31. The Council noted that the document had been examined in depth by the Programme and Finance Committees at their Sixty-third and Seventy- second Sessions, respectively. It further noted that both Committees had found the document satisfactory both as regards presentation and content, and that it provided an informative and analytical assessment of Regular Programme implementation, with evaluation of four selected Sub-programmes in Part Two and the in-depth review of technical cooperation networks in Part Three.
32. The Council recalled that Member Nations would have the opportunity to consider the document at the Twenty-sixth Session of the Conference. In order to facilitate that debate, the Council agreed to draw to the attention of the Conference the detailed observations of the Programme and Finance Committees on the Review.
33. The Council recognized that the Medium-Term Plan 1992-97 had been the object of careful consideration by the Programme and Finance Committees at their September 1991 sessions, and that all Member Nations would have the opportunity to address it extensively during the forthcoming discussions in Commission II of the Conference. It, therefore, recommended that the views of the Programme and Finance Committees be made available to the Conference in a LIM document in order to facilitate these discussions.
34. Accordingly, while recognizing that the Medium-Term Plan was one of the key outcomes of the FAO Review, the Council did not engage in a detailed examination of the document. Brief references were made regarding the format of future versions of the document on the basis of the two options suggested by the Director-General. One member supported the concept embodied in Option 1 of a thorough examination of the Organization's long-term priorities at periodic six-year intervals, to be complemented by interim revisions between successive full-scale versions of the Plan. Another member suggested that the matter should be deferred for consideration by the Conference before ruling on a definitive formula for future versions, as it could possibly decide to continue the present format for the next edition.
Programme of work and Budget 1992-93
3
35. The council considered the programme of work and Budget 1992-93 together with views of the programme and finance committees, as contained in the reports of their individual and joint sessions. The council concurred with the two committees in expressing appreciation for the improvements in the format of the document. Members underlined that more extensive and substantive interventions would be made on the subject by country representatives during Commission II of the Conference.
36. The Council recalled its consideration of the proposals in the Summary Programme of Work and Budget at its Ninety-ninth Session (10-21 June, 1991). It reiterated its broad endorsement of the approach followed by the Director-General in proposing areas of increased, as well as areas of reduced, resources. The Council noted that the framework of no real programme growth had been continued in the full Programme of Work and Budget. In this connection, many members stressed their opposition in principle to zero-growth for an international organization like FAO, in view of the magnitude of requirements for assistance particularly in developing countries. They were, however, prepared to set these objections aside for the sake of facilitating consensus on the budget. Other members recalled their governments' pursuit of a policy of zero net programme growth for organizations of the UN system and were, accordingly, pleased to observe that this aspect had been retained in the Programme of Work and Budget.
37. The Council reiterated its broad support for the choice of major programme priorities such as: environment and sustainable development, biological diversity including plant genetic resources, policy advice, women-in-development, forestry, the World Agriculture Information Centre and the International Conference on Nutrition. The proposed further strengthening of FAO country offices and enhanced cooperation with other international organizations and non-governmental organizations were also supported. Several members, however, expressed regret with the cuts that had been necessary in a number of substantive areas. Members of the Asia and Pacific Region recalled their request that work on a study covering their region should at least be initiated in the 1992-93 biennium.
38. While welcoming the net increase proposed for the Technical Cooperation Programme (TCP), the majority of the members reiterated their disagreement with the percentage of the TCP appropriation to the proposed overall budget remaining at the current level of 11.9 percent which they considered too low. They were particularly concerned that the terms of Conference Resolution 9/89, inviting the Director-General to make every effort in order to restore the resources available to the TCP to the former level of 14 percent of the total Regular Programme Budget and, if possible, to raise it to 17 percent, had not been fulfilled. Some members considered the US$ 4 million programme increase for the TCP to be excessive, resulting in reductions in equally valuable substantive areas.
