94. The Council noted that the Programme Committee, in accordance with the mandate given in General Rule XXVI, and as agreed by the Council itself in November 1984, had carried out the first part of its current cycle of programme reviews. The review permitted the Programme Committee to advise the Council on the long-term orientations and objectives of FAO programmes. Accordingly, the Programme Committee had reviewed five technical programmes of particular importance under Major Programme 2.1: Agriculture, namely 2.1.1 Natural Resources, 2.1.2 Crops, 2.1.3 Livestock, 2.1.4 Research and Technology Development and 2.1.5 Rural Development at its Fiftieth Session. It had also reviewed all programmes under Major Programme 5.1 Information and Documentation (5.1.1 Public Information, 5.1.2 Library, 5.1.3 Documentation Systems and 5.1.4 Publications) and all Major Programmes under Chapter 1 (1.1 Governing Bodies, 1.2 Policy, Direction and Planning, 1.3 Legal and 1.4 Liaison) at its Fifty-first Session.
95. The Council noted that the Programme Committee had made use of existing documentation, i.e. the Programme of Work and Budget including Medium-Term Objectives, and the Reviews of the Regular and Field Programmes submitted to the Twenty-third FAO Conference. Moreover, this had been supplemented by detailed presentations by the programme managers. concern These presentations focused on updated-background descriptions of, and data on, the nature and magnitude of problems addressed by FAO programmes. Illustrations were also provided of concrete achievements and outputs produced during their implementation. Pertinent quantitative and qualitative information was also made available in two special reports to the Fifty-first Session of the Programme Committee: a report on FAO’s training activities; and a report on the use of consultants in 1984-85 (also submitted to the Finance Committee).
96. The Council noted with satisfaction that, as explained by the Chairman of the Programme Committee, in the exercise of this advisory function to the Council, the Committee had been strictly guided by the parameters set out in FAO’s Basic Texts, and had continued to adhere to past practice. Within the framework of the Programme of Work and Budget and Medium-Term Objectives approved by the Conference, the Programme Committee reviewed in-depth the situations prevailing at global, regional and country levels which had led to the formulation of FAO programmes and activities. This permitted the assessment of the continued validity of the objectives sought by Member Nations through FAO. The Committee further satisfied itself on the criteria of efficiency and effectiveness which were met in the implementation of activities and programmes. This was done in relation to several factors including the evidence provided of specific achievements and concrete impact, the means of action which had been selected among the possible alternatives, and conformity with previous guidance from FAO governing and advisory bodies. This analytical approach provided the basis for the Committee to formulate, as necessary, recommendations on needed shifts of emphasis or reorientations in programme focus.
97. The Council appreciated the thorough and in-depth review carried out by the Programme Committee. It recognized that this task was conceptually different from the analysis of proposals for the Summary and full Programme of Work and Budget. In fact, these programme reviews contributed significantly to enhancing the Programme Committee’s capacity to assist the Council in reviewing proposals in the Summary and full Programme of Work and Budget.
98. The Council approved in this connection, a number of general priorities identified by the Programme Committee which should, to the extent applicable, guide the design of FAO technical and economic programmes and the selection of means of action:
99. The Council noted a number of specific activities, to which individual members attached particular importance, within the programmes which had been reviewed by the Committee. Mention was made, especially, of: FAO’s support to national agricultural research systems; the valuable role played by FAO’s information and documentation systems such as AGRIS (International Information System for Agricultural Sciences and Technology), recently enhanced by increased language coverage; animal health programmes; activities regarding plant genetic resources and the Code of Conduct on the Use of Pesticides, which were to be carried Out in full cooperation with other international institutions concerned; programmes in support of rural women; programmes of training and technical assistance for the improved use of essential agricultural inputs such as fertilizers and seeds. The Council endorsed the views of the Programme Committee on these and other programme areas covered in the review.
100. Some members stated that in the light of the financial situation, they considered that a wide-ranging and in-depth review of FAO’s role, programme priorities and activities was essential in view of new emerging situations, changing requirements, and evolving trends in development cooperation. They strongly requested that this should be the object of a document for consideration by the Council through the Programme Committee at their next sessions and subsequently by the Conference.
101. Most members, however, did not share these views. They stressed that the role, programmes and priorities of FAO had been determined by a full consensus in the Council and the Conference, and there did not appear to be any justification for questioning this consensus at the present time. Furthermore, if such a review were to be undertaken, it should not be based on a series of proposals and options artificially divorced from the body of guidance, consensus and agreements stemming from the deliberations of FAO’s Governing Bodies. Furthermore, the current uncertainties and financial difficulties foreseen through 1987 and beyond would not be conducive to the serenity and rigour needed for a successful outcome.
