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C - Management of the Fund of UNEP and administrative and budgetary matters

1. Introduction

369. In considering item 11 (c), the Committee had before it a projection of resources and expenditures 1978-1981 (UNEP/GC/98), a performance report on the first six months of the biennium 1976-1977, together with a report on the action taken by the Executive Director and the Secretary-General of the United Nations regarding the rationale for the allocation of expenses between the regular budget of the United Nations and the Environment Fund (UNEP/GC/99), the proposed Fund programme and programme support costs budget 1978-1979 (UNEP/GC/99/Add.1), a report on the architectural and engineering study for the permanent headquarters of UNEP (UNEP/GC/100) and reports of the Advisory Committee on Administrative and Budgetary Questions on the performance report (UNEP/GC/L.44), the rationale (UNEP/GC/L.45) and the proposed 1978-19T9 budget (UNEP/GC/L.46).

370. Introducing the item, the Deputy Executive Director stated that it was essential for the Governing Council to give clear guidelines to UNEP as to the financial parameters within which the programme was to be constructed. The proposal before the Governing Council was to establish a Fund of $150 million for the period 1978-1981, which UNEP believed was the rough equivalent of $100 million for five years in real terms at the time of the establishment of the Fund. The allocation authority approved by the Governing Council provided a ceiling on commitments, but the management of the Fund had to take full account of the actual resource position. The ceiling on commitments was set on an annual basis, and when commitments were carried over from previous years, they had to be accommodated within the allocation for the next year; that should be borne in mind when considering the proposed allocation level for 1978 and future years because already-recorded 1977 commitments were close to the proposed allocations for years after 1977. Early pledging for 1978 was important, as pledges received for that

year would form the basis for resource projection for the duration of the medium-term plan. There was no intention to establish an automatic relationship between the target figure for the medium-term plan and pledges expected from individual countries; many countries were already paying their fair share, while others were contributing either not at all or at levels well below their capacity to pay.

371. The budget for programme and programme support costs was presented in the standard United Nations format, as it was also to be submitted to the General Assembly. On the basis of the performance report on the first six months of the 1976-1977 biennium, it was proposed that the budgetary provisions should be revised, with an increase in allocations from the Fund of UNEP and a saving to the regular budget portion. That proposal had not been questioned by the Advisory Committee on Administrative and Budgetary Questions and, as it related to the regular budget, it had been approved by the Assembly at its thirty-first session.

372. The question of the division of programme and programme support costs between the regular budget of the United Nations and the Fund of UNEP had been under discussion for some time. During the discussions, the number of Professional posts funded by the regular budget had remained fixed at 34. Agreement had been reached between the Secretary-General and the Executive Director, based on analysis of the 129 Professional posts approved for the current biennium from both budgetary sources, that the number should rise to 53.

373. A related suggestion that a ratio between the Fund of UNEP and the regular budget be established for meeting future programme and programme support costs had been criticized by the Advisory Committee on Administrative and Budgetary Questions and rejected by the General Assembly. The proposal had been that the cost of six Professional and six General Service posts be transferred in the 1978-1979 biennium from the Fund of UNEP to the regular budget, in order to initiate a gradual transfer of posts which, in the opinion of the Secretary-General and the Executive Director, should more appropriately be borne from the regular budget under the basic rationale contained in section II of General Assembly resolution 2997 (XXVII). The Advisory Committee had recommended approval of the transfer of only five Professional and four General Service posts, which would, if endorsed by the Assembly, require minor amendment to the Fund programme and programme support costs budget.

374. UNEP was requesting five new Professional and five additional General Service posts from the Fund of UNEP and the upward reclassification of three Professional posts. The Advisory Committee had queried some of those requests, but the Executive Director attached great importance to the proposed actions and maintained these requests. The Executive Director was, however, prepared to drop the request for a contingency fund under the programme and programme support costs budget, on the understanding that the Governing Council would agree to receive in odd-numbered years a performance report based on 12 to 14 months' experience in the biennium, rather than on six months only, as at present.

375. The architectural and engineering study of the permanent headquarters of UNEP was on schedule and would result in a detailed proposal, including cost implications, to the General Assembly at its thirty-second session. The present headquarters buildings would be integrated into the permanent headquarters.

2. Management of the Fund

376. There was general agreement that the Fund should be maintained at least at the-same level in real terms as during the first five years of its activity. However, there were some differences of view as to the financial implications of that agreement on principle.

