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Under Secretary General Joseph Connor on the UN Financial Situation Joseph E. Connor
Under Secretary General for Administration and Management
Statement on the United Nations Financial Situation
Plus Summary of Subsequent Debate
Fifth (Budget) Committee
December 12, 1996
Press Release text from the UN Dept. of Public Information
Joseph E. Connor, Under Secretary General for Administration and Management said that as of the end of November there were unpaid assessments of more than $2.4 billion, consisting of $700 million for the regular budget and $1.7 billion for peace-keeping. That was about $300 million less than what he had projected at his last briefing to the Committee in October, he noted. Payments received in the first days of December had further reduced the arrears to just under $2.3 billion.Regarding the regular budget's current cash position, the Under- Secretary-General said that the negative position of the combined General Fund -- including the regular budget and the reserves -- had grown to $178 million.
While outstanding regular budget dues, as of 30 November, totalled $697 million, payments at the beginning of this month had lowered that figure to $546 million: $393 million for 1996 assessments and $153 million for prior years. The United States owed about 69 per cent of arrears to the United Nations.
Making projections of regular budget cash flow, he said that the Secretariat had anticipated getting payments of approximately $300 million in the final quarter of 1996. Based on more recent information, it expected to get just over $200 million in that period. He recalled that the United States had told the Secretariat that it would pay some $213 million by the end of 1996. While $150 million of that had been paid, the Secretariat had been told that it would not receive the remaining $63 million this year. In addition, other payments from other Member States previously estimated to total over $29 million were no longer expected before 1997. The combined General Fund would end the year with a negative balance of $195 million, compared to the earlier estimated $103 million.
Turning to peace-keeping cash flow, he said that, as of 30 November, unpaid assessments totalled a little over $1.7 billion. The combined peace- keeping cash position at 31 December would total $910 million. It showed an increase of $115 million over what had been anticipated and would cover the expected shortfall in the regular budget. As for payments to troop providers, payments totalling $299 million had been made and an additional $51 million would be paid by the end of December. Upon receipt of the payments expected from the Russian Federation, the Secretariat would make a $200-million special year-end payment to troop and equipment providers.
He said the amount owed to States at the end of 1996 for troop and equipment costs was $990 million. The increase from an earlier estimate of $700 million reflected mainly two factors. The first was the $75 million shortfall in the special payment the Secretariat had hoped to make. The second was the reassessment of the liability for contingent-owned equipment, mostly for UNPROFOR.
On the combined cash position, he forecast that the combined General Fund would have a deficit of $195 million while the peace-keeping accounts should have a positive balance of $910 million. The Organization's combined cash position would thus be $715 million, compared with the earlier estimate of $692 million.
In concluding, the Under-Secretary-General said that Organization would resort to borrowing from peace-keeping accounts to maintain its basic operations in 1997. The continuing financial crisis undermined reform efforts and distracted the Secretariat from implementing the Member States' programmes and priorities.
Analtoli Zlenko (Ukraine) said the information provided by the Under- Secretary-General for Administration and Management clearly proved that the Organization's financial situation remained very critical and that the aggregate arrears on contributions of Member States continued to be extremely high. The practice of borrowing from the peace-keeping operation accounts continued. The financial problems were unresolved in spite of the outstanding attempts of the Assembly's high-level working group on the financial situation.
Ukraine was deeply convinced that the inability of some Member States to meet their financial obligations was a direct result of their overassessment, he said. The Organization must eliminate the existing irregularities in the scale of assessments in order to overcome the financial crisis. In that connection, it was important not to lose a golden opportunity to have a comprehensive package of measures required to resolve the financial crisis by adopting the parameters of a new scale at this session of the General Assembly.
Despite its economic and financial difficulties, his Government would honour its financial obligations. In a few days, it would contribute up to $20 million to the Organization. First steps would also be taken to make payments to the peace-keeping budgets. Next year, his country's real payments would be increased. The exact amounts would be announced in January 1997.
Henrique Valle (Brazil) said budgetary constraints in his country had prevented his Government from being prompt in payments of its assessments. However, Brazil was fully committed to the Organization. Fulfilling its obligations to the regular budget continued to be a high priority. This morning he had been authorized by his Government to inform the Committee and the Under-Secretary-General for Department of Administration and Management that Brazil would pay $10 million to the regular budget. He was satisfied that Brazil would continue to maintain its commitment to the United Nations.
