A - Implementation of the Fund programme
395. In considering item 8 (a), the Committee had before it documents UNEP/GC.9/9
396. The Acting Assistant Executive Director, office of the Environment Fund and
Administration, introducing the report of the Executive Director on the implementation of the Fund programme (UNEP/GC.9/9 and Add.1), drew attention to the fact that the programme had been held back because of the Executive Director's concern over the Fund's liquidity due to uncertainty as to the payments of contributions during the latter half of 1980. Despite that, 89 per cent of the 1980 allocation had been committed by the end of the year. Expenditures in terms of percentages of commitments (83.5 per cent) or of the allocation (74 per cent) were higher than in any previous year and because of inflation and with a smaller Fund programme over-all, the proportion.of total expenditure for internal projects was rising and that for projects implemented by co-operating agencies within the United Nations system was falling. Moreover, the proportion of regional and interregional projects was rising in relation to global projects and there was an amount of $8.5 million uncommitted in 1480, which the Executive Director proposed carrying over to 1981. In addition, whereas in 1978 and preceding years, income had exceeded expenditure, in 1979 and subsequent years, expenditure had exceeded income. The excess of expenditure over income had been possible due to a draw-down of accumulated cash balances. However, in 1981 expenditure was expected to exceed income by $10 million, and by the beginning of 1982 the Fund would no longer have convertible cash balances above a minimum level.
397. Regarding the Executive Director's decision to hold back the programme in 1980, concern was expressed by several delegations at the "stop-start" nature of programming, a phenomenon not restricted to 1980. In their view, there was no problem of liquidity; UNEP had substantial investments which it could have realized to provide the cash required. One delegation suggested that when a liquidity crisis was foreseen, cuts should be made in the programme and programme support costs budget rather than in Fund programme activities. Another suggested that the Fund programme reserve should be increased to $2 million to provide a ready cash "cushion" for liquidity crises. The need for project programming to be long-term and designed to meet the programme's needs rather than tied to payment of contributions was stressed. one delegation expressed concern at the degree of slippage in the 1980 programme. Another delegation said that the practice of committing such a large proportion of the Fund's resources for any year early in that year meant that the necessary programme flexibility was not maintained.
398. Several delegations expressed thair appreciation of the Executive Director's response to decision 7/3 concerning the reduction and phasing out of support to projects which had been in operation for four or more years.
399. With reference to project-implementing institutions (table 6 of document UNEP/GC.9/9), one delegation asked what the secretariat's policy was regarding the ratio between co-operating agency and supporting organization project implementation. Another delegation asked whether the Executive Director's statement at the opening meeting that the non-convertible currencies had not had an undue impact on the programme was not inconsistent with the fact that the ratio of supporting organization to co-operating agency implemented projects had increased, largely as a result of the increase in non-convertible currency projects being implemented by supporting organizations. Furthermore, it asked whether the reduction in the share of co-operating agency projects was due to administrative difficulties inherent in such projects which made the co-operating agencies unwilling to undertake them. Another delegation asked what proportion of funds was spent on supporting organization projects compared with co-operating agency projects and what financial impact the system-wide medium-term programme would have on that proportion. Several delegations commented on the increase in the number of internal projects, which was contrary to decisions taken by the Governin§ Council at previous sessions, and undesirable.
400. On the question of geographical distribution of Fund programme activities (table 7), one delegation asked why the percentage for Latin America was so low. Another delegation commended the secretariat's efforts, noting with appreciation the increase in the percentage of activities carried out in Asia, a trend which it hoped would continue. A question was asked concerning the criteria used for defining global, interregional and regional projects. Several delegations singled out specific programme areas as meriting special attention on account of their importance or because of successes achieved so far: oceans, desertification, environment and development, energy. A number of delegations stressed the importance of co-operation with the United Nations Centre for Human Settlements (UNCHS) and questions were asked about expenditure on joint UNEP/UNCHS activities.
401. A number of delegations said that the presentation of the document could be improved. The way the terms defined in the glossary were used in the document was criticized 'commitment", "expenditures" and "Fund programme activities" were not clearly differentiated in the tables. One delegation suggested that a single table showing appropriations, allocations, commitments, expenditure and income for all relevant years and all budget lines should be provided.
402. Replying to the questions raised by delegations, the Acting Assistant Executive Director dealt first with "stop-start" programming. The Executive Director was extremely sensitive to the need to maintain the Fund's liquidity at all times; he had therefore considered it proper financial management on his part to withhold approval of further convertible currency projects. He agreed, however, that other mechanisms for avoiding liquidity crises should be looked into. With regard to the suggestion that the Fund programme reserve be increased and used as a cushion in times of low liquidity ,, the Acting Assistant Executive Director pointed out that there were specific rules governing the use of the Fund programme reserve, which was intended to provide for the implementation of Governing Council decisions and the undertaking of other unanticipated activities; it was not a reserve fund of the type that could support the regular programme. It would be difficult to reduce programme and programme support costs in time of liquidity crises instead of reducing the Fund programme activities themselves, as such costs included long-term commitments, such as staff contracts.
403. With regard to policy on the use of co-operating agencies or supporting organizations for implementing projects, it was necessary to maintain a balanced, coherent programme. There was a general mandate to make use of organizations in the United Nations system so far as possible in implementing the programme in order to underline UNEP's catalytic role, and Governing Council decisions governed the undertaking of internal projects. While the system-wide medium-term programme would certainly increase the number of co-operating agency implemented projects, the financial implications were not yet known.
404. Three co-operating agencies had expressed interest in co-operating with UNEP on non-convertible currency projects. UNESCO was already implementing the eco-management training project (FP/1102-78-01) for UNEP in Dresden, German Democratic Republic, and if its example was followed by others, the ratio of co-operating agency to supporting organization implemented projects would swing back. The statement that the non-convertible currencies had had no undue influence on the programme held good.
405. The increase in the number of internal projects had resulted from decisions taken by the Governing Council at its eighth session requiring implementation by UNEP: meetings on environmental law, tropical deforestation, soils policy and cost-benefit analysis. The secretariat too was concerned about the situation, which it was trying to remedy.
406. The Executive Director was keenly aware of the political importance attached to geographical distribution and strove to maintain an even regional distribution of activities over the long-term. Due to the cyclical nature of activities, one region might, however, have more projects than another at a given time. The geographical scope of a project was determined by the area that benefited most directly from it: a regional project was one that directly benefited a region; an interregional project benefited several regions, such as most developing countries, but did not have a global impact - for example, non-convertible currency training projects for developing countries; and a global project entailed the carrying out of a world-wide investigation or assessment, the results of which were globally applicable. A national or regional project was expected to have results which could be extrapolated and used in a global context, but until the results became global, it remained classified as national or regional. The compendium of projects, which included a special section on geographical distribution and global projects, would be issued shortly.
407. In future, a table showing appropriations, allocations, commitments, expenditure and income for all relevant years and all budget lines would continue to be provided in an addendum to the main document because the accounts of UNEP were not finalized at the time of the preparation of the main document.
408. Co-operation with UNCHS was governed by a Memorandum of Understanding. Total expenditure on joint activities amounted to $247,892 in 1979 and $176,242 in 1980, while commitments for 1981 currently amounted to $233,4BS.
409. At the conclusion of its discussion, the Committee took note of the Executive Director's report on the implementation of the Fund programme in 1980.