PROGRAMME, BUDGETARY, FINANCIAL AND ADMINISTRATIVE MATTERS

Programme of Work and Budget 1990-91 and Medium-Term Objectives 1

22. The Council began consideration of this item with an oral presentation by the Chairmen of the Programme and Finance Committees of the views and recommendations of the Committees with regard to the full Programme of Work and Budget (PWB) for 1990-91, as contained in the reports of their individual and joint sessions. It concurred with the positive assessment made by these Committees of the further improvements in the format and presentation of the document.

23. The Council recalled the views it had expressed during its Ninety-fifth Session, when considering the Summary Programme of Work and Budget 1990-91. In particular, it recalled its broad endorsement of the nine priority areas under Chapter 2: Technical and Economic Programmes, which were targetted for net additional resources. It welcomed the expanded presentation of cross-sectoral priorities in the full PWB document, introduced in response to its own request. The Council agreed that the proposals were in conformity with the prior guidance given by FAO's Governing and Advisory Bodies, and expressed appreciation of the changes introduced in the substantive content, since the initial proposals in the Summary.

24. The Council also recalled the preliminary views expressed on the revised programme budget process introduced on an experimental basis for the 1990-91 PWB. Some members reiterated their positive views on the process and the merits of the submission and consideration by the Joint Session of the Programme and Finance Committees of an "Outline" PWB. They noted that this had increased the dialogue among the members on the budget and the recommendation by the Special Joint Session that this process be continued for at least the next biennium. Some other members stated that the usefulness of the process still had to be confirmed during the Conference.

25. The Council noted that since submission of the Summary, the financial aspects of the proposals had been refined, and in particular that the provision for cost increases had been updated in the light of the latest information available to the Secretariat. It noted that the cost increases were based on established methodology, that the Finance Committee had received clarifications in response to its queries and had agreed that there was no basis to dispute the estimates. It also noted that most members of the Finance Committee had endorsed the cost increases though two members had expressed their governments' concern about their level.

26. Some members questioned the rationale and received explanations on some assumptions which had led to the calculation of cost increase estimates. A few requested absorption of non-discretionary cost increases. The Council in general stressed that cost developments were beyond the control of the Organization and that it was essential to protect the implementation of the programme eventually approved by the Conference.

27. The Council further noted that the deliberate absorption of US$ 3 million of cost increases, as proposed by the Director-General in the Summary, had been maintained in the PWB. The Council observed that the net programme increase of US$ 5.5 million, i.e. 1 percent over the recosted 1988-89 budget base, if offset by this absorption, would amount to only 0.45 percent. Some members, however, did not agree with this form of calculation.

28. The Council further observed that the absolute amount of the provision for cost increases would depend on the budget rate adopted by the FAO Conference.

29. The Council considered the proposal to reduce the lapse factor used in the calculation of cost estimates for established posts, as contained in document C 89/3-Sup. 4. Some members expressed the view that they did not see any justification to effect such a change at the present time, particularly as it would significantly increase costs. Other members, however, were in support of the proposal to reduce the level to 3 percent, with a view to ensuring adequate coverage for the effective implementation of the approved Programme of Work and Budget. The Council noted that a decision on this issue would need to be taken at the Conference.

30. The Council reiterated its appreciation of the Director-General's efforts to facilitate consensus approval of his budgetary proposals. The Council stressed the need for adequate resources to be put at the disposal of FAO to enable it to fulfil its mandate and meet the expectations of Member Nations for assistance. Most members felt that an expansion of the Organization's programmes, however modest, was long overdue after the substantial cuts it had been forced to make in the last two biennia. They drew attention to the numerous requests for FAO action on the international scene stemming from all groups of countries. Strong appeals were made for the prompt payment of assessed contributions and the settlement of arrears as the indispensable starting point for such recovery.

31. Some members, while acknowledging that FAO should be able to respond to new needs and to take new initiatives, considered that FAO should do so through redeployment of resources. They felt that new activities need not necessarily lead to requests for budgetary increases.

32. A few members who addressed the issue considered that, since important aspects of FAO's work were to be addressed within the context of the Review, they preferred to postpone giving their overall reaction to the budgetary proposals, pending the Conference conclusions on this Review. Most members, however, objected to any attempt to link the two matters in any such manner.

