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B - Financial report and interim accounts (unaudited) for the first year of the biennium 1980-1981 ended 31 December 1980

499. The Acting Assistant Executive Director introduced the financial report and interim accounts (unaudited) for the first year of the biennium 1980-1981 ended 31 December 1980 (UNEP/GC.9/L.4 and Corr.1).

500. One delegation raised the question of the liquidity problem which, it had been asserted, had been due to the failure of "the largest contributor to the Fund" to pay its full contribution on time, which had led the Executive Director to delay the implementation of projects as from August 1980. In its view, the reason for the problem should be sought elsewhere; the problem of liquidity was being mentioned for the second successive year, but schedule 3.1 in the document showed that UNEP had investments amounting to some $11.2 million at 31 December 1980, earning some $2 million per annum in interest. There was no reason why UNEP should not have drawn on some of its investment if faced with liquidity problems. The need for a working capital fund was recognized, but not one that amounted to approximately one third of the value of the programme. The programme should not be slowed down to protect a working capital fund; the working capital fund was there to protect the programme.

501. The Chief, Fund Programme Management Branch, explained that the schedule of investments should be seen in the context of the balance sheet of the Fund as a whole. The investment schedule referred to was an important part of the total assets of the Fund, but, as could be seen from the full balance sheet, there were many liabilities which had to be covered by those assets. What was most important was the bottom line figure balance of the Fund, $25.5 million, of which $14.7 million was represented by non-convertible currencies and $10.8 million by convertible currencies. Of the balance of convertible currencies, $6.8 million had not been paid by 31 December 1980.

502. The Acting Assistant Executive Director said that one way to deal with the liquidity problem would be to raise the Financial Reserve by a certain percentage each year and to review the over-all limit of the Financial Reserve in 1984.

503. One delegation said that in view of the shortage of time at the present session, it would request that a discussion paper be prepared for the tenth session and a decision taken on the subject at that time.

504. The Committee took note of the financial report and interim accounts (unaudited) for the first year of the biennium 1980-1981 ended 31 December 1980.