Jan Jaremczuk (Poland) asked the Under-Secretary-General to explain a difference of some $100 million he had found in relation to one of the charts the official had used in his presentation.
Janie Letrot (France) asked for additional information regarding the projections for the end of the year. She asked why the surplus expected in the peace-keeping budgets would not be used to reimburse troop and equipment contributing States. She also asked whether the $115 million improvement in the cash flow for peace-keeping operations was due to the lack of reimbursements to Member States and called for explanations of the differences in the amounts outstanding.
Tammam Sulaiman (Syria) said that his Government had decided on how to pay up its arrears to the peace-keeping budgets in accordance to a five-year payment plan, which was to have started in 1997. But, the Syrian Government had decided to pay the first instalment starting this year. The Government would send an explanatory note to the Secretariat to explain its decisions. The payment of the arrears did not cover the United Nations Disengagement Observer Force (UNDOF) or the United Nations Interim Force in Lebanon (UNIFIL), as the position of the Syrian Government on those Forces was well- known.
Ernst Sucharipa (Austria) expressed concern about the serious financial situation in spite of the efforts of the Secretary-General and the Secretariat to improve the cash situation. The clearest impression of the gravity of the situation was the indication that the $990 million owed to troop-contributing States was higher than the projected combined cash position for the end of the years. Such a picture should encourage others to pay up their dues.
Prayono Atiyanto (Indonesia) said he had taken note that the briefing was the last for 1996. It was a reflection of all the consultative efforts made by Member States and the Secretariat during the year. The conclusion that there was no improvement in the Organization's financial situation and that there was continued borrowing from the peace-keeping budgets was of concern. That information would be communicated to his capital. He welcomed Austria's observation regarding the concerns of troop-contributing States. That situation must receive serious attention from Member States and from the Secretariat. They must continue to try their best to improve the Organization's financial situation. He called on the major contributor to fulfil its obligation in full, on time and without condition. Special consideration should be given to developing countries which faced difficult economic situations.
Denise Almao (New Zealand) said she was deeply disappointed that the cash flow situation had not improved. The Russian Federation, Ukraine and Brazil must be commended for honouring their commitments. Their efforts were laudable. Through their efforts, the Secretariat could make some amounts available to the troop-contributing States. The continued borrowing from the peace-keeping accounts was cause for concern. That situation was still very grave.
Syed Rafiqul Alom (Bangladesh) requested clarification on some of the charts presented by Mr. Connor. For chart 1 (unpaid assessments), he asked about the total amounts quoted. Also of interest were the Member States which were the major defaulters, in addition to the United States. For chart 8 (the amounts of the cash in the regular budget), he noted the improvement in the cash flow situation by about $3 million and asked what was the reason for the reverse cash flow at the end of 1996. With regard to chart 10 (the peace- keeping cash situation), he asked about the increase of $115 million cited. For chart 11 (peace-keeping payments), he asked whether there was any possibility that the outstanding payments to troop-contributing States could be increased since there had been an increase in the cash position of peace- keeping budgets.
Sam Hanson (Canada) said he regretted that the news was not better. He was pleased at the announcement of payments made today. All Member States were obligated to pay their contributions in full, on time and without conditions. Those Member States that had been pursuing increased efficiency, reform and "belt tightening" were obligated to set the example in payment of their assessments, he added.
Peter Soal (South Africa) said he shared the disappointment that the situation had not improved significantly since last year despite the efforts of the Under-Secretary-General, the Secretariat and the high-level working group on the United Nations financial situation. Those in arrears should pay their dues as soon as they could. Further information as to who owed the largest amounts of money to the various peace-keeping budgets should be provided.
Patrick Kelly (Ireland), speaking for the European Union, said that the situation had not improved significantly since the end of 1995. The Union was concerned that almost $1 billion would be owed by the end of the year to troop-contributing States, similar to the position last year. He thanked Member States that had announced plans to clear their arrears. Others should follow their examples and pay up their dues. Urgent action should be taken in the new year to resolve the current financial crisis.