33. In the course of the debate, members of the Council made comments on substantive aspects of the proposals of interest to them or to their respective regions. The Council noted the decline in the share of the Technical Cooperation Programme (TCP) in the total proposed budget at a moment where there was a greater demand for TCP projects. The large majority of the Council expressed regret at this reduced share of the TCP in the total appropriation. They stressed that they had expected a higher level, more commensurate with requirements and the benefits accruing to recipient countries from TCP assistance. A few members expressed concern over the proposed programme increase for the TCP. Most members were satisfied with the transparency of TCP management. A few members, however, expressed the view that this management should be made more transparent.

34. Supportive references were made to FAO's forestry programme, the increase in priority given to it and the catalytic role of the Tropical Forestry Action Plan. FAO's expected role in supporting the Uruguay Round of the GATT, through enhanced support to the work of the Codex Alimentarius Commission and the International Plant Protection Convention, was also endorsed. It was observed that the forthcoming consideration of the PWB by Commission II of the Conference would provide an opportunity for all Member Nations to make their detailed comments on proposed activities.

35. Regarding the proposed budget level, a few members reiterated their government's support for zero real growth and maximum absorption of non-discretionary cost increases for the organizations of the UN system and yet hoped for eventual consensus; they noted that despite repeated reuests for restraint the budget continued to be larger than the resources available. Other members, while espousing the same policy, saw the possibility for some flexibility, permitting an eventual consensus. Some members referred to domestic limits on public spending and reiterated the need for FAO budget to reflect realistically the resources likely to be available to the Organization. A few members reserved their position until the Conference discussion; others drew attention to the impact of the proposed budget level on assessed contributions of developing countries affected among other factors by the burden of external debt. Many members emphasized that they would have preferred provision for a greater programme increase based on receipts of assessed contributions and stressed they could support the Director-General's proposals despite the modest increase proposed, only on the understanding that they were framed with the intent of generating unanimous approval at the Conference.

36. Taking all these views into account, the Council agreed to submit the Director-General's Programme of Work and Budget to the Conference for consideration for approval and expressed the hope that the Conference would approve the 1990-91 Programme of work and Budget by consensus.

Reports of the Fifty–eighth Session of the Programme Committee; the Sixty-sixth Session of the Finance Committee, and their Joint Session (Rome, 13-29 September 1989)2

- Payment of Assessed Contributions

37. The Council considered the report of the Finance Committee as presented in document CL 96/4 and reviewed the detailed information provided concerning the financial situation of the Organization. The Council commended the quality of the introductory comments made by the Chairman of the Finance Committee and expressed satisfaction on the excellent work performed by his Committee. The Council noted with regret that notwithstanding its solemn calls at its prior Session for Member Nations in arrears to honour their obligations, the rate of receipt of contributions was still highly unsatisfactory.

38. The Council was also informed that while the cash flow situation had been stabilized over the last few weeks, the situation could soon become critical again if no significant additional contributions were received before year–end. In that regard, the Council considered that the Director General could be led to use the authorization to borrow, since he would have to pay for basic and uncontainable expenditure and commitments for which no further cash would be available once the Working Capital Fund and the Special Reserve Account resources were exhausted. However, some members reaffirmed their opposition to the Director-General having recourse to borrowing.

39. The Council expressed the greatest possible concern at the absence of response to appeals for urgent action on the part of those Member Nations who were still in arrears and stated that the Director-General was in an unprecedented situation and needed to take whatever measures were required so as to ensure the survival of the Programme of Work and Budget at a minimal level of implementation and to honour unavoidable commitments and payments due.

40. The Council expressed high regard for the managerial ability of the Director-General and commended the prudent and flexible manner with which, under difficult circumstances, he had controlled the financial situation of the Organization while ensuring that as far as possible the objectives embodied in the Programme of Work and Budget, voted by the Conference, were met.

41. The Council regretted that, even at this dramatic juncture in the existence of the Organization, its appeals were apparently not heard and it felt that the Conference might consider the possibility of adopting a resolution on this subject. Some members did not agree with this proposal.