102. The Council agreed that advantage could be taken of the opportunity that would be offered in 1987 by the detailed consideration of medium-term objectives in conjunction with the preparation of the Programme of Work and Budget 1988-89. Medium-term objectives would be specifically considered by the Committee on Agriculture (COAG), and subsequently by the Programme and Finance Committees, by the Council, and ultimately by the Conference. In the course of these discussions, Member Nations would have ample opportunity to advance any suggestions for programme priorities and new directions that might be pursued by FAO within the framework of its mandate. Thus the Conference would be able to take, in a rational and harmonious manner, any decision that might be felt necessary.
103. The Council appreciated the initiative of the Director-General in having the Programme Committee consider the subject of transparency of FAO activities, with the aim of further strengthening the climate of confidence between Member Nations and the Secretariat. The Council welcomed the Programme Committee’s positive assessment with regard to the full availability of necessary information in the exercise of its mandate. A few members, however, observed that there was still some room for improvement in the format and content of FAO official documents.
104. The Council agreed with the view of the Programme Committee that representatives of Member Nations could seek directly from the Secretariat any further information they might need for a better understanding of FAO activities, recognizing that additional costs could be involved in the general and systematic provision of supplementary information. It felt that there was a wealth of data available, which could be better exploited.
105. The Council noted that the Programme Committee had considered UN General Assembly Resolution 40/211 on Operational Activities for Development, in response to operative paragraph 9 of this Resolution. The views of the Programme Committee had been conveyed to the Second Regular Session of the Economic and Social Council in July 1986. It was recognized that the concern expressed by the Programme Committee on the activities of the Office for Project Execution (OPE) of UNDP, was fully consistent with conclusions reached by the UN Joint Inspection Unit (JIU) in an earlier assessment of the work of this office.
106. While diverging views were expressed on the extent of real duplication between OPE and executing Agencies of UNDP, particularly FAO, the Council stressed that it was essential for FAO Governing Bodies to be able to provide their considered and frank assessment of the implementation of operational activities for development, to those organs of the United Nations which also addressed themselves to these subjects. It recalled that FAO was expected to provide a further contribution to ECOSOC discussions on this subject in 1987, based on the views of the Programme Committee and the Council itself.2
107. The Council noted that the Programme Committee had examined on its behalf seven JIU Reports during its 1986 sessions.
108. The Council noted with particular satisfaction the favourable assessment made in one of these JIU reports, of FAO’s internal evaluation system which emerged as one of the most comprehensive and conceptually-advanced among Organizations of the UN System. The report stressed that evaluation was an essential link in the decision-making process, in so far as feedback of results led to reformulation of objectives and improved design of programmes and activities.
109. The Council took note of the exchange of letters dated 10 June 1986 between the Director-General and the Representative of the Host Government containing a new definition of the headquarters seat, and constituting a supplemental agreement to the Headquarters Agreement concluded in 1950. In this connection the Council expressed its gratitude to the Host Government for the decision taken to construct some new buildings at the Terme di Caracalla site, and noted that the above-mentioned exchange of letters was necessary before the Italian Parliament could authorize the commencement of construction.
110. The representative of the Host Government informed the Council about the progress that had been made, by Parliament towards approval of the necessary legislation, as well as about the Special Contribution to compensate for rent paid b FAO, and the Government’s intention to provide separate office. accommodation for the World Food Programme and IFAD within a reasonable period of time.
111. Some members noted that there had been some uncertainties relating to the accommodation of the World Food Council. It was indicated that a solution should be found for the future accommodation of the WFC that was consistent with the interests and desires of both FAO and WFC.
112. The Council was informed that intensive contacts had taken place between. representatives of the Host Government and the Secretariat, in order to reach an agreement on various issues concerning the interpretation and application of the Headquarters Agreement, with respect to privileges provided for therein, and also with respect to the Organization’s immunity from legal process. The Council noted with satisfaction that substantial progress had been made with a view to submitting. a final report to the Council at its Ninety-first Session.