39. The Council considered the Director-General's proposal for a system of indicative country allocations under the TCP after setting aside reserves for contingencies and emergency and regional projects, as outlined in the Programme of Work and Budget. The majority of the members underlined that the flexibility of the TCP represented one of the main strengths of the programme. They, therefore, saw no need to introduce modifications to the present operating procedures of the TCP. Some members expressed the hope that the regional breakdown under the TCP would be kept in view so as to closely reflect effective requirements for assistance.
40. During the discussion, the Council addressed the issue of the Outline Programme of Work and Budget, as well as the broader proposals regarding FAO's programme budget process submitted by the Director-General and discussed by the Programme and Finance Committees at their last sessions. Therefore it recognized that it would revert to these questions when considering the reports of the latter Committees.
41. The Council noted that the updating of cost increase estimates on the basis of the established methodology had led to a reduction of the overall provision for cost increases by over US$ 4 million. Some members considered that further reductions in the cost increase estimates were possible. However, the majority of the members underlined that it was essential to protect the integrity of approved FAO programmes against factors which were beyond the Organization's control. They accordingly rejected any further absorption of cost increases the result of which would be tantamount to negative growth.
42. In connection with the lapse factor, the Council recalled that the 3 percent rate, decided by the Twenty-fifth Session of the FAO Conference, had been used in the preparation of the 1992-93 budgetary estimates. The majority of the members supported the notion of maintaining the lapse factor at its present level, particularly bearing in mind the objective of effective implementation of the approved programme. Some members considered that the continuation of the 3 percent rate was not justified in view of the cost involved, and stressed their expectation of a return to a higher rate that would take account of effective vacancy rates.
43. The Council expressed appreciation for the efforts of the Director-General to try and reconcile conflicting requirements and to achieve consensus approval of the Programme of Work and Budget 1992-93. Several members reiterated their government's position on the issue. On the whole, the Council felt that the proposals reflected a delicate compromise and, as such, were very close to permitting an eventual consensus.
44. In the light of all the views expressed, the Council agreed to commend the Director-General's Programme of Work and Budget to the Conference. It looked forward to fruitful deliberations in Commission II with the objective of consensus approval of the 1992-93 Programme of Work and Budget.
45. The Council noted that the Programme and Finance Committees had carried out a thorough examination of FAO's programme budget process on the basis of a document submitted by the Director-General. It further noted that the Committees had addressed two aspects:
- the establishment of the Outline Programme of Work and Budget as a permanent feature of the process, which the Committees had recommended unanimously for endorsement by the Conference; and
- suggestions from the Director-General with a view to streamlining the entire programme budget process.
46. Several members recalled views expressed on earlier occasions regarding the merits of the outline procedure. Some members reiterated their positive appreciation of its usefulness and noted the need to give it a permanent character. Others recalled their expectation that this procedure, introduced on an experimental basis during the 1990-91 budgetary exercise and reconducted during the 1992-93 exercise, should lead to lasting improvements in the financial situation of the Organization and consensus approval of the budget. Some members reiterated their reservations on the presentation of the Outline. They felt that any decision on the matter should be taken after the Conference had decided on the Budget. The Council recognized that the Conference would need to deliberate and decide on the matter. It noted, in this connection that the following draft Resolution dealing with eventual related amendments to the Basic Texts had been examined by the Committee on Constitutional and Legal Matters (CCLM) at its just-concluded session and would be forwarded to the Conference:
AMENDMENTS TO THE BASIC TEXTS OUTLINE PROGRAMME OF WORK AND BUDGET
THE CONFERENCE,
Recalling that a new step of an Outline Programme of Work and Budget had been introduced in the programme budget process, on an experimental basis, by the Council at its Ninety-fourth Session in November 1988 for the preparation of the Programme of Work and Budget for the 1990-91 biennium,
Recalling its decision at its Twenty-fifth Session in November 1989 to continue the programme budget process implemented on an experimental basis for the preparation of the Programme of Work and Budget 1990-91 for at least another biennium,
Noting with satisfaction that the Outline Programme of Work and Budget has proved useful in facilitating early dialogue on budgetary proposals and in paving the way for consensus on the Programme of Work and Budget at its present session,
Noting the recommendation of the Council at its One Hundredth Session in November 1991, based on the joint recommendation of the Programme and Finance Committees at their Joint Session in September 1991, that the Outline step be continued and that it be incorporated in the Basic Texts of the Organization so as to make it a permanent feature of FAO's programme budget process:
Adopts the following amendments to the General Rules of the Organization (GRO) and the Financial Regulations (FR):
(a) The word "outline" is inserted before the words "summary and draft Programme of Work and Budget" in the following provisions of the General Rules of the Organization:
(i) Rule XXVI, paragraph 7(a) (ii) GRO;
(ii) Rule XXVIII, paragraph 3 GRO.
