reserve,

378. In view of the difference of opinion, the Chairman called for a vote. The proposal of the Executive Director for an increase of the Fund programme reserve to$1,100,000 in 1976 and $1,200,000 in 1977 was not accepted. A second vote favoured the maintenance of the level of the Fund programme reserve at $1 million in both 1976 and 1977, and the Committee recommended for adoption by the Governing Council a draft decision to that effect

379. In the light of the revised proposals presented by the Executive Director regarding the level of Fund programme activities for the years 1975 to 1977, the Committee recommended for adoption by the Governing Council a draft decision on the amounts to be allocated for the years in question.

380. In the consideration of the Executive Directors proposals regarding the medium-term plan, one delegation pointed out that he plan was to be reviewed at subsequent sessions and could be adjusted. Another delegation drew attention to the fact that it was hot in a position to make any commitments of a financial nature for the years 1978 and 1979.

381. The Committee recommended for adoption by the Governing Council a draft decision concerning the medium-term plan.

Action by the Governing Council

382. At its 40th meeting, the Council adopted by consensus the three draft decisions 31/ recommended by Sessional Committee II.

E. The establishment of a rationale for the allocation of the expenses of UNEP between the United Nations regular budget and the Fund of UNEP and the format f the budget o the Fund

383. Several delegations considered that a zero staff growth approach for UNEP within the regular budget of the United Nations was unsatisfactory. Some delegations said that the proposed allocation of expenditure did not reflect the intention of General Assembly resolution 2997 (XXVII). Another delegation stated that the environment was an important area of United Nations concern which should be able to compete with other areas of activity for financing. One delegation asked what rationale had been used for allocating 34 posts from the regular budget of the United Nations for UNEP in 1972. Several delegations suggested that the matter be referred to the General Assembly for sympathetic consideration. Some delegations, on the other hand, considered that the rational presented by the Executive Director, although unsatisfactory, was the only practical solution at present, it should be considered, however, as a temporary solution only. many delegations supported the idea that the rationale proposed by the Executive Director should be accepted for a specified and limited period only and that future biennial arrangements should be taken up with the Secretary General.

384. In answer to a question, the Assistant Executive Director indicated that the Governing Council had no competence to make decisions on the regular budget, could only make recommendations regarding it, however,, it was competent to consider the rationale for the allocation of expenses in respect of its effect the budget of the Environment Fund. The real growth of the budget of the Unit Nations had been set at a ceiling of 2 per cent for the biennium, and even a considerably higher rate would have a negligible effect in providing for the r needs of the UNEP secretariat as prescribed in General Assembly resolution 2997 (XXVII). The Executive Director had little choice but to recognize the political realities of the situation in terms of the constraints attached tot growth of the regular budget, and had accepted the consequences of that situation proposing the rationale.

Il/ Idem. The decision on the medium-term plan appears as decision 42 (III sect. V, and the decisions on the 'Fund programme for 1975-1077 are included in decision 42 (III), sect. VI.

385. The Committee recommended for adoption by the Governing Council a draft decision concerning the rationale for the allocation of the expenses of UNEP between the United Nations regular budget and the Fund.

Action by the Governing Council

386. At its 39th meeting, the Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 42 (III), sect.. IV). 32/

F. Revised 1974-1975 budget estimates for Programme

and programme support costs of the Fund of the United Nations Environment Programme

387. Some delegations drew attention to the proportion of requests for additional posts at higher rather than at lower levels, and questioned the criteria used in deciding the appropriate level for posts. In particular, the need for an additional post at the Assistant Secretary-General level at the present stage, and for an additional P-2 post in the Geneva Liaison Office, was questioned. One delegation queried the need for a car at the Geneva office, and asked whether UNEP conformed to United Nations standards in the acquisition of vehicles.

Another asked if a decision by the Governing Council regarding a telecommunication link at Nairobi would prejudge a decision to be made in New York with respect to the United Nations telecommunication network, while another expressed concern at the level of use of consultancies and asked how UNEP determined constants' fees.

388. The Chief of the Division of Administration explained that consultant fees were normally based on the qualifications of the consultant, the estimated value made of the services to be rendered and the estimated amount of time required to complete the task. Those factors were then related to established United Nations salary scales to determine the consultant's fee- it was hoped that, in future, UNEP would be able to adhere to new consultancy guidelines now being formulated at United Nations Headquarters. The United Nations telecommunication network

was being upgraded at present, Nairobi would be a new link in the system, and the proposal contained in the revised estimates for 1974-1975 was fully consonant with decisions already made in New York. The Chairman of the Committee had been advised by the Executive Director that he attached great importance to the establishment of a new post at the Assistant Secretary-General level in the Bureau of the Fund and Management. The Assistant Executive Director said that the importance of the Geneva Liaison Office for co-ordination with other agencies

and as a backstop for project management justified an additional post at the P-2 level. The Executive Director proposed to delay for a few months, a final decision on the acquisition of the car requested for the Liaison Office, in order to ascertain whether transportation facilities provided by the United Nations Office at Geneva could meet the needs of the Liaison Office. He pointed out that UNEP did conform to United Nations standards regarding vehicle acquisition.