113. The Council noted the status of contributions at 21 November 1986 , compared to the same date in 1985, as follows, as well as the details of receipts in 1986 and outstanding contributions of Member Nations, as shown in Appendix E to this Report.
|
(for comparison) |
||
|
|
1986a |
1985 |
|
|
$ |
$ |
|
Amounts outstanding at 1 January |
|
|
|
Current assessments |
198 575 000.00b |
197 940 000.00c |
|
Contributions in arrears |
24 210 846.98 |
29 160 039.05 |
|
Total |
222 785 846.98 |
227 100 039.05 |
|
|
|
|
|
Receipts 1 January to 21 November |
|
|
|
Current assessments |
129 848 291.31 |
182 770 525.59 |
|
Contributions in arrears |
10 295 945.99 |
19 182 166.12 |
|
Total |
140 144 237.30e |
201 952 691.71d |
|
|
|
|
|
Amounts outstanding at 21 November |
|
|
|
Current assessments |
68 726 708.69e |
15 169 474.41 |
|
Contributions in arrears |
13 914 900.99e |
9 977 872.93 |
|
Total |
82 641 609.68e |
25 147 347.34 |
aContributions in arrears include arrears payable under Conference authorizations by instalments due in 1986 (in 1985 in comparative figures) and in future years (on 1 January 1986 US$41 490.63 due in 1986 and US$235 969.89 due in future years).
bOf which US$575 000.00 relates to the Tax Equalization Fund.
cOf which US$650 000.00 relates to the Tax Equalization Fund.
dReceipts include release on 1 January 1985 of cash surplus of 1982-83 biennium: US$41 005 487.08 applied to current assessments (20.72%) and US$5 010 524.74 to arrears.
eAppendix E sets out details of receipts during 1986 and of outstanding contributions of all Member Nations.
114. The position at 21 November 1986 of 1986 assessments of Member Nations (as well as the number with arrears outstanding), with comparative figures at the same date during the preceding four years, was as follows:
|
|
|
|
Number of Member Nations |
|||
|
|
|
|
Current Assessments |
Arrears |
||
|
|
% Received |
Paid in Full |
Part Paid |
No Payment |
Total |
|
|
1986 |
65.39 |
69 |
26 |
63 |
158 |
54 |
|
1985 a |
92.34 |
82 |
15 |
59 |
156 |
41 |
|
1984 |
86.49 |
76 |
23 |
57 |
156 |
53 |
|
1983 b |
86.10 |
84 |
15 |
53 |
152 |
41 |
|
1982 |
56.23 |
71 |
34 |
47 |
152 |
38 |
115. The month-end cumulative percentages of 1986 assessments received during the first ten and a half months of 1986, as compared to receipts during the preceding four years, is shown in the following statistics.
|
|
|
Percentages of Current Assessments Received |
|||
|
|
|
(Cumulative - year to date) |
|||
|
|
1986 |
1985c |
1984 |
1983 d |
1982 |
|
|
% |
% |
% |
% |
% |
|
January |
10.37 |
24.69 |
6.28 |
4.63 |
2.48 |
|
February |
15.89 |
28.25 |
8.73 |
18.81 |
14.02 |
|
March |
24.50 |
30.95 |
14.21 |
26.52 |
16.88 |
|
April |
30.26 |
37.31 |
27.09 |
32.74 |
27.82 |
|
May |
36.10 |
47.89 |
30.92 |
45.58 |
28.28 |
|
June |
40.6 |
51.35 |
51.90 |
48.07 |
32.69 |
|
July |
62.48 |
59.63 |
55.42 |
51.87 |
40.55 |
|
August |
63.00 |
60.14 |
57.44 |
53.06 |
43.62 |
|
September |
63.40 |
63.33 |
60.66 |
55.33 |
49.46 |
|
October |
64.75 |
73.52 |
86.34 |
75.17 |
56.17 |
|
November |
65.39 e |
92.35 |
91.44 |
89.09 |
79.95 |
|
December |
|
92.50 |
92.60 |
93.81 |
90.52 |
aTo facilitate comparisons, applications of the cash surplus (20.72%) to the current assessments of 84 Member Nations are excluded from the Numbers of Member Nations.
bTo facilitate comparisons, applications of the cash surplus (0.19%) to the current assessments of 54 Member Nations are excluded from the Numbers of Member Nations.
cIncludes US$41 005 487 (20.72% of 1985 assessments) as distribution of the cash surplus of the 1982-83 biennium applied as of 1 January 1985 .
dIncludes US$345 595.00 (0.19% of 1983 assessments) as distribution of the cash surplus of the 1980-81 biennium applied as of 1 January 1983 .
eReceipts at 21 November 1986 .
116. The rate of receipt of contributions at 21 November 1986 represented by far the least favourable rate at that date over the last four years. This position, however, reflected primarily the lack of any payment from the largest contributor; had the largest contributor paid its full assessment, which it normally had at this time of each calendar year, the overall receipts would have been at the most favourable rate on that date during four of the last five years. The Council noted that 62 other Member Nations had made no payment against their 1986 assessments, notwithstanding that the Financial Regulations of the Organization required payment in full at latest by the end of February of the calendar year to which the assessment related.