(b) Rule XXVIII (GRO) is amended by inserting a new Paragraph 1 to read as follows and renumbering the following paragraphs accordingly:
"1. Early in the second year of the biennium, the Programme Committee and the Finance Committee shall hold a joint meeting to consider the Outline Programme of Work and Budget submitted by the Director-General for the following biennium, and to make recommendations for the Director-General's consideration on the level of the budget and the main activities of the programme."
(c) Rule XXXVII, paragraph 2(g) (GRO) is amended to read as follows: "2. In particular, the Director-General shall, ...
(a) •••
(b) •••
(c) •••
(d) •••
(e) •••
(f) •••
(g) prepare,
(i) in the light of guidance given by the Conference and Council at its previous sessions and by regional and technical conferences, commissions or committees, an Outline Programme of Work and Budget for consideration by the Programme and Finance Committees, and a summary Programme of Work and Budget for consideration by the Programme and Finance Committees, other appropriate organs of the Organization, and the Council, and ..."
(d) Financial Regulation 3.5 is amended to read as follows:
"The Director-General shall arrange for the outline budget to be considered by the Programme and Finance Committees early in the Conference year and for the summary budget to be considered by the Council not less than 90 days before the date fixed for the opening of the regular session of the Conference."
Words underlined to be added.
47. With regard to the proposals put forward by the Director-General for streamlining the programme budget process, the Council endorsed the positive reaction of the Programme and Finance Committees. It supported the Committees' recommendation that the Conference approve the proposed implementation measures on an experimental basis during the 1992-93 biennium, and for the 1994-95 budgetary exercise.
48. The Council decided that its own views and those of the Programme and Finance Committees, together with the related document submitted by the Director-General, should be made available to the Conference as a LIM document, in order to facilitate consideration of the matter during the Commission II proceedings.
49. The Council noted the view of the CCLM, that the Resolution amending the General Rules of the Organization regarding the programme budget process was in order from a legal point of view, and concluded that there were no legal objections to the transmittal of the draft Conference Resolution to the Conference for adoption.
Review of Field Programmes 1990-91
5
50. The Council recalled that the review of FAO's field programmes had been a long and comprehensive process. Many aspects of the review had been thoroughly scrutinized by the Programme and Finance Committees, as reflected in their report.6
51. The Council noted the large amount of information contained in the documentation provided, and expressed its appreciation to the Secretariat for the efforts made to present a complete picture of FAO's field programmes, covering such issues as - among others - policy advice, project implementation and evaluation, and the highly important subject of UNDP support costs successor arrangements.
52. The Council commended FAO on its role and contribution in the inter-agency collaboration and encouraged the continuation of this process in order to arrive at an appropriate formula to enable the application of the new arrangements.
53. The Council recalled that Member Nations would have the opportunity to consider the subject in greater detail at the Twenty-sixth Session of the Conference.
Implementation of the Review of Certain Aspects of FAO's Goals and Operations
7
54. In line with Conference Resolution 10/89, the Council considered the Report of the Director-General to the Conference together with the views of the Programme and Finance Committees to which the Report had also been submitted at their last September sessions.
55. The Council concurred with the two Committees in noting with satisfaction the progress made in implementing the Conference recommendations linked to the FAO Review in a number of important areas, despite the exceptional financial constraints which affected the Organization in the present biennium. It was observed that putting the Organization back on an assured and stable financial basis would give further impetus to the follow-up of the FAO Review.