377. A number of delegations sought clarification of the expected shortfall in expenditures as compared with commitments during the period of the next medium-term plan. They felt that the shortfall should be taken into consideration in determining the level of voluntary contributions required to implement the plan, and that that factor had been overlooked in the presentation of the plan. A number of other delegations stated that the Governing Council should concern itself with the programme rather than with detailed figures and that, in their view, the Executive Director's proposal for the medium-term plan should be adopted.

378. While supporting the view that the Fund should be maintained at the same real level, one delegation shared the concern expressed in the debate on item 11 (a) about whether the programme could be implemented at the proposed level. Other delegations felt that problems of programme implementation should not result in a reduction of the Fund, but that ways of overcoming those problems should be sought. In this context, one delegation proposed that the Executive Director should be requested to identify the major difficulties in programme implementation and report to the next session of the Governing Council on proposed measures to overcome them.

It further proposed that the Executive Director should consider the capacity of UNEP to raise the level of Fund programme activities, taking due account of the special needs of developing countries. Another delegation, supported by others, thought that the Governing Council should concern itself only with approving a given level of expenditure while taking note of anticipated levels of voluntary contributions. The Deputy Executive Director said that UNEP had the capacity to execute a programme at the proposed level, but the fact that the Governing Council's allocation was considered to be a ceiling on commitments rather than expenditures was a constraint.

379. Several delegations raised questions about the calculation used to determine the amount required to maintain the Fund at the same real level, and a number of illustrative calculations were put forward. One delegation presented a detailed discussion paper, containing various alternatives in order to clarify the debate. Two points highlighted were the appropriate base to be used and the rates of inflation to be applied. One view was that an average figure of expenditure should be used as the base for projecting the level of the programme in future years, while others felt that that base was inadequate in view of the dynamic growth experienced by the programme thus far. One delegation, supported by another, believed that expected inflation should not enter into calculations of the future programme level; rather, when inflation did occur, additional requests for funds should be submitted to the Governing Council.

380. One delegation, supported by another, expressed concern about the flexibility of UNEP in developing new programmes and improving the regional distribution of projects when a substantial proportion of its resources were already effectively committed to ongoing projects and those arising out of the discussions at this session of the Governing Council. There was a danger that the shape of the programme would be frozen so that it could not engage in new activities, especially in relation to the special environmental problems of developing countries. It was stressed that UNEP should not discriminate against national projects as these could also have an important catalytic role. It was asked whether relevant information could be provided on the effective level of commitment of resources during the period of the medium-term plan. The Deputy Director of the Environment Fund gave estimated figures showing anticipated commitments and available resources during the period of the medium-term plan. One delegation said that there was a marked imbalance in the regional distribution of projects. The Deputy Executive Director replied that that was indeed the case, particularly with regard to Asia and Latin America. However, a corrective trend had already become apparent in 1977 and should be more clearly reflected from 1978 onwards.

381. Concern was expressed that the level of contributions proposed would lead to a continuing growth of accumulated cash balances. The Deputy Executive Director said that the rate of expenditure relative to commitments in convertible currencies could readily be increased; however, a growing proportion of the cash balances of UNEP was held in non-convertible currencies, and those balances would continue to grow, at least for a few years. Intensive negotiations had been held with donors of non-convertible currencies, and all parties had agreed that use of those currencies should not distort the approved programme. One delegation pointed out that non-convertible currencies represented only one third of the carryover into 1977, mentioned a number of projects under discussion for funding with non-convertible currencies and stated that a common effort on the part of UNEP and donors of those currencies would overcome the problem. Another delegation expressed dissatisfaction at the fact that developing countries were expected to provide their contributions in convertible currency when certain other countries with stronger economies continued to contribute in non-convertible currencies, and stated that its Government might in future have to reconsider its position concerning the currency of its own contribution.

382. The Deputy Executive Director considered that the manifold factors involved

made it impossible to give a satisfactory estimate of the future shortfall between commitments and actual expenditures. The problem was essentially a managerial one which in normal years could readily be contained. At the insistence of some delegations, he ventured a very tentative estimate that the shortfall between commitments and expenditures from 1978 onwards might be of the order of 10 per cent if the Council's approval of the medium-term plan continued to set a ceiling on commitments.