117. The Council was informed by the representative of the largest contributor that the Government had not renounced its financial obligations to the Organization, but that legislative action had required the withholding of payment of a substantial part of contributions to the UN System as a whole. She announced that US$4 800 000 would be paid to the Organization shortly and that another payment against its 1986 assessment would be received after 1 October 1987, bringing the total cash payments for 1986 to US$25 400 000. Both the World Health Organization (WHO) and International Labour Office (ILO) had been informed at the same time of similar treatment of their assessed contributions due from the Government. Following receipt of these two payments and the application on 1 January 1987 of the cash surplus of the 1984-85 biennium, the outstanding arrears of the largest contributor relating to 1986 would be approximately US$17 300 000, equal to 34.56 percent of its 1986 assessment. No information was provided as to the timing or amounts of payments of its 1987 assessment of US$50 070 000.
118. The Council noted with concern that 54 Member Nations had arrears of contributions outstanding, relating to 1985 and prior years, totalling US$13 914 900. It also observed that US$10 295 945 of contributions in arrears had been received to date n 1986, many of these payments having been received from Member Nations which were known to be facing very difficult financial problems. In view of these special efforts of certain Member Nations, the Council urged all other Member Nations with outstanding arrears of contributions to make every possible effort to remit these long overdue amounts as soon as possible.
119. The Council reviewed the in-depth study by the Finance Committee of this important, delicate and difficult problem. Members pointed out that the Alternatives being studied by the Finance Committee, using criteria endorsed by the Council, would provide for a more rational and equitable distribution in future of any cash surplus. The Council recognized that no cash surplus was foreseeable for the 1986-87 biennium, and most likely not for the 1988-89 biennium as well. However, action should be taken promptly to deal effectively with the problem of delayed payment of assessed contributions. The Finance Committee should therefore continue its review of the various Alternatives with a view to submitting a recommendation to the next Session of the Council, for decision by the Conference in November 1987. The Committee on Constitutional and Legal Matters (CCLM) would be charged with the drafting of any necessary changes in the Financial Regulations. The majority of the Council felt that Alternatives III, IV and V, as suggested by the Finance Committee and set out in Appendix C of the Report of the Fifty-eighth Session of the Finance Committee 7, most closely responded to the Council’s wishes, and should therefore be studied further by the Finance Committee with the objective of recommending one solution only to the Ninety-first Session of the Council.
120. The Council was apprised of the serious liquidity problem confronting the Organization in the implementation of the Programme of Work and Budget for 1986-87. It expressed appreciation for the detailed assessment provided by the Director-General based on the latest developments. The Council also acknowledged, in this connection, the valuable views expressed by the Finance Committee at its Fifty-eighth Session (22 September - 2 October 1986 ), when it had made a preliminary analysis of this issue.
121. The Council recognized the unprecedented nature and scale of the problem. The financial viability of FAO in the short-term and the Director- General’s capacity to implement the Programme of Work for 1986-87, approved by the Conference were put under severe test by the combined effects of external factors. The Organization faced prospects of an income shortfall of a magnitude which was well beyond anything experienced so far.
122. On the basis of the latest information available, and the best estimates possible, the biennium would end with a shortfall in income of US$ 92 million. Cash flow projections gave firm indications that the schedule of payments in 1987 could not be effected without resorting to exceptional measures.
123. The Council recognized that three factors were responsible for this prospective income shortfall. Firstly, FAO was faced, for the first time, with a significant shortfall in the payment by the largest contributor. Secondly, because of the sharp decline in interest rates and a lower level of investible funds, FAO’s Miscellaneous Income was expected to be some US$ 19 million less than estimated in the Programme of Work and Budget. Thirdly, as in the past, all Member Nations did not find it possible to pay their full contributions during the biennium. For 1986-87, the likely arrears in contributions from these Member Nations were estimated at US$ 26 million.
124. The Council emphasized that the primary cause of the liquidity problem which would affect FAO through the remainder of the biennium and beyond, was, therefore, the considerable shortfall, of nearly a quarter, in total expected contribution income.
125. The Council was aware that the Organization was confronted, every biennium, with a small percentage of assessed contributions not being paid and constituting arrears. It stressed that this was due to the extreme difficulties experienced, particularly by the poorest developing countries, in securing the foreign exchange resources necessary to meet their external commitments. The Council considered that, given the financial plight in which most developing countries found themselves since the early eighties, it was encouraging that such arrears were not, in fact, of a higher amount.