Second Report on Unscheduled and Cancelled Sessions in the 1990-91 Biennium
8
56. The Council reviewed the Annual Report on Unscheduled and Cancelled Sessions and noted that since its Ninety-eighth Session (19-30 November 1990) a further 16 unscheduled sessions had been approved and 66 sessions had been cancelled, making a total for the biennium of 43 unscheduled and 84 cancelled sessions.
57. Details of the unscheduled sessions approved and of the sessions cancelled since the Ninety-eighth Session of the Council are given in Appendix D.
Financial Position of the Organization9 - Collection of Assessed Contributions (Outstanding and in Arrears)
58. The Council was informed that the financial position of the Organization had deteriorated since the Ninety-ninth Session of the Council (10-21 June 1991) due to the increasing amount of arrears of contributions and the delayed payment of contributions by certain Member Nations. The Secretariat stated that the two largest contributors accounted for approximately 38 percent of the total assessment. It explained that any delay of payment on the part of these two countries made the Organization's financial position extremely precarious. The Secretariat had felt that this left the Organization with only two solutions: to have adequate funds in the Working Capital Fund and Special Reserve Account or to exercise the authority to borrow. The Secretariat stated that since both the Working Capital Fund and the Special Reserve Account had been exhausted, the Administration of the Organization had been compelled to resort to borrowing.
59. The Council noted the status of contributions at 5 November 1991, compared to the same date in 1990, as follows, as well as the details of amounts received from each Member Nation during 1991 and of outstanding contributions, as shown in Appendix E to this Report.
(for comparison) |
||
|
1991 |
1990 |
|
________ |
||
|
US $ |
US $ |
|
|
Amounts outstanding at 1 January Current assessments Contributions in arrears Total |
278 750 000.00 c 162 518 104.25 441 268 104.25 |
278 750 000.00 c 150 863 173.02 429 613 173.02 |
|
Receipts 1 January to 5 November Current assessments Contributions in arrears Total |
219 461 882.35 24 399 031.82 243 860 914.17 |
185 274 390.37 17 786 615.28 203 061 005.65 |
|
Amounts outstanding at 5 November Current assessments Contributions in arrears Total |
59 288 117.65 138 119 072.43 197 407 190.08 |
93 475 609.63 133 076 557.74 226 552 167.37 |
a/Appendix E sets out full details of receipts during 1991, (US$243 860 914.17) and outstanding contributions of all Member Nations.
b/Contributions in arrears include arrears payable under Conference authorizations by instalments due in 1991 (in 1990 in comparative figures) and in future years (on 1 January 1991, US$37 139.54 due in 1991 and US$136 664.32 due in future years).
c/of which US$350 000.00 relates to the Tax Equalization Fund.
60. The month-end cumulative percentages of 1991 assessments received during more than ten months of 1991, as compared to receipts during the preceding four years, were as follows s
|
Cumulative - year to date |
|||||
|
1991 |
1990 |
1989 |
1988 |
1987 a |
|
|
% |
% |
% |
% |
% |
|
|
January |
6.29 |
13.33 |
9.81 |
7.01 |
10.41 |
|
February |
30.57 |
27.33 |
24.28 |
20.62 |
24.25 |
|
March |
35.41 |
35.55 |
31.25 |
31.10 |
32.40 |
|
April |
36.88 |
39.16 |
34.60 |
33.92 |
44.75 |
|
May |
43.66 |
45.98 |
41.31 |
43.51 |
50.38 |
|
June |
46.18 |
46.27 |
45.82 |
53.03 |
61.00 |
|
July |
48.26 |
48.51 |
48.24 |
54.38 |
63.25 |
|
August |
51.34 |
49.29 |
48.38 |
60.96 |
63.78 |
|
September |
51.94 |
52.70 |
62.73 |
61.92 |
64.47 |
|
October |
78.73 |
66.31 |
65.75 |
65.20 |
65.77 |
|
November |
78.73 b |
79.77 |
67.30 |
76.00 |
66.15 |
|
December |
88.10 |
74.83 |
76.65 |
66.17 |
|
a/ Includes US$17 354 871.34 (8.73% of 1987 assessments) as distribution of the cash surplus of the 1984-85 biennium applied as of 1 January 1987.
b/ Receipts at 5 November; preceding years at month-end as well as at 31 December.