42. The Council recommended to the Conference that it consider and adopt the following draft Resolution, prepared by the Independent Chairman of the Council :

DRAFT RESOLUTION FOR THE CONFERENCE PAYMENT OF ASSESSED CONTRIBUTIONS

THE CONFERENCE,

Recalling that, in accordance with Financial Regulations 5.5, assessed contributions to the budget of the Organization by all Member Nations were due and payable in full within 30 days of the receipt of the communication of the Director-General, or as of the first day of the calendar year to which they relate, whichever is the later,

Noting that the requests of the Director-General to Member Nations to remit all contributions and advances due were sent on 1 December 1988 and that payments were therefore due as from 1 January 1989,

Noting that by 7 November 1989 only 66.8 percent of the total 1989 assessment had been collected and that the cumulative total of 1989 contributions outstanding and of the prior years' arrears amounted to US$174.7 million, which represents 72.4 percent of 1989 assessed contributions,

Regretting that in spite of the repeated reminders by the Director-General and appeals by the Council, the level of unpaid contributions and arrears has dramatically increased over the last four years,

Being seriously concerned that the amount of unpaid contributions and arrears due to the Organization is the highest ever experienced by the Organization at this time of the biennium,

Recognizing the principle of non-discrimination among Member Nations concerning arrears and unpaid contributions, but at the same time being aware that the impact on the Organization's finances of non-payment varies with the considerable differences of the rates of contribution ranging from the minimum to the maximum rates of assessment, so that non-payment by a few of the largest contributors is far more serious than in the case of several at the lower levels of contribution,

Recalling that the Director-General had been obliged to cut programmes and costs during 1987 and 1988 amounting to some US$ 45 million, and that during the 1988–89 biennium an additional US$ 23 million in unanticipated costs related to staff had had to be absorbed with additional damage to approved programmes, so reducing further the capacity of the Organization to respond to the requirements of Member Nations,

Noting that Council Resolution 280 authorizing the Director-General, in case of need, to borrow monies to the extent necessary had not so far been used:

1. Addresses a solemn request to all Member Nations with current contributions outstanding and contributions in arrears urgently to honour their commitments to both the Organization and the other Member Nations which have contributed in a timely way, so as to ensure implementation of the Programme of Work and Budget voted by the Conference;

2. Requests all Member Nations to provide information to the Organization early each year as to the amount and timing of expected payments;

3. Requests the Council and the Finance Committee to study in depth the subject of contributions outstanding and in arrears and to submit recommendations with a view to proposing possible courses of action and to assess requirements in terms of the legal and other instruments that would assist the Director-General in his mandatory responsibility to ensure the implementation of the approved Programme of Work and Budget in similar adverse financial conditions.

43. The Council recalled that the Conference, through its Resolution 18/87, had requested the Director-General to report on measures to be adopted to distribute interest-credited to Miscellaneous Income to Member Nations, on a weighted basis, in accordance with the amount and timing of their payments.

44. In this respect the Council noted that since there would be no cash surplus arising out of the 1988-89 biennium, there would therefore be no allocation of interest income or distribution in the 1990-91 biennium.

45. The Council was informed that following an independent actuarial review of the Compensation Plan Reserve Fund, a slight reduction in the rates of contribution applied to staff cost to fund the Compensation Plan Reserve Fund was approved by the Finance Committee.

46. The Council noted the report on the results of the Cost Measurement System for 1988 and recognized the usefulness of this exercise, mainly in relation to the UNDP (United Nations Development Programme) "successor" support cost arrangements now being developed.

47. The Council was also informed of the latest developments regarding the implementation of FINSYS/PERSYS (Budget and Financial Management System/ Personnel Management System) and noted that the project was proceeding on schedule.

- Financial Position of the Organization3

(a) Status of Contributions to the Budget

48. The Council noted the status of contributions at 7 November 1989, compared to the same date in 1988, as well as the details of amounts received from each Member Nation during 1989 and of outstanding contributions, as shown in Appendix D to this Report.

49. The Council also noted that five countries had paid their contributions in full (Algeria, Angola, Congo, Mexico and Myanmar) and one country (Brazil) had paid part of its arrears, between 23 October and 7 November 1989. Thus, the position was as follows:

^a/ Appendix D sets out full details of receipts during 1989,(US$176 024 953.37 and outstanding contributions of all Member Nations.

^b/ Contributions in arrears exclude arrears payable under Conference authorizations by instalments due in 1989 (in 1988 in comparative figures) and in future years (on 1 January 1989, US$43 933.96 due in 1989 and US$223 891.02 due in future years).

^c/ of which US$600 000.00 relates to the Tax Equalization Fund.