126. The Council agreed that the contribution shortfall expected in 1986-87 was basically different from that of the past pattern of arrears. At the root of the problem was legislative action in the main contributor country. Many members expressed their firm conviction that the difficult situation in which FAO currently found itself, and which would continue in the foreseeable future, was in large part caused by the decisions taken by the main contributor. Contrary to arrears from other Member Nations, which were paid as soon as they had the means to do so, there was no precedent on which to base expectations as to how and when the contributions due from the largest contributor would be paid.
127. The Council stressed that it was a basic obligation of all Member Nations to pay their contribution to the Regular Budget promptly and in full, as required by the FAO Constitution, and urged all members not to abdicate from their international treaty obligations. The Council stressed, moreover, that other Member Nations could not be expected to compensate for the failure of one member government in meeting its obligations, particularly when this was the result of unilateral action to reduce contributions linked to member ship of international organizations.
128. The Council was reassured by the representative of the largest contributor that it had not renounced its obligation to pay its full contribution. The Council, therefore, made a strong appeal to the government of the main contributor country to see its way to reversing the effects of this legislation and finding the necessary means, as early as possible, to honour the payment of its assessed contribution. The Council also appealed to all other Member Nations to settle without delay any arrears in their contributions and to endeavour to effect future payments as expeditiously as possible.
129. The Council agreed that, in view of projected income shortfalls of such magnitude, the Director-General was compelled to address a situation of force majeure. The gravity of the situation, the certainty of a cash flow problem before the end of the biennium, and the prospect of an even more severe liquidity problem in early 1988, called for determined action. In this connection, the Council agreed that the difficulties were aggravated by the uncertainties. The Council recognized that the Director-General had considered the respective merits of all the options available, and that he was studying the measures taken by other United Nations bodies in similar difficulties.
130. In the current circumstances, the Council agreed with the Director-General that programme adjustments could not be avoided. It commended his initiative of submitting a package of proposals for the Council’s consideration. It supported the approach adopted, which was aimed at some sacrifice in those programme areas where reductions were possible, but, at the same time safeguarded the most essential aspects of FA0’s programme.
131. While expressing its deep regret that the Director-General was compelled to take action of such nature, the Council endorsed the proposals as contained in Appendix A of the document 9, amounting to US$ 16.4 million.
132. Some members expressed the view that in the current financial circumstances, the opportunity should be taken to look carefully at present activities and programmes where further possible savings could be made. In this context, these members felt that the proposals of the Director-General would not prove adequate to cope with the financial problem, since if the financial crisis were to be of the dimensions expected, it would be necessary to take more drastic measures.
133. The great majority of members felt that there was not at present a justification for more far-reaching reductions, nor for structural changes. They stressed that a package of programme adjustments and austerity measures had a direct negative impact on the delivery of substantive support for the benefit of member countries. They would have preferred the Programme of Work to be implemented in its entirety and only with regret could they accept the force of circumstances which required adjustments. They welcomed the assurance given by the Director-General that the package was the result of extensive review in consultation with the programme managers concerned and the application of pragmatic but rigorous selection criteria. Many of these members said that additional limitations should not be imposed on the essential activities and operations of the Organization as a result of financial pressure.
134. The Council recognized that the Technical Cooperation Programme (TCP) enjoyed the support of all developing member countries and of the great majority of other member countries.
135. Some members regretted that possible savings in the TCP had not been considered in the proposed package, in view of the level of unobligated TCP funds. This would have reduced the deficit caused by the income shortfall further and would alleviate the problems to be faced beyond this biennium.
136. An overwhelming majority of the Council, however, fully supported the proposal of the Director-General not to affect the resources of the TCP. The TCP represented, in their view, a crucial component of FAO’s effective and direct action in member countries. They agreed entirely with the Director-General not to reduce the resources of the TCP, which was most responsive to the urgent, felt, and expressed needs of developing countries, and to see his way to effecting elsewhere the necessary adjustments imposed by factors outside his control.
137. The Council agreed that the Director-General needed to be accorded maximum flexibility in the application of the package of programme adjustments. In the unlikely event that the contribution situation improved at any time in 1987, the Director-General should be in a position to rescind some of the adjustments enacted and limit the negative effects on FAO’s approved programmes. Should, however, the situation further deteriorate, further measures would be necessary. The Council expressed its conviction that the Director-General would propose or where necessary carry out the measures which might be required, in either case.
138. The Council noted the importance attached by the countries concerned to the Intergovernmental Group on Jute, Kenaf and Allied Fibres meeting as scheduled in 1987. In the context of the large external debt facing countries in Latin America and the Caribbean , members from this region expressed the hope that meetings whose objectives were to promote ECDC (Economic Co-operation between Developing Countries) and export of agricultural products would not be cancelled. Given the need for flexibility in the application of the adjustments, the Director-General was requested to take these factors into account.