61. At 5 November 1991, the position of Member Nations (and the number
of Member Nations with arrears) with comparative figures at the same date during the preceding four years, was as follows:
Number of Member Nations
|
Current Assessments |
Arrears |
|||||
|
% |
Paid in |
Part |
No |
|||
| Received | Full | Paid | Payment | Total | ||
|
1991 |
78.73 |
59 |
24 |
74 |
157 |
73 |
|
1990 |
66.47 |
56 |
27 |
74 |
157 |
47 |
|
1989 |
66.81 |
65 |
24 |
69 |
158 |
53 |
|
1988 |
65.40 |
73 |
30 |
55 |
158 |
43 |
|
1987 a/ |
66.00 |
86 |
25 |
47 |
158 |
41 |
a/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.
62. The Council was informed that receipts at 5 November 1991 of the 1991 assessments were more favourable than those of the four previous years compared.
63. However, only 59 Member Nations had paid their assessments in full, while 24 Member Nations had made only a partial payment, leaving 74 Member Nations who had made no cash payment at all in 1991.
64. The Council noted with concern that at 5 November 1991, a total amount of US$138 119 072.43 of arrears of contributions remained outstanding, including US$116 043 879.04 overdue from the largest contributor. As at 5 November 1991, 58 Member Nations had made cash payments, of which 22 had paid their arrears in full. Amounts of more than one million US dollars were due from 7 Member Nations, totalling US$131 293 316.38 and representing 94.99 percent of arrears outstanding.
65. The Council also noted with concern that at 5 November 1991, 23 Member Nations owed arrears in such amounts as could cause them to risk losing their right to vote at the Twenty-sixth Session of the Conference.
66. Some members requested the Council to recommend that the Conference adopt necessary measures in order that the countries which were in arrears and risked losing their voting rights could vote at the next Conference. It was considered that it was unfair to penalize those countries unable to pay for reasons beyond their control.
67. Of the total amounts due at 1 January 1991 amounting to US$3 325 493 and US$1 865 444, respectively, nine Member Nations had made cash payments as at 5 November 1991, leaving balances of US$3 270 102 and US$1 819 869, respectively, outstanding on 5 November 1991.
68. Notwithstanding the Director-General's special appeals to Member Nations for payment of their arrears and outstanding contributions, the Council was informed that 98 Member Nations had made no payment, or only partial payment of 1991 assessed contributions, and 73 Member Nations owed arrears for 1990 and prior years.
69. All Member Nations were therefore urged to pay their outstanding arrears and current assessed contributions in full as soon as possible, in order that the Organization could continue to fulfill its mandate.
70. Furthermore, in view of the critical financial position of the Organization, the Council requested Member Nations to advise the Director-General, as soon as possible, as to the amounts and timing of their expected payment of the contributions and arrears outstanding.
71. 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 1990-91.
72. 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. The Council recognized that both audit organizations were highly professional and were equipped to perform a thorough audit.
73. The Council reviewed the external auditing requirements of the Organization and, in particular, the need for continuity in the External Audit function at this point in time in view of the changes which were taking place in the financial systems. It approved, therefore, the
reappointment of the Comptroller and Auditor-General of the United Kingdom for a further period of two years commencing with the audit of accounts for the year 1991 and adopted the following Resolution:
APPOINTMENT OF THE EXTERNAL AUDITOR
THE COUNCIL,
Noting that the Finance Committee recommends the reappointment of the Comptroller and Auditor-General of the United Kingdom as External Auditor of the Organization,
Recognizing the effective services of the External Auditors
Decides to reappoint the Comptroller and Auditor-General of the United Kingdom as External Auditor of the Organization for a further period of two years commencing with the audit of account for the year 1992.