389. The Committee recommended for adoption by the Governing Council a draft decision concerning the allocation for programme and programme support costs in 1975.

Action by- the Governing Council

390. At its 39th meeting , the Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 42 (III), sect. VT). 32/

G . Proposed Budget for Programme and Programme Support Costs 1976 to 1977.

391. Several delegations asked why no staff growth was envisaged during the biennium 1976-1977 in the Division of Technical Assistance and Training-, the activities of that Division, were particularly important to the mandate of UNEP, and it should be provided with adequate staff resources. Some delegations questioned the need for three additional posts at the field level in the Bureau of the. Programme. One delegation pointed out that the growth of the staff' of UNEP was to some extent one-sided, the number of D-1. positions in the three programme divisions was increasing, whereas it would be preferable to increase the complement of Professional staff at the P-3, P--4 and P-5 levels. One delegation suggested that, in future, manning tables be presented to show divisional allocations. Another delegation asked for an explanation about the proposed increase in General Service posts in the Programme Management Division in the Bureau of the Fund and Management. Another delegation referred to the comments made in Sessional Committee I concerning the public information component of the programme, and asked what efforts were being made by UNEP -to increase public awareness of its activities. Two delegations stated that they could not accept the concept of' inflation built into the figures in the proposed budget nor, for that matter, into any part of the medium-term plan. They would like to see inflation taken into account only in a readjustment of the proposed budgetary figures after the inflation had, in the event, taking place.

392. The Assistant Executive Director recalled that the Executive Director attached very high priority to technical assistance and training and explained that his staffing proposals for 1976 and 1977 reflected the way in which technical assistance was to be handled by UNEP. The Division of Technical Assistance an Training was not a self-contained unit handling all such activities completely Substantive support to technical assistance was given by other programme divisions, while the Programme i4anagement Division was responsible for the management of the projects. In addition, the Executive Director was pro-posing the establishment of a programme activity centre for environmental education at training, and also regional advisory teams, to be financed as projects, which I would provide technical assistance at the field level. The Division of Technical Assistance and 'Training would largely act as co-ordinator for those various activities, and the proposed staff resources provided for the purpose were currently considered adequate, though the Executive Director would keep the matter under review.

393. The Assistant Executive Director Programme) explained that the D-1 posts were necessary in his Bureau in particular because the nature of the work often required divisional heads to be absent from Nairobi., whereas high-level substantive backstopping and staff guidance were required at UNEP, headquarter all times. With respect to the public information component of the work of UNEP the Executive Director was considering. proposals for publications which carried no specific budgetary requirements, since they could be financed as Fund programme activities the proposed temporary premises. Sore delegations asked about the fate of the temporary buildings once the permanent headquarters were completed, particularly in terms of recovery of costs. One delegation asked what actual savings would be realized in moving to temporary premises and whether it would be necessary to pay a penalty for moving out of the Kenyatta Conference Centre, and questioned whether all economic factors had been adequately reflected in the Executive Director's note. One representative expressed the view that the note did not give full de-tails of the proposed project, and said he was not fully convinced of the necessity and advantage of the project.

398. The representative of Kenya pointed out that his Government attached great importance to the move of UNEP to new premises, as the projected growth of UNEP and planned uses for the Kenyatta Conference Centre would inevitably make continued occupation of the present headquarters difficult. That importance was reflected in the substantial commitment of funds by his Government to assist in a speedy relocation. many delegations thanked the Government of Kenya for its generous offer of a contribution to the building of the temporary premises.

399. The Chief of the Division of Administration said that the time-table for construction of temporary premises was tight, but based on the information available at present, it was feasible. The proposed date of moving would have the least impact on the workload. Conference facilities would continue to be provided by the Government of the host country at the Kenyatta Conference Centre at no cost. Present best estimates for foreseen growth indicated that the proposed floor space at the new site would be sufficient, furthermore, it would be possible to erect further temporary buildings on the site if necessary. The fate of the temporary buildings would have to be decided after completion of the permanent headquarters. Estimates were that there could be a 10 to 20 per cent recovery on demolition of concrete temporary buildings and a slightly higher recovery on wooden buildings. If the move to temporary premises were made, there would be potential cash savings of $ 90,000 over the six-year period before the permanent headquarters were completed and, in addition, UNEP would have at its disposal an extra 20,000 square feet of floor space which must also be taken into account in determining savings. By agreement with the Government of Kenya, no penalty would need to be paid for moving out of the Kenyatta Conference Centre

before the current lease expired.

400. The amount required from the United Nations regular budget, as outlined in the Executive Director's note, was the best estimate currently available; details would be worked out with the Secretary-General. It should be kept in mind, moreover, that financial considerations represented only one aspect of the problem.

401. The Committee recommended for adoption by the Governing Council a draft decision concerning the construction of temporary premises for UNEP.

Action by the Governing Council

402. At its 39th meeting, the Governing Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 42 (III), sect. VII). 32/