139. The Council agreed that any further corrective action outside the ambit of programme adjustments should be guided both by the parameters of the liquidity problem as it evolved, and the adequacy and expediency of mechanisms provided for in FAO’s financial regulations. Should the contribution shortfall materialize as predicted, resorting to the Working Capital Fund to the maximum of resources available therein, would be necessary.
140. Some members considered that it was important, in devising such a strategy to cope with the liquidity problem in the short-term, not to mortgage excessively the capacity of FAO to function effectively in the next biennium. It was stressed that any necessary measures should, to the extent possible, avoid putting additional burdens on those Member Nations which paid their contributions on time. They also drew attention to the fact that recourse to the Working Capital Fund and to the Special Reserve Account, as permitted, would lead to additional burdens in their replenishment.
141. In this context, the Council recalled its Resolution 2/80 of the Eightieth Session (November 1981) conferring on the Director-General the authority to borrow, confirmed as a measure of last resort by Resolution 14/83 of the Twenty-second Session of the Conference (November 1983). It noted that, according to information presently available, there would be outstanding obligations to be met in early 1988, estimated at some US$ 60 million, which would not be fully covered by cash resources, and that it might be necessary to resort to short-term borrowing up to a tentative amount of US$ 30 million. The Council noted certain concerns expressed about possible recourse to borrowing, but accepted the assurance that, in such an eventuality, the Director-General would consult the Finance Committee in advance and fully report on action taken to the Council.
142. The Council recalled that a cash surplus of US$ 34.7 million .had resulted from the biennium 1984-85, and would be distributed to Member Nations on 1 January 1987 , in accordance with FAO’s financial regulations. Any proposal to withhold distribution of this cash surplus was a Conference prerogative. However, individual Member Nations were at liberty to relinquish their share of it.
143. The Council recognized that non-distribution of the cash surplus would only result in a net benefit to the Organization in cases in which Member Nations were not in arrears and would pay their 1987 contributions in full. If, as the Host Government had noted, these countries were prepared to voluntarily relinquish their share of the cash surplus or to defer their claim to it, this would help the Organization’s financial position. The Council expressed its hope that individual member countries would consider surrendering or deferring their share of the cash surplus and paying their 1987 contributions in full.
144. The Council expressed its deep appreciation for the announcement made during the debate by the representative of the Host Government that his government had agreed to delay at least until 1988 its claim to a share of the cash surplus to be distributed on 1 January 1987 , and to accelerate payment of its entire contribution for 1987. The gesture of the Host Government was considered a positive response to the phase of budgetary constraints through which the Organization was passing.
145. The Council noted with satisfaction the supplementary one-time allocation for 1986 of Lire 1000 million made by the Host Government, as reported to the Finance Committee at its Fifty-eighth Session10, and welcomed the announcement that this contribution could be utilized by the Organization as part of the Regular Programme resources in the current biennium. The Council also noted with satisfaction that use of part of the special contribution of the Host Government, agreed with FAO, permitted programme adjustments yielding a saving of US$ 2.1 million.
146. The Council recalled with satisfaction that a special session of the Finance Committee had been convened by the Director-General on 15 and 16 December 1986 . It welcomed this opportunity for the Finance Committee to consider the latest developments, the financial prospects and the liquidity problems during 1986-87 and beyond. It looked forward to receiving the views of the Finance Committee at its next Session.
147. In view of the fluidity of the situation and attendant uncertainties, the Council agreed that it would, itself, need to review developments further in 1987, with the advice of the Programme and Finance Committees.
148. The Council noted that the current difficulties were aggravated by the sharp depreciation of the US dollar. The 1986-87 Regular Programme Appropriations Resolution of the last Conference (November 1985), was based on an exchange rate of 1760 Italian Lire = US$ 1, while current rates were oscillating around 1400 lire to the dollar. Even on the most optimistic assumptions, this would lead to the total depletion of the resources in the Special Reserve Account by the end of the biennium.
149, The Council concluded that it was important to view the problems confronting the Organization in their proper perspective. FAO was faced with a liquidity problem of undoubted gravity and of critical proportions, which its full membership most sincerely hoped would be temporary. In this connection the Council recognized the efficiency of FAO’s management and the support it enjoyed for its aims, and pointed out that FAO remained the symbol of effective international cooperation and the key international organization in dealing with world food and agriculture.