74. The Council agreed that it was in the interest of the Organization to have the opportunity of recourse to the experience and knowledge of Auditor-Generals of other Member Nations. In this connection the Council requested the Secretariat to submit again for its consideration alternative proposals, including the present External Auditor, for future appointments.
75. The Council noted that Regulation 27 of the Revised General Regulations envisaged that the World Food Programme Fund should continue to be established by the Director-General under Regulation 6.7 of the Financial Regulations of FAO, while the management of the Fund should be governed by separate Financial Regulations to be proposed by the Executive Director of WFP and approved by the Committee on Food Aid Policies and Programmes (CFA) after receiving advice from the UN Advisory Committee on Administrative and Budgetary Questions (ACABQ) and the FAO Finance Committee. Financial Regulation 6.7 provides that:
"… Trust and Special Funds and voluntary contributions shall be administered in accordance with the Financial Regulations of the Organization, unless otherwise provided for by the Conference. …"
76. The Council agreed that a further resolution of the Conference would be required to authorize this exception, in accordance with the provisions of Financial Regulation 6.7, and recommended that the following draft Resolution be submitted to the Conference for adoption:
FINANCIAL REGULATIONS FOR THE WORLD FOOD PROGRAMME
THE CONFERENCE,
Recalling its Resolutions 1/61, 4/65 and 22/75 concerning the establishment and continuance of the UN/FAO World Food Programme,
Noting that the proposed Revised General Regulations endorsed by the Council at its Ninety-ninth Session in June 1991 and submitted to the present session of the Conference for its approval envisage that the World Food Programme Fund should continue to be established by the Director- General under Regulation 6.7 of the Financial Regulations of FAO, while the management of the World Food Programme Fund should be governed by separate Financial Regulations to be proposed by the Executive Director of the World Food Programme and approved by the Committee on Food Aid Policies and Programmes after receiving advice from the United Nations Advisory Committee on Administrative and Budgetary Questions and the FAO Finance Committee, rather than by the Financial Regulations of FAO themselves,
Further noting that Financial Regulation 6.7 provides that Trust and Special Funds and voluntary contributions should be administered in accordance with the Financial Regulations of the Organization, unless otherwise provided for by the Conference:
Decides, for the purpose of Financial Regulation 6.7, that the World Food Programme Fund may be administered in accordance with separate Financial Regulations established by the Committee on Food Aid Policies and Programmes in accordance with the procedures set out in the Revised General Regulations of the World Food Programme.
77. The Council considered the Report of the Committee on Constitutional and Legal Matters (CCLM) on the legal aspects of the proposed Conference resolution authorizing the administration of the WFP Fund in accordance with separate Financial Regulations to be approved by the CFA. The Council also noted that the CCLM had considered the resolution from a strictly formal point of view and concluded that it was legally correct. The Council concluded that there were no legal objections to the transmittal of the resolution to the Conference for adoption.
78. The Council reviewed the proposal submitted by the Director-General and the comments of the Finance Committee. In compliance with the Council directives this proposal did not provide for any penalties, but suggested a discount scheme which would provide a credit to Member Nations for early payment of their assessment.
79. Several members supported the recommendation of the Finance Committee that the scheme be tested on an experimental basis, although it was recognized that the scheme as such might not achieve the desired objectives as it did not tackle the main causes for the late payment of assessments. Other members expressed concern that this approach might lead to the establishment of a level of assessment higher than actually required, or that the discount might exceed the interest earned and jeopardize programme implementation. One member expressed the hope that an effective incentive system could be found while avoiding proliferation of schemes within the UN system. Another member recommended that, in determining the application of the rate of discount, the Director-General should consult the Finance Committee.
80. The Council noted that despite the strong recommendations of the Finance Committee and the Council, the amount of assessed contributions outstanding had reached unprecedented levels, and the Organization was faced with an increasingly serious cash flow situation.
81. The Council was informed that the Director-General would use his authority to borrow only as a last resort. It was not always possible to resort to the Special Reserve Account, the major purpose of which was to protect the Organization against unfavourable movements in the Lira/US dollar exchange from that established for the budget. In this biennium, this reserve had been seriously depleted leaving no margin to offset arrears of contributions. The majority considered it essential to provide for a more adequate Working Capital Fund as the first resort for the non-payment of contributions.