Norma Goicochea Estenoz (Cuba) supported the views expressed by some previous speakers. Cuba was doing everything possible to reduce its debts to the United Nations and welcomed the announcements made by Ukraine, Syria and Brazil as well as the contributions the Russian Federation would make to the United Nations. Account should be taken of the special difficult situation of the developing countries. Their conditions should be differentiated from that of countries that were withholding assessments for political reasons. The scale of assessments should not be blamed for the financial crisis. She asked Mr. Connor to explain how the crisis would hamper the current reform efforts in the United Nations.
Nicholas K. Thorne (United Kingdom) joined others in expressing regret that the early optimism shown regarding the clash flow situation by the end of the year had not been fulfilled. That would again lead the Organization into borrowing from peace-keeping budgets to maintain its regular budget activities, at the expense of troop-contributing States. He would like to receive more information on the reassessment of the payments for contingent- owned equipment for UNPROFOR. There should be information in percentages as to which nations were the major debtors to the peace-keeping accounts.
Chen Yue (China) expressed concern over the lack of improvement on the financial situation of the Organization. She welcomed the efforts of the Russian Federation, Ukraine, Brazil and Syria to reduce their arrears. China was one of the 97 countries that had paid up their regular budget dues on time and in full. It had paid its dues at the beginning of the year. But in the second half of the year, it had not been able to pay some of its peace-keeping dues on time. It expected to pay the $5 million that was outstanding as its peace-keeping assessments. All Member States should pay up their dues on time, in full and without conditions.
Uldis Blukis (Latvia) said "each chart is worth many words" in relation to the charts used by the Under-Secretary-General to illustrate his presentation. He expressed support for Ukraine's view on the issue of the scale of assessments. He asked whether the Under-Secretary-General could make forecasts for 1997 in addition to those for 1996.
Mr. Connor said he was pleased that Ukraine would pay $20 million which had been included in the forecasts. The $10 million Brazil intended to pay was not included in the forecasts. As for the $358 million deficit in the regular budget as of 30 November, he said, "I wish that was a mistake, but it is not. Unfortunately, it is not an error". The amount of the deficit had forced the Secretariat to borrow from the peace-keeping budgets. While there was a slight improvement in the combined cash position, the debts owed by the United Nations were growing also. The Organization had to hold the cash balances to pay its bills and tolerate an increased level of United Nations debt, mainly to Member States. The shortfall in the Russian Federation's generous contributions had made the Secretariat reduce what it paid to troop- contributing States. The increase in debts to Member States had grown to $990 million, mainly due to the reassessment of the amounts due for contingent-owned equipment used in UNPROFOR. He said that the bulk of the receipts that had been expected for December was $300 million of which $200 million had been received. The shortfall had been caused by the reductions of payments by the United States and four other countries. The seemingly improved fiscal picture was partly due to the fact that the Secretariat was slowing down the payment of its bills: that was not an improvement. The percentage of what was owed to the peace-keeping budget could be deduced by referring to the monthly reports on the status of contributions. The United States portion of the debts to peace- keeping was about 53.5 to 54 per cent. Russia accounted for about 15.5 per cent.
The current financial crisis diverted the attention of the Secretariat, he said. The United Nations lost interest discounts and spent more time on how to cope with the situation rather than doing something more creative. An example of the diversions was that the Secretariat, having signed separation contracts with staff last year, had to delay implementation of those separations until January or February, when it could find the cash to pay off the staff involved. Two or three months of extra service after signing the separation contracts was not helpful.
Ms. Goicochea Estenoz (Cuba) said regarding her specific question on chart 15 (impact on the financial situation), the answer given could have been more illustrative. The voluntary separation of staff could not be considered a reform measure. To perceive it as such reflected a difference in approach. The Secretariat should issue the information on the Organization's financial situation as an official document or as addenda.
Turning to agenda item 116 (the 1996-1997 programme budget), she asked a number of procedural questions regarding the timing for posing follow-up questions to Mr. Connor on the Efficiency Board. Her questions would relate to the responses already provided to the Committee by Mr. Connor in writing on Friday in response to matters raised by delegations earlier in the session. The exchange on those issues should be done in a formal meeting. She asked if she could proceed during the meeting or whether Mr. Connor would return to the Committee on another day before the end of the current regular session.
Ngoni Francis Sengwe (Zimbabwe) noted that the Committee did not have any other time. It had deadlines to meet.
Mr. Connor agreed to respond to the questions during the meeting. He said the information presented this morning would be included in a formal paper as an addendum.
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