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VII - THE ENVIRONMENT FUND AND ADMINISTRATIVE AND OTHER FINANCIAL MATTERS

1. In considering agenda item 9, at its 8th and 9th plenary meetings of the session, on 18 and 19 May, the Council, under the chairmanship of Mr. J. Nyagah (Kenya), had before it a summary of the documentation submitted under the item (UNEP/GC.15110), chapters V and VI of the 1987 Annual Report of the Executive Director (UNEP/GC.1513), chapter V of the 1988 Annual Report of the Executive Director (UNEP/GC.15/4), the performance report on the programme and programme support costs budget for the biennium 1988-1989 (UNEPIGC.15/10/Add.1 and Corr.1), the proposed budget for programme and programme support costs of the Environment Fund for the biennium 1990-1991 (UNEPIGC.15110/Add.2 and Corr.1), the report of the Executive Director on the management of the Environment Fund in 1988-1989 and the proposed use of resources in 1990-1993 (UNEPIGC.15110/Add.3 and Supplement 1), the report of the Executive Director on the management of trust funds (UNEPIGC.15/10/Add.4 and Supplement 1), the report of the Executive Director on additional sources of funding (UNEP/GC.15/10/Add.5 and Corr.1), the report of ACABQ on the performance report on the programme and programme support costs budget for the biennium 1988-1989 and the proposed budget for programme and programme support costs for the biennium 1990-1991 (UNEP/GC.15/L.2), and a note by the Executive Director on the financial reports and audited accounts of the Environment Fund for the biennium 1986-1987 ended 31 December 1987 (UNEPIGC.15/L.4).

2. In introducing the item, the Acting Assistant Executive Director, Office of the Environment Fund and Administration, said that the first matter to be settled by the Council was the level of appropriation that could be afforded for Fund programme activities and the Fund programme reserve for the biennium 1990-1991. That sum would provide the basis for the apportionment for the Fund programme activities which the Committee of the Whole would recommend to the Plenary. Secondly, the Council was being asked by the Executive Director to provide him with guidance on the size of programme he should plan for the 1992-1993 biennium. Thirdly, the Council was requested to extend a number of existing trust funds and to establish four new ones. Fourthly, the Council was asked to reconfirm the appropriation for programme and programme support costs (PPSC) for 1988-1989 and to consider and approve a PPSC budget for the biennium 1990-1991. Finally, the Council was requested to note and approve the financial report and audited accounts of the Fund for 1986 and 1987, to consider the Executive Director's report on additional sources of funding and to review the staffing of the secretariat and its organization.

A. The Environment Fund

3. The Acting Assistant Executive Director drew the attention of the Council to the recent upward trend in contributions to the Environment Fund. In 1988, contributions had reached an unprecedented level of nearly $35 million and the prospect was that they might possibly reach a level close to $40 million in 1989. However, he expressed concern about the decline over recent years in the number of States contributing to the Fund and stressed that the Executive Director regarded contributions by developing countries as important, even if they were sometimes small. He pointed out that the continuing decline in the real value of contributions since 1979 was verydisappointing. On behalf of the Executive Director, he thanked those Governments who paid contributions early in the year, thereby facilitating the management of the Fund and the implementation of the programme.4. The Acting Assistant Executive Director said that the Executive Director proposed to write off contributions outstanding for 1984 and 1985 on 31 December 1989.

5. The Council endorsed the Executive Director's proposed appropriation level of $68 million for Fund programme activities in 1990-1991, consisting of a core programme of $60 million and supplementary activities of $8 million; and endorsed a level of $4 million for the Fund programme reserve in 1990-1991. The Council requested the Vice-President of the Council presiding at the meeting to address a letter to the Chairman of the Committee of the Whole to that effect.

6. The Council endorsed the Executive Director's proposal that he should

plan for 1992-1993 on the basis of $180 million for Fund programme activities,

made up of a core programme of $150 million and a supplementary programme of

$30 million. However, two representatives, while recognizing the desirability of achieving the targeted levels for contributions in that biennium, questioned the feasibility of achieving $100 million by 1992 rather than 1995, as had been proposed earlier.

7. The Acting Assistant Executive Director then introduced the performance report on the PPSC budget for the biennium 1988-1989 (UNEPIGC.15/10/Add.1 and Corr.1). He pointed out that the Executive Director proposed that there should be no change in the level of appropriation approved by the Governing Council at its fourteenth session, $25,846,300, which he therefore asked the Governing Council to reconfirm. He wished, however, to request approval of some relatively small changes in its allocation among the objects of expenditure.

8. He informed the Council that the actual expenditure finally recorded for 1988 was $11.24 million, compared with the estimate of $11.76 million given in the document. Savings had been achieved through measures taken by the Executive Director to contain costs, mainly by freezing posts and delaying recruitment, and also as the result of favourable currency fluctuations.

9. He pointed out that adverse factors were anticipated during 1989: inflation had been higher than assumed when the budget was drawn up and, in addition, there was need to fill vacant posts if UNEP was to respond to Governments' requests for strengthened actions. Consequently, those savings were likely to be wiped out and that had led Executive Director to request the Council to reconfirm the original appropriation. However, the secretariat would continue to seek savings in implementing the budget, as it had done in previous years.

10. Three representatives said that they appreciated the efforts of the Executive Director to contain PPSC expenditure within 33 per cent of total contributions and supported his proposal to reconfirm the appropriation of $25,846,300, with the changes in allocation among objects of expenditure suggested. One representative, however,advocated that the PPSC performance report and its proposed budget for the following biennium should be consolidated into a single document, which should be streamlined, especially with regard to the tables presented therein.11. Introducing the proposed PPSC budget for the biennium 1990-1991 (UNEP/GC.15110/Add.2 and Corr.1), the Acting Assistant Executive Director drew attention to the fact that the Executive Director was seeking the approval of the Council to fill up to 90 per cent of the approved posts at the Professional level and above, and to transfer certain activities hitherto financed by the PPSC budget to the budget for Fund programme activities. He pointed out, however, that the Advisory Committee on Administrative and Budgetary Questions (ACABQ) had reservations about those transfers.

12. One representative drew attention the view of ACABQ that those activities properly belonged to the PPSC budget, where they could be scrutinized and monitored. Another representative, while supporting the Executive Director's proposal to fill more posts, pointed out that support costs were not reduced by merely transferring them. Shifting expenditure from one budget line to another would amount only to an accounting adjustment.

13. The Acting Executive Director explained that the line between programme and support costs was particularly difficult to draw in the case of programme activity centres (PACs). He asked why the Desertification Control PAC should be seen as support costs, while the costs of all other PACs were accepted as project costs. The Executive Director did not accept the argument of ACABQ and, in order to be consistent and to treat all PACs in the same way, he wished to maintain his original recommendation. The Council accepted that argument.

14. Two other representatives, while supporting the Executive Director's proposed budget for 1990-1991 in the amount of $29,087,000, said that the Environmental Law and Machinery Unit should be further strengthened in view of its increasing importance. One representative recommended that the Conferences and Governing Council Service should also be strengthened.