150. The Council considered the document which outlined possible approaches to dealing with budgetary and financial uncertainties. It appreciated this matter being drawn to its attention and recognized that no decision was expected of it immediately, rather that it was the Director-General’s proposal that the Council provide guidance to the Finance Committee and himself as to which of the approaches should be studied further.
151. The Council recognized that none of the possible measures proposed could deal with the kind of problems being faced in the current biennium. Nevertheless, as the degree of uncertainty in budgetary income and fluctuations in exchange rates had to be faced more effectively than was possible under existing arrangements, the problem merited closer study.
152. In its discussions the Council noted ‘that all the proposals involved decision by the Conference, and that some involved possible delegation of responsibilities from the Conference to the Council. The approaches fell into two categories, one dealing with measures to face uncertainties in the receipt of contributions, and the other with exchange rate fluctuations. Varying views were expressed on each of the options, and additional suggestions were put forward. The Council agreed that at its December 1986 Session, the Finance Committee should consider the subject in the light of the proceedings of the Council debate. After considering the views expressed in the course of the Council’s discussion, the Finance Committee would decide which of the suggested measures should be studied further. A detailed paper could then be prepared for substantive discussion at the Finance Committee’s session in Spring 1987.
153. The Finance Committee would submit the results of its deliberations for consideration by the Council at its Ninety-first Session in June 1987. The Council would then decide on the proposals to be submitted to the Conference.
154. The Council reviewed the reports on the above accounts and noted that the External Auditor had examined the financial statements and related schedules and had expressed an unqualified audit opinion on them.
155. In the course of the discussion, a number of members asked for additional information on points raised by the External Auditor. Comments on many of these points were provided by the Secretariat which also offered to provide additional information to any members which requested it.
156. The Council endorsed the External Auditor’s recommendations regarding management practices and procedures and noted the Director-General’s actions on the possible improvements mentioned in the External Auditor’s report.
157. With regard to the system of budgetary planning and monitoring of the Regular Programme, the Council endorsed the overall positive assessment of the External Auditor. It also expressed satisfaction at the Auditor’s positive assessment of the systems and procedures for work planning, and noted that further improvements in PLANSYS (Workplan Implementation and Monitoring System) would be introduced as resources permitted.
158. The Council considered the Finance Committee’s conclusions on the External Auditor’s review of the procurement of word processing and data processing equipment. It noted that, as recommended by the Auditor, improvements were being made in the framing of tenders relating to high-technology areas that were in a process of rapid technological evolution.13
159. As regards the account for the United Nations Development Programme, the Council agreed with the External Auditor’s suggestions for improvements in inventory control and noted that the Director-General was implementing these recommendations.
160. The Council noted the comments of the External Auditor regarding the extensive emergency operations in Chad, Ethiopia and Sudan of the World Food Programme. It expressed satisfaction that the figures for receipts, expenditure and the unspent balance would be included in this account for the period ended December 1985. In connection with the development of the WFP Information System and the circumstances leading to the abandonment of the initial contract the Council also noted the External Auditor’s comments.
161. The Council endorsed the Finance Committee’s recommendation and agreed to forward the following resolution to the Conference for adoption:
DRAFT RESOLUTION FOR THE CONFERENCE
AUDITED ACCOUNTS
THE CONFERENCE,
Having considered the report of the Ninetieth Session of the Council,
Having examined the following audited accounts and the External Auditor’s Reports thereon:
|
Regular Programme 1984-85 |
C 87/5 |
|
United Nations Development Programme 1984-85 |
C 87/6 |
|
World Food Programme 1984-85 |
C 87/7 |
Adopts the above audited accounts.
162. The Council noted that the Actuary had reviewed the financial position of the Separation Payments Fund. This fund was established to meet the Organization’s liabilities for the costs of separation. It further noted that, in the light of the results of that review, the Finance Committee had recommended an increase in the rate of funding in order to provide a sufficient balance in the fund within the next eight to twelve years which was estimated to cover all separation payment liabilities.
163. Accordingly, the Council endorsed the Finance Committee’s recommendations for ensuring long-term full coverage of the Separation Payments liabilities for all programmes. It recommended the adoption of a uniform funding rate of eight percent. This rate would be in addition to charges to be made to the annual budget of an amount equal to one-third of actual separation payments made under the Regular Programme.
164. The Council noted that this action would increase the annual cost of maintaining the fund by less than seven percent, the amount of payments being estimated to go up from US$7 144 000 to some US$7 644 000 for the 1986-87 biennium. It concurred with the Finance Committee’s suggestion that a further Actuarial Review of the Fund be made in four years’ time and that an interim report be prepared after two years, in 1988.