(b) Current Assessments (details of amounts received and amounts outstanding are listed in Appendix D)

^a Includes US$17 354 871.34 (8.73% of 1987 assessments) as distribution of the cash surplus of the à984–85 biennium applied as of 1 January 1987.

^b Includes US$41 005 487 00 (20.73% of 1985 assessments) as distribution of the cash surplus of the 1982–83 biennium applied as of 1 January 1985.

^c Receipts at 7 November; preceding years at month-end as well as at 31 December.

51. At 7 November 1989, the position of Member Nations (and the number of Member Nations with arrears) with comparative figures at the month-end during the preceding four years, was as follows :

^c To facilitate comparisons, applications of the cash surplus (9.20%) to the current assessments of 80 Member Nations are excluded from the number of Member Nations.

^d To facilitate comparisons, applications of the cash surplus (20.72%) to the current assessments of 84 Member Nations are excluded from the number of Member Nations.

Percentages of Current Assessments Received

(Cumulative - year to date)

52. The Council was informed that receipts at 7 November 1989 of the 1989 assessments were slightly more favourable than those of 1988 and 1986, comparable years without a cash surplus distribution.

53. Only 65 Member Nations had paid their assessments in full, while 24 Member Nations had made only a partial payment, leaving 69 Member Nations who had made no cash payment at all in 1989.

(c) Contributions in Arrears (Appendix D sets out details of amounts outstanding)

54. In this connection, the Council noted with great concern that, at 7 November 1989, a total amount of US$94 793 803.64 of arrears of contributions remained outstanding, including US$78 090 211.57 overdue from the largest contributor. As at 7 November 1989, 54 Member Nations had made cash payments, of which 31 had paid their arrears in full. Amounts of more than 1 million were due from six Member Nations, totalling US$89 120 801.00 and representing 94.01 percent of arrears outstanding.

(d) Replenishment of the Special Reserve Account and Advances to the Working Capital Fund

55. Of the total amounts due at 1 January 1989 amounting to US$4 461 624.57 and US$4 570 143.12^arespectively, 77 Member Nations had made cash payments as at 7 November 1989, leaving balances of US$3 791 296.19 and US$2 181 359.82 respectively outstanding on 7 November 1989.

(e) Need for All Member Nations to Pay Contributions

56. The Council noted with very great concern that notwithstanding the positive response made by many Member Nations to the Director-General's special appeals for payment of their arrears and outstanding contributions, 93 Member Nations had made no payment, or only partial payment of 1989 assessed contributions, and that 53 Member Nations were in arrears for 1988 and prior years, and that there was no definite information available regarding the date and payment schedules for the assessments due from the largest contributor and other debtor countries.

57. The Council requested Member Nations to advise the Director-General as soon as possible concerning the expected amounts and timing of their payments of contributions and arrears outstanding.

58. The Council therefore expressed its very serious concern about the critical effects of the situation on the programmes of the Organization and urged all Member Nations concerned to pay outstanding arrears and current assessed contributions in full as soon as possible.

(f) Voting Rights

59. The Council noted that 14 Member Nations might lose their right to vote at the forthcoming Session of the Conference.

60. In this connection, it had been announced that telegraphic appeals for prompt payment in September and a last appeal in October 1989 had once again been sent by the Director–General.

- Appointment of the External Auditor 4

61. The Council recalled that in conformity with Financial Regulation 12.1, it had to appoint the External Auditor, since the tenure of office of the current incumbent, the Comptroller and Auditor General of the United Kingdom, was terminating with the audit of accounts for the biennium 1988–89.

62. The Council considered the recommendation made in this regard by the Finance Committee. It noted that the Committee had reviewed the candidatures of the French Cour des Comptes and of the current incumbent, and had found both to be eminently professional and demonstrably able to perform an audit of the highest professional standard.

63. The Council was informed that the professional approaches proposed by these Auditors were significantly different in respect to the practical organization of their work. One main difference was that the present External Auditor gave high importance to "value–for–money" audits, which the Organization and its governing bodies had come to appreciate.

64. The Council was informed by the Finance Committee that a change from the current audit system to a new system as proposed by the French Cour des Comptes, might have a negative impact on the Organization while a prolonged financial crisis was having serious effects.

65. The Council considered that the French Cour des Comptes had made an excellent presentation and expressed the hope that it would maintain its interest in providing audit services to the Organization when the matter of appointment of the External Auditor would be considered again for the accounts for the 1992-93 biennium.

