I have pleasure in submitting to the Council the Summary Programme of Work and Budget (SPWB) for the biennium 2002-2003, through the Programme and Finance Committees. This is an essential consultative step, leading to the preparation of full Programme of Work and Budget proposals for eventual decision by the Conference later this year.
By definition, a budget embodies a financial request to the members of an organization for the resources needed to be able to execute an agreed programme of work, which should meet their expectations and expressed requirements. Looking to the long-term in FAO's case, the formulation of this Programme of Work and Budget has the great advantage of being based firstly on the Strategic Framework covering the period 2000-2015, as approved by the Conference in November 1999 and secondly on the Medium Term Plan (MTP) covering the six year period 2002-2007. The Council generally felt that the latter document provided an accurate presentation of the key priorities and the needed balance and concluded that the substantive content should be the starting point for the SPWB.
The area on which the Council could not reach agreement concerned the level of resources that should be envisaged for the forthcoming biennium, with views ranging from the decline in resources inherent in a "zero nominal growth" budget to support for real growth of 15 percent. The most pessimistic view of an appropriate level of resources can be contrasted with an overwhelming measure of immediate needs - in particular, the disturbingly slow progress observed in meeting the target of reduction in the number of undernourished people, as approved by the World Food Summit. This disappointing development led me to propose that the Members of this Organization renew their commitment at the highest political level, through the
World Food Summit: five years later discussions, to take place during the next session of the Conference.
In this context, more pressing demands can be expected from the membership in a broad range of areas including:
Regrettably, there is also no end in sight in the relentless occurrence of emergencies in all regions of the world, requiring the timely and active involvement of FAO in assisting affected countries. While the Organization's inputs in emergency situations - up to the critical rehabilitation phase - are mostly delivered with the help of generous extra-budgetary sources, they depend on key activities under the Regular Programme (e.g. GIEWS and FIVIMS).
These calls for assistance, in turn, place more demand on our FAO Representatives as governments turn to them as their primary entry point to FAO and on the Technical Cooperation Programme as the most immediate and responsive source of funding for much of this assistance.
More generally as regards the normative side of FAO's work, the list of activities to which we are urged to allocate more resources grows each time a group of Members meets together. In the last few weeks both the Committees on Fisheries and Forestry have renewed their call for the allocation of a larger share of FAO's total resources.
However, the call to accord high priority and, by implication, more resources covers a much broader range of the Organization's work as evidenced by the following selective list:
I emphasise again that this list is partial but provides a good sample of the range of matters on which Members seek increased activity and hence resources - while, in many cases, stating at the same time that there should be no overall increase in the level of resources made available to this Organization. How can an organization, which is faced with needs for modernization, decentralization and increasing demands arising out of the objectives of the World Food Summit, sustain budget cuts and zero nominal growth budgets for more than eight years without damaging consequences?
And Members, of course, tend to take for granted that FAO should have the most advanced and best performing administrative systems, although they have been most reluctant to provide incremental resources to fund the significant initial investment costs which are implied. Too often, this places the implementation of the required complex upgrades at the mercy of "shoestring" budgets, regrettably often leading to delays, frustrations and less than perfect results as planning ahead for required resources cannot be made under such circumstances.
In trying to accommodate all these requirements within the limitations of a fixed budget envelope, my colleagues in the Secretariat often feel that they are facing an impossible task. The Governing Bodies are, of course, aware of the hard facts of recent budget history in FAO. It may perhaps be annoying for some to see and hear the same figures oft restated. But the consequences are so pervasive within the Secretariat and have been with us for so long, that I would be remiss in my duties as Executive Head if I did not recall them.
The approved budget for the 1994-95 biennium was US$ 673.1 million. After the abrupt and particularly painful drop to the level of US$ 65O million adopted in 1995, the Conference has since maintained a somewhat arbitrary and certainly artificial lid on the resources to be made available; one which had no direct relationship with what the Members required and asked for. All in all, as I reported in the Medium Term Plan, this amounts to a biennial reduction of US$ 95 million or 15 percent below what would have been provided for 2000-01 if there had simply been zero real growth during the period in question.
FAO has coped, in part, with this protracted situation of declining resources by implementing a comprehensive package of structural reforms and efficiency measures. The Organization can, I believe, demonstrate the depth and timeliness of these changes. It has emerged a leaner and more effective institution.
However, a legitimate question at this juncture is: for how long should this situation prevail? While calls for budgetary restraint to international organizations could perhaps be understood at times of burgeoning deficits in public finances, one hears more these days about deficits under control, and of staggeringly high surpluses in some of the richer countries. As circumstances change, is it far-fetched to expect that international organizations might benefit from adequate incremental resources to exercise their mandates more effectively?
In the Introduction to the Medium Term Plan 2002-2007, issued a few months ago, I expressed similar feelings. At a time when the annual rate in reduction of the number of undernourished in the world is woefully inadequate in the light of the already conservative target agreed at the World Food Summit; after a period of nearly eight years of lack of budget growth in nominal terms, let alone in real terms, I felt there could be no better case for, and in effect invited the membership to consider, a resumption of real growth in this Organization. A tentative net increase - at comparable costs and rate of exchange - of 9.6 percent over the present approved budget, was indicated in the MTP as highly desirable for the 2002-2003 biennium.
However, as recalled above, there was no agreement on this figure at the last Council. In fact, the lack of consensus led to suggestions from some Members that several scenarios be prepared, a costly process in terms of staff time which does not, in my view, lead the membership any nearer to consensus. Instead, I have tried to find a middle path which will, I hope, attract a broad body of support that could eventually lead to real consensus.
The proposals which are provided in this document have been framed to preserve, to the maximum extent possible, the main substantive thrusts indicated for the next biennium in the MTP, while limiting the request for real growth in the Appropriation to 5.4 percent at constant exchange rate and cost levels.
It is noted that, at the current exchange rate, the two excluded factors (i.e. exchange rate and cost increases) net off to approximately zero. The impact of several hypothetical rates of exchange on the proposals, in terms of total budget level, is illustrated in the document.
The explanations for the eventual increases over the 2000-2001 budget provisions are also given in the document. The major highlights are: to allow for selective increases under high priority technical activities such as those I have already referred to; to raise the share of the TCP Appropriation as requested by the majority of Members; and to permit a more satisfactory coverage of countries with efficient management of field activities, which is critical in the overall distribution of responsibilities.
I hope that the Committees and the Council will consider these hard facts and figures, together with the merits of the individual proposals, and will reach what I see as being the only logical conclusion: if we are to meet your demands for services, then you, the Membership, must allocate more resources to this Organization.
Jacques Diouf
Director-General