165. The Council was informed of the request made by the UN General Assembly at its Fortieth Session (1985), addressed to the competent organs of the member Organizations of the United Nations Joint Staff Pension Board, to review the size and composition of the Pension Board. This review had to take into account, where practicable, the views expressed in the Fifth Committee at the Fortieth Session, and to submit the conclusions to the General Assembly through the Pension Board, in time to enable the Assembly to take a decision on the matter not later than at its Forty-second Session in 1987.
166. The Council considered the views expressed in the Fifth Committee of the UN General Assembly and by the United Nations Joint Staff Pension Board, the FAO Staff Pension Committee, the Director-General and the Finance Committee, and approved the following conclusions with respect to the size and composition of the United Nations Joint Staff Pension Board:
(a) that the principles of the federative character of the Fund should be preserved through full and equitable participation of all member organizations in the deliberations on pension issues;
(b) that the tripartite composition of the Pension Board should be maintained in order to ensure full debate and participation of the three constituent groups: Member States , executive heads and participants; -
(c) that while other forms of tripartite structure might also be envisaged, it would be preferable to maintain the present tripartite composition of the Pension Board. Changes in this respect should not, however, hamper the participation and respective role of the three constituent groups on the Pension Board;
(d) that an enlargement of the Pension Board’s size would be desirable in view of the expanded membership of the Fund and of the need to respond to the requirements of Member States, organizations and participants’ representatives. It should be left to the Pension Board itself to recommend the optimum number of members in order to obtain maximum effectiveness in the deliberations and work of the Board;
(e) that a revised membership of the Pension Board provide adequate representation of pensioners;
(f) that in the event of an enlargement of the Pension Board, the number of seats for FAO should be increased from two to three.
167. The Council agreed that these conclusions be conveyed to the UN General Assembly through the Pension Board.
168. The Council cons a recommendation by the Finance Committee to amend two Staff Regulations dealing with measures in support of staff with disabled children.
169. The Council approved the proposed amendments to Staff Regulations 301.0333 and 301.0334, to read as follows with effect from 1 January 1986 :
Staff Regulation 301.0333
Eligibility for the grant under Staff Regulation 301.033(iii) shall begin from the date on which the special teaching or training is required up to the end of the year in which the child reaches the age of 25 years. In exceptional cases the Director-General may extend the age limit to 28.
Staff Regulation 301.0334
170. The Council observed that the Director-General reported to it once a year on the unscheduled sessions approved and on the sessions cancelled.
171. The Council noted that between 1 January and 1 October 1986 , 34 unscheduled sessions had been approved and 30 sessions had been cancelled. Details are given in Appendix F to this report.
172. The Council approved the revised Calendar of Sessions for 1986-87 of the Council and of those bodies which report to it, as given in Appendix G to this report.
1CL 90/3; CL 90/16; CL 90/PV/16; CL 90/PV/19.
2See paras. 70 to 81.
3CL 90/4, paras. 50-55; CL 90/17, paras. 90-92; CL 90/22; CL 90/PV/15; CL 90/PV/16; CL 90/PV/19.
4CL 90/4; CL 90/4-Corr.1; CL 90/17; CL 90/LIM/1; CL 90/PV/5; CL 90/PV/6; CL 90/PV/7; CL 90/PV/8; CL 90/PV/18.
5Appendix E sets out details of receipts and of amounts outstanding.
6Appendix E sets out details of amounts outstanding.
7CL 90/17
8CL 90/23; CL 90/23-Sup.1; CL 9O/23-Sup.2; CL 90/PV/5; CL 9O/PV/6; CL 90/PV/7; CL 9O/PV/8; CL 9O/PV/18; CL 9O/PV/19.
9CL 90/23.
10CL 90/17, para.57.
11 CL 90/24; CL 90/PV/8; CL 90/PV/9; CL 90/PV/10; CL 9O/PV/19.
12CL 90/17 paras. 46-47 and 57; C 87/5; C 87/6; C 87/7; CL 90/PV/15; CL 90/PV/16; CL 90/PV/19.
13Therepresentatives of Canada, Denmark and the United Kingdom regretted that paragraphs 154 to 158 did not adequately reflect the discussion on the audited accounts, and their views in particular.
14CL 90/4, paras. 35-40; CL 90/PV/15; CL 90/PV/16; CL 90/PV/19.
15CL 90/17, paras. 84-86, Appendix E; CL 90/PV/15; CL 90/PV/19.
16CL 90/17, paras. 81-83; CL 90/PV/15; CL 90/PV/16; CL 90/PV/19.
17CL 90/7; CL 90/PV/16; CL 90/PV/19.
18CL 90/18-Rev.1; CL 90/PV/16; CL 90/PV/19.