66. The Council, on the proposal of the Finance Committee, adopted the following resolution:

Resolution 1/96
APPOINTMENT OF THE EXTERNAL AUDITOR

THE COUNCIL

Noting that the Finance Committee recommends the re-appointment of the Comptroller and Auditor General of the United Kingdom as External Auditor of the Organization;

Recognizing the need and importance of the function of External Auditor to review and certify the Accounts of the Organization;

Decides to re-appoint the Comptroller and Auditor General of the United Kingdom as External Auditor of the Organization for a period of two years, commencing with the audit of accounts for the year 1990.

- Treatment of Profit and Loss on Exchange 5

67. The Council reviewed the proposal of the Director-General which had been endorsed by the Finance Committee regarding the treatment of profit and loss on exchange.

68. The Council noted that such profit and loss on exchange resulting from purchases and from re-evaluation of holdings of non-US dollar currencies were charged to Chapter 5 of the Budget. It also noted that in the last four years the Organization had suffered considerable losses on exchange due to the fall in value and instability of the US Dollar.

69. The Council recalled that Conference Resolution 13/81 had authorized the Director-General to use funds in the Special Reserve Account to finance un– budgeted extra costs due to movements of currency exchange rates. The Council considered that the Finance Committee's examination of the Director-General's proposal to transfer to the Special Reserve Account the profit and loss on exchange which had previously been charged to Chapter 5, was consistent with the thrust of Conference Resolution 13/81.

70. The Council recognized that such a measure would improve the protection of the Programme of Work and Budget against uncertainties of exchange rates and improve the conditions of its implementation.

71. The Council consequently approved the Director-General's proposal and recommended the following draft resolution for adoption by the Conference.

DRAFT RESOLUTION FOR THE CONFERENCE
TREATMENT OF PROFIT AND LOSS ON EXCHANGE

THE CONFERENCE,

Recalling its Resolution 13/81 on the Special Reserve Account,

Recognizing that the above-mentioned Resolution directs the Director-General to credit to the Special Reserve Account any savings on staff costs arising from favourable differences between the Lira exchange rate used in calculating the budget and the effective UN rate,

Further recognizing that the above-mentioned Resolution authorizes the Director-General to use the funds in the Special Reserve Account inter alia, to finance budgeted extra costs due to movements of currency exchange rates,

Noting that profits and losses on exchange, arising from the purchase of non-UN Dollar currencies and from the revaluation of such currencies as a result of changes in the UN operational rate of exchange are charged to Chapter 5 of the Budget,

Recognizing that these profits or losses on exchange can reach substantial amounts and can either jeopardize the implementation of the Programme of Work, and Budget and/or need to be subjected to an improved budgetary and accounting process:

1. Decides to deal with profits/losses on exchange under the Special Reserve Account;

2. Directs the Director-General to credit such profits and debit such losses on exchange to the Special Reserve Account;

3. Decides that the measure shall be applied to the Regular Programme Accounts for 1988-89 and in future biennia.

- Staff Commissary Support Cost Reimbursement6

72. The Council noted from the Finance Committee Report, that the indirect costs of servicing the Staff Commissary were reimbursed to the Organization since 1971 through charging 0.5 percent on total sales, with an equal amount being contributed by the Commissary to the Staff Welfare Fund.

73. The Council also noted that this level of reimbursement of support costs was not adequate to cover actual costs incurred by the Organization with respect to all services provided to the Commissary.

74. In view of the need to avoid a subsidy to the Commissary from the Regular Programme, the Council recommended the following draft resolution for adoption by the Conference:

DRAFT RESOLUTION FOR THE CONFERENCE
STAFF COMMISSARY SUPPORT COST REIMBURSEMENT

THE CONFERENCE

Having noted that for 1988, in accordance with Resolution 29/71 the Staff Commissary transferred an amount of Lit. 53 315 000 equivalent to US$ 39 500 to the Organization in payment for indirect services and facilities made available to it during that year;

Recognizing that the level of such reimbursement as established under Resolution 29/71 is not adequate to cover actual related costs incurred by the Organization;

Decides that with effect from 1 January 1988

1. all actual indirect services rendered, and facilities made available, by the Organization to the Staff Commissary shall be estimated and charged as expenses of the Commissary operation; and

2. the equivalent of 0.5 percent of the total sales and any net profits of the Commissary shall continue to be transferred to the Staff Welfare Fund as heretofore, for use in accordance with policies and procedures to be developed jointly by the Director-General and the Staff.