383. One delegation felt that insufficient attention had been paid to broadening the contribution base of the Fund, and expressed the view that an annual pledging conference should be held.

384. The Deputy Executive Director announced that a number of new contributions and pledges had been received since 31 March 1977, and presented the following information:

Contributions received US$

Bangladesh 2,000 for 1977

Colombia 9,057 for 1977 (first payment)

Finland 200,000 for 1977

France 1,212,121 for 1977

Hungary 24,oo4 for 197

Iran 50,000 for 1977 (partial payment)

Italy 4oo,ooo for 1976

Morocco 50,000 for 1973-1977

Pakistan 5,000 for 1976

United Republic of Tanzania4,813 for 1976

United States of America10,000,000 for 1977

Pledges received US$

Brazil 20,000 for 1977

Iceland increased to 5,000 for 1977

Iran increased to 500,000 for 1978-1982

Luxembourg l0,811 for 1978

Mauritius 3,000 for 1978-1980 (first time

Philippines increased to 80,000 for 1978-1982

Pledges received United States dollars

Spain increased to 1,000,000 for 1978-1982

Sudan increased to 1,500 for 1978

Turkey 30,000 for 1978-198

Uganda 6,015 for 1977-1981 (first time pledge)

United Republic of Tanzania 24,06for 1977-1982

385. The representative of the IvoryCoast announced that his Government had recently effected payments of $2,000 to the Fund of UNEP and $5,000 to the United Nations Habitat and Human Settlements Foundation. The representative of Finland stated that, subject to parliamentary approval, his Government would maintain its present contribution for 1978. The representative of Ghana announced that his Government would continue to support the Fund at the level of $19,700 per annum. The representative of Algeria made it known that his country's contribution of $10,000 for 1977 had already been paid and that its contribution for the period 1977-1980 would total $40,000. The representative of Argentina announced that his Government pledged $60,000 per annum to the Fund for 1978-1979 and $70,000 per annum for 198o-1982.

386. At the conclusion of its debate on the management of the Fund, the Committee recommended for adoption by the Governing Council draft decisions on the medium-term plan for 1978-1981 and, on the basis of a recommendation by Sessional Committee I at the conclusion of its debate on programme matters, on the allocation for Fund programme activities 1978-1979.

387. The representative of the Soviet Union said his delegation had not opposed the consensus on the first draft decision on the understanding that it did not necessarily mean an increase in the contributions of member States, but that the increase in the income of the Fund would also be achieved through contributions .from new contributors.

388. The representative of Iraq indicated his Government's view that the level of Fund programme activities should be increased during the period of the medium-term plan. Action by the Governing Council

389. At its 74th plenary meeting, on 24 May 1977, the Governing Council adopted byconsensus the draft decisions recommended by Sessional Committee II on the medium-term plan for 1978-1981, as amended orally by the representative of France, and on the allocation for Fund programme activities 1977-1978 (decision 98 (V)). 31/

3. Administrative and budgetary matters

390. A number of delegations supported the remarks of the Advisory Committee on Administrative and Budgetary Questions regarding the redeployment of posts between the United Nations regular budget and the programme and programme support costs budget of the Fund, inasmuch as action with financial implications had been taken by the Secretary-General without the prior approval of the General Assembly. One delegation pointed out the possible confusion between redeployment and giving the Executive Director the authority to transfer Fund-financed posts between departments, which it supported subject to proper reporting to the Governing Council.

391. One delegation said that from an analysis of the 1976 accounts it appeared that there might be sufficient savings in the programme and programme support costs budget in the 1976-1977 biennium to absorb the increase requested by the Executive Director in his performance report.

392. Delegations generally shared the Advisory Committee's criticism of the proposed automatic ratio for the distribution of staff costs between the regular budget and the Fund of UNEP. The Committee felt that the rationale question should now be regarded as finally settled. Noting the Advisory Committee's recommendation that the number of posts to be redeployed should be reduced, a number of delegations asked for details of the cost implications of the suggested reduction. One delegation shared the view of the Advisory Committee that, in s future, new posts which should properly be charged to the regular budget should not initially be charged to the programme and programme support costs budget of the Fund.

