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UN Finance
Press Briefing on the UN Financial Situation
By Joseph Connor
Under Secretary General for Management
March 23, 2000
In 1999, the United Nations took a step back from the financial brink, Under Secretary General for Management Joseph E. Connor told the General Assembly's Fifth Committee (Administrative and Budgetary) this morning, meeting to hear his assessment of the financial situation of the United Nations. While 1999 had been a year of financial turnaround, 2000 would be a year of financial challenge. He cautioned that in 2000 the situation could deteriorate if the Organization's operational grasp exceeded its financial reach.
While regular budget and tribunals assessments were as expected, there was an increase in peacekeeping assessments in 1999, he added. Even with that increase, the obligatory cost to Member States for all United Nations activities in 1999 was the lowest in six years. Actual assessment for 1999 came to just over $2 billion. Combined assessment levels projected for 2000 were some $1 billion higher than 1998 and 1999. The regular budget level in 1999 stayed about even with 1994, and was the lowest in several years. For 2000, peacekeeping assessments were forecast to rise to $1.938 billion. Spending on the regular budget and the international tribunals would be largely unchanged. The total for all budgets was projected to be some $1 billion higher than 1998 and 1999.
The Organization had more cash than last year, he explained, largely because of payments made by the United States to avoid losing its vote in the General Assembly. Total available cash at the end of 1999 jumped to some $1.093 billion, from $736 million in 1998. Amounts owed to the United Nations were also lower, at $1.758 billion, down from $2.031 billion a year earlier. And the level of the United Nations debt to its Member States - some $800 million - was also significantly lower than the previous three years.
The United States had paid an amount equal to its share of the 1999 regular budget plus some $150 million last year, he said. Its 1999 regular budget payments totalled some $452 million. Other Member States paid 103 per cent of what was owed for 1999, and as a result of both, there had been no need to borrow money from peacekeeping missions to meet the United Nations regular expenses. The United States had also paid 92 per cent of its share of the 1999 peacekeeping bills, while payments from other Member States totalled 123 per cent of their share.
His projection at year end 2000 was more cash, a better collection of assessments and a lower level of debt, he said, and that meant a United Nations better prepared to meet the responsibilities Member States gave it. A degree of financial stability had returned for regular activities, but for peacekeeping operations, liquidity problems would mean less stability. For special missions funded by voluntary contributions, uncertainty was the watchword. In a word, the task was not easy.
During the extensive general debate that followed Mr. Connor's presentation, many speakers expressed their positions on changes to the scale of assessments used to apportion the Organization's peacekeeping and regular budget expenses among its Member States. The scale uses a formula based on the principle of States' capacity to pay to determine the share of the Organization's expenses for which each State will be responsible.
The representative of the United States said the United Nations was both indispensable and flawed. It must be fixed to save it, he continued. The greatest challenge facing Member States was the inequitable assessment of dues. A "potential major train wreck" was in the offing if the demand for peacekeeping operations and the means of funding them were not aligned. Peacekeeping expenditures were projected to double this year. The United States wanted to pay its fair share and, above all, wanted peacekeeping missions to be effective, and that required that they be fully funded in the field. However, current peacekeeping missions were fated not to succeed if the status quo continued.
Japan's representative said that the present scale was not fair. His country paid some 22 per cent of the regular budget and the amount was being scrutinized increasingly in domestic debates. Further, the fact that Japan's share of the assessed budget was 7 per cent larger than the total share of the permanent Security Council members, other than the United States, was untenable. Permanent Council members' responsibilities should be reflected in the peacekeeping and regular budgets.
But China's representative said that, at the United Nations, responsibility was not linked to amounts assessed. There was nothing in the United Nations Charter that said permanent members of the Council were liable beyond their capacity to pay. Requests to reform the scale seemed primarily aimed at lowering the ceiling, but the ceiling distorted the principle of capacity to pay in favour of the major contributor. The United States was assessed for 25 per cent of the budget, but its gross domestic product constituted about 27 per cent of the world's total product.
The representative of the Republic of Korea said there could be no lasting solution to the Organization's financial stability without payment of arrears of Member States. It would be difficult for Member States to address reform of the current scale of assessments until there were concrete results in terms of resolving arrears issues.
What was sacrosanct was not the ceiling, but the Charter, India's representative said. Member States were being told that payments would continue to be withheld unless the ceiling for assessed contributions was lowered. No State had a right to take a unilateral decision on its assessment. While respecting the principle of capacity to pay, perhaps Member States should consider a scale in which a fair number of countries contributed at or near the ceiling. That would be more equitable and would reduce the Organization's budgetary vulnerability.
Egypt's representative stressed that the United Nations should not be held hostage by having its budget based on just one or a few States. At the same time, arrears must be paid to allow the Organization to carry out legislative mandates. According to the Charter, Member States must shoulder the expenses of the Organization in accord with the scales of assessment they determine. Constructive negotiations to settle differences on all aspects of the budgets were needed, but the Charter was a legal commitment to pay in full, on time and unconditionally.
Canada's representative, speaking also on behalf of Australia and New Zealand, said negotiations on the scale of assessments should pay due regard to the principles of the equality of Member States; the binding nature of obligations assumed on ratification of the Charter; and the collective responsibility to bear the expenses of the United Nations as apportioned by the General Assembly according to the principle of capacity to pay. He also called for reviewing the Organization's present mechanism to sanction those in arrears, via Article 19 of the Charter, and for interest on accumulated arrears and for penalties.
Statements were also made this morning by the representatives of Portugal (for the European Union and associated States), Nigeria (for the "Group of 77" developing countries and China), South Africa (for the Non-Aligned Movement), Russian Federation, Norway, Israel, Malaysia (speaking for the Association of South-East Asian Nations), Tunisia, Brazil, Morocco, Bangladesh, Pakistan, Czech Republic, Belarus and Cuba.
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