- Gift by Small Farmers of Indonesia7

75. The Council noted with satisfaction the statement by the Director-General that FA0 had received during the Session a gift of US$ 1 million from 300 000 small farmers of Indonesia. Each one had donated 5 to 10 kg of paddy rice which had then been sold. The money would be used by FAO to fund small projects for small farmers.

-Personnel Matters

(a) Statistics of Personnel Services

(b) Allowance for the Chairman of the Appeals Committee

- Matters Relating to UNDP8

80. In noting that UNDP was preparing proposals for new agency support cost reimbursement arrangements, the Council underlined the importance of this for the Organization's field programmes. It emphasized that FAO, including its governing bodies, should continue to be closely associated with the development of the new arrangements, which were intended to come into effect in 1992.

81. The Council noted that the report of the UNDP–funded expert team on this matter would only be available in early December (1989), and that FAO would have a chance to comment on the contents of this report prior to its submission to the Special Session of the UNDP Governing Council in February 1990, and the full UNDP Governing Council session in June 1990. It was also noted that the UNDP current plan was to make these decisions in June 1990 in the context of the preparations of the fifth programming cycle of the UNDP. In this connection, note was taken of the recent ACC (Administrative Committee on Coordination) decision (1989/29) to bring the issue of the timetable to the attention of the UNDP Governing Council with a view to allowing governing bodies of the Executing Agencies to deal with any possible budgetary and organizational implications of the proposals advanced by the UNDP experts group on this subject. The Council also noted the concern of the Programme and Finance Committees about the subsidizing of field programmes from the Regular Programme and the view that any new UNDP support cost arrangement would need to be fully discussed by a few governing bodies. Accordingly, the Council underlined the importance of careful consideration of the matter by the FAO Programme and Finance Committees at their sessions in May 1990, and ultimately by the Council itself at its Ninety–eighth Session in November 1990.

Conclusions of the Review of Certain Aspects of FAQ's Goals and Operations 9

82. The Council agreed that the report of the Programme and Finance Committees on FAO's Objectives, Role, Priorities and Strategies and FAO's Field Operations conformed with the requirements of Resolution 6/87 as adopted by the Twenty-fourth Session of the Conference. The report was candid, in-depth and well presented and its recommendations were constructive. The report was the cooperative effort of the Committees and the Experts, and the Secretariat had provided all the assistance required. The Council congratulated the members of the Programme and Finance Committees, and particularly the two Chairmen, on the completion of a very complex assignment entrusted to them by the Conference.

83. The Council welcomed the valuable comments of the Director-General on the findings and recommendations of the Committees' report as stipulated in paragraph 4 of Resolution 6/87. It noted that the Director-General was in agreement with many recommendations of the Committees. In a few cases, the Director-General had amplified the issues raised by the Committees and had submitted his own suggestions for the consideration of the Council and the Conference, namely increased cooperation with GATT, staff training, more consultation with Rome-based UN agricultural organizations and the elimination of the Summary PWB. The comments of the Director-General were appreciated by the Council.

84. The Council generally endorsed the findings and recommendations of the Committees' report. However, the report, as also the discussion in the Council on it, had shown divergencies of some members on certain aspects, most notably on the issues of comparative advantage, priority setting and the issue of resources to implement the report's recommendations. The Council recommended that these recommendations, and in particular the divergencies, required priority attention by the Conference. While recognizing that the process for improving systems and approaches was a continuing one, the Council concluded that the Review exercise should not be prolonged and that the time had come to act on the recommendations in so far as they were endorsed by the Conference.

85. The Council was pleased to note that the reports of the Committees and the Experts had confirmed that FAO was a sound, healthy, solid and dynamic Organization, despite the recent financial difficulties. Some members noted however that, although they agreed that FAO was basically a solid and dynamic institution, the Committees had identified a number of areas where the efficiency of FAO could be improved.

86. The Council endorsed the conclusion of the Committees that the aims and objectives pursued by the Organization were consonant with the Preamble to FAO's Constitution and relevant to Article I. It agreed that the Constitution of FAO remained valid.