393. A number of delegations felt that the requests for new posts to be charged to the programme and programme support costs budget of the Fund and for reclassification of existing posts had not been adequately justified in the documentation provided. While some delegations supported the Executive Director's proposal in full, a number questioned the justification for particular staff actions. Special attention was drawn to the reclassification of deputy regional representatives and it was suggested that action should be deferred until the terms of reference of the regional offices could be studied. One delegation, in supporting the reclassifications, queried the disparity in the levels of the posts in the different regional offices and said that the Governing Council should authorize the Executive Director to carry out, in the biennium 1978-1979, his intention to put all the heads of the regional offices at the same level. Some delegations also endorsed the other remarks of the Advisory Committee in respect of post reclassifications.

394. The decision of the Executive Director to withdraw the proposal for the creation of a contingency fund was received with gratification. One delegation raised a number of detailed questions about the internal consistency of the document for the proposed budget for programme and programme support costs of the y Environment Fund (UNEP/GC/99/Add.1). Another queried the seemingly high ratio of common staff costs to salaries. One delegation queried the increase in the budget provision for the radio station. Another felt that greater emphasis should be placed on the use of short-term consultants and that the background of such consultants should be a major factor in their recruitment. The delegation of Argentina said it was very possible that its Government would announce an increased pledge to the Fund of UNEP, and expressed the hope that other more developed countries would follow its example.

· 395. Regarding the redeployment of the particular posts mentioned by the Advisory Committee on Administrative and Budgetary Questions, the Deputy Executive Director stressed the importance of giving the Executive Director freedom to transfer Fund-financed posts between departments. On the question of the rationale for the allocation of expenses between the regular budget and the Fund of UNEP, the General Assembly would probably accept the Advisory Committee's recommendations regarding the number of posts to be redeployed to the regular budget; details of the financial implications for the Fund would be made available to delegations. c

As regards the query on the disparity in the levels of posts in the regional offices, he explained that the proposed reclassification of the deputy regional representatives was only the first step which the Executive Director was proposing to take in strengthening the regional offices and he agreed that the whole matter could be reconsidered at the next session of the Governing Council.

396. In reply to the query regarding the possible use of savings in the 1976-1977budget for programme and programme support costs in place of the proposed increasing budget, he stated that it was not certain that the proposed increase would infact be needed. Several key posts which had been vacant were now to be filled, and any amount required would be associated with recruitment actions. The Council might wish to approve up to the amount requested, coupled with an injunction that the additional funds not be drawn upon unless absolutely necessary.

397. Common staff costs were higher in Nairobi as a proportion of salaries due

mainly to the lower salary base in Nairobi compared to New York and because of higher travel costs. Certain unforeseen costs and the delay in full utilization of the radio station had led to higher costs for that budget item in 1976-1977.However, those were one-time costs, and UNEP was now beginning to reap the anticipated benefits of the station. The Governing Council had allocated resources for the use of consultants, who could also be financed through the regional offices and through projects; UNEP was building up rosters of suitable consultants, and the assistance of Governments in that task would be welcome.

398. At the conclusion of its debate on administrative and budgetary matters, the Committee recommended for adoption by the Governing Council a draft decision on the performance report on the programme and programme support costs budget 1976-1977and the proposed budget for programme and programme support costs 1978-1979.

399. The French delegation said that, in a spirit of conciliation, and in order to facilitate the task of the secretariat and meet the concerns of various delegations, it had not opposed the consensus on the second of the two decisions. Nevertheless, it had reservations regarding the increasing tendency to slip Fund expenditures into the United Nations regular budget.

400. The Deputy Executive Director, in accordance with rule 30 of the rules of procedure and financial regulations 13.1 and 13.2, informed the Committee on behalf of the Secretary-General that paragraph 2 of the decision had financial implications for section 13 of the regular budget in the amount of $64,975 for the biennium 1978-1979. Should the General Assembly fail to approve the financing of the legal liaison post from the regular budget, as proposed, the Executive Director would request, at the sixth session of the Council, restoration in the Fund budget of the posts involved. The decision would also have the effect of delaying the action proposed by the Executive Director on the reclassification of the two posts in the regional offices until the study foreseen by the decision was completed and acted upon.

401. The Committee also recommended for adoption by the Governing Council a draft decision on the progress report on the architectural and engineering study of the construction of permanent UNEP headquarters.

Action by the Governing Council

402. At its 74th plenary meeting, on 24 May 1977, the Governing Council adopted by consensus the draft decisions on administrative and budgetary matters recommended by Sessional Committee II (decisions 97 A (V), sect. III and 97 B (V)). 32/