87. The Council endorsed the significance of the three major roles of FAO, i.e. (i) centre for global information on food, agriculture and nutrition, (ii) forum for policy formulation and action and (iii) the promoter and provider of technical assistance. All three roles were of vital importance to Member Nations and consonant with the mandate of FAO and all three deserved high priority. The Council concluded that the three major roles were interlocked and their unity of purpose was unquestionable, although there was room to increase coordination in the interest of mutual strengthening.

88. The Council did not reach conclusions on the prioritization of the Committees' recommendations for implementation nor their methods of financing. Some members expressed the view that additional funding for the implementation was not acceptable and therefore that the costs of implementing the recommendations could be borne by the cancellation of some activities and readjustments in the budget. The majority of members did not accept this view. They stressed that the Organization was in great financial difficulties because of the significant amount of sums of the outstanding contributions.In their view there was no room for flexibility in the PWB to accommodate the order of the costs involved and they recalled the Director-General's statement to the Council, in response to questions which were put to him, about the huge amount of outstanding contributions (US$ 175 million) and US$ 100 million in outstanding obligations. Moreover, the Special Reserve Account and the Working Capital Fund would again be exhausted at the end of the year. They emphasized that if the unpaid contributions and extrabudgetary resources were not received by the Organization, the prospects for implementing the recommendations were dim.

89. The Council recognized the need for reaching a consensus on the final recommendations of the Review and on their subsequent implementation. It stressed that such a consensus would pave the way for the drafting of a Conference resolution on the Review. In this connection, some members felt that in view of the limited time available, it was advisable to establish immediately at least an informal means of intensive dialogue and a formal contact group as soon as the Conference begins its work to facilitate reaching a consensus as well as considering a few other matters not dealt with by the Committees. The Council heard a variety of new ideas proposed by a number of members. A number of members recommended that these ideas be considered in the review process. However, the majority of members emphasized that discussion on this topic should be held within the confines of Resolution 6/87. They also considered it premature to establish a contact group as requested by some members prior to the crystallization of the debate on the Review in Commission II.

90. The Council noted with appreciation the results of the Management Review, commissioned on the initiative of the Director-General and approved by the Programme and Finance Committees. It agreed that matters arising from it would be pursued in the Finance Committee, on the basis of the Conference discussion of the FAO Review.

Second Report on Unscheduled and Cancelled Sessions in the 1988–89 Biennium 10

91. The Council noted that since its Ninety-fourth session (15-26 November 1988) a further 20 unscheduled sessions had been approved and 56 sessions had been cancelled, making a total for the biennium of 32 unscheduled and 101 cancelled sessions. The Council expressed its regret about the large number of sessions which had to be cancelled due to the programme adjustments resulting from the financial difficulties.

92. Details of unscheduled sessions approved and of the sessions cancelled since the Ninety-fourth Session of the Council are given in Appendix E.

¹ C 89/3; C 89/3-Sup.1; C 89/3-Sup.2; C 89/3-Sup.3; C 89/3-Sup.4; CL 96/4;CL 96/PV/1; CL 96/PV/2; CL 96/PV/3; CL 96/PV/10.

² CL 96/4; CL 80/4 paras. 3.62 – 3.73; CL 96/PV/4; CL 96/PV/10

³ CL 96/4; CL 96/LIM/1; CL/96/PV/4; CL 96/PV/10.

^c Of which US$600 000.00 relates to the Tax Equalization Fund.

^a Of which US$1 567 143.12 from 1988 call and US$3 003 000.00 from 1989 call.

⁴ CL 96/4 - paras. 3.80-3.87; CL 96/PV/4; CL 96/PV/10.

⁵ CL 96/4 - paras. 3.50-3.56; CL 96/PV/4; CL 96/PV/10.

⁶ CL 96/4, paras 3.74–3.79; CL 96/PV/4; CL 96/PV/10.

⁷ CL 96/PV/4; CL 96/PV/10.

⁸ CL 96/4, paras 2.119-2. .124 and 3.72-3.73; CL 96/PV/4; CL 96/PV/10.

⁹ C 89/21; C 89/21–Sup.l; CL 96/2; CL 96/PV/5; CL 96/PV/6; CL 96/PV/7; CL 96/PV/8; CL 96/PV/10.

¹⁰ CL 96/3; CL 96/PV/8; CL 96/PV/10.