82. The Council reviewed the Director-General's proposal that the Fund be increased to US$25 000 000. It was informed that this would bring it into line with other major UN agencies and would further strengthen the ability of the Organization to implement its Programme of Work without recourse to external borrowing. At this level, the Fund would represent 4.4 percent of the 1990-91 budget.
83. In accordance with Financial Regulation 6.2 (b) the increase would have to be met by an additional assessment on Member Nations. As a result of the significant delays in the receipt of contributions, it was unlikely that a cash surplus would be realized at the close of the 1990-91 biennium from which the proposed increase could be met.
84. Some members could not support the proposal, as it would involve a further assessment. Other members considered that the increase, which would involve an assessment on all Member Nations, would penalize those members who had paid their contributions in a timely manner. One member, whilst not opposing the increase to US$25 million, which would be in line with Joint Inspection Unit (JIU) recommendations, could not agree to a special assessment. This member preferred that other measures be considered to fund increases in the Working Capital Fund, such as the application of cash surpluses. The Conference could review and amend the Financial Regulations to permit this if so required.
85. The majority of members, recognizing the need for a more adequate Working Capital Fund, supported the increase. Some of these expressed concern, however, that the additional assessment would put a further strain on the ability of Member Nations of developing countries and countries experiencing budgetary difficulties to pay their contributions.
86. Taking into account the views expressed, the Council agreed to transmit to the Conference the following draft resolution:
THE CONFERENCE,
Recalling its Resolution 16/87 by which the level of Working Capital Fund was fixed at US$20 000 000 as from 1 January 1989,
Regretting that in spite of the Council's appeals, the rate of receipts of contributions to the Budget have again seriously deteriorated and that this might reflect a continuing pattern,
Recognizing that the present level of the Working Capital Fund which has enabled the Organization to continue to implement its Programme of Work and Budget without recourse to external borrowing several times in recent years,
Noting that the present level of the Working Capital Fund constitutes only 3.52 percent of the present Budget level and that this was lower than in other comparable organizations.
Having examined the recommendations of the Council,
Decides that the authorized level of the Working Capital Fund shall be US$25 000 000 as from 1 January 1992, and that:
(a) Member Nations shall be reassessed in accordance with the provisions of Financial Regulation 6.2 (b) (iv) and (v) as from 1 January 1992 on the basis of the Scale of Contributions for 1992-93;
(b) Notwithstanding the provisions of Financial Regulation 6.1 (b), the portion of each Member Nation's share in any 1990-91 cash surplus as may be needed to bring up its advance to the Working Capital Fund after reassessment to the required level, shall be withheld and applied towards such advance as of 1 January 1992.
87. The Council considered the Report of the CCLM on the legal aspects of the proposed Conference resolutions regarding the resources of the Working Capital Fund. The Council also noted that the CCLM had considered the resolution from a strictly formal point of view and concluded that it was legally correct. The Council concluded that there were no legal objections to the transmittal of the resolution to the Conference for adoption.
88. The Council reviewed the proposal of the Director-General for the replenishment of the Special Reserve Account for 1992-93.
89. The Council was informed of the purposes for which the Special Reserve Account had been established by the Conference, namely to supplement the Working Capital Fund in financing budgetary expenditures pending receipt of contributions from Member Nations; to finance unbudgeted extra costs due to movement of currency exchange rates and profits/losses on exchange; and to finance unbudgeted extra costs of approved programmes due to inflationary trends.
90. The Council was informed that the demands on the Special Reserve Account in the current biennium, to supplement the Working Capital Fund as well as to deal with currency losses, would amount to over US$26 million. As the balance in the Special Reserve Account was limited to US$19.7 million, the entire balance would be used to cover these losses, and the remainder would have to be charged to the General Fund. As a result, the 1992-93 biennium would begin with no resources in the Special Reserve Account. The implementation of the next Programme of Work and Budget would, accordingly, have no protection, unless measures were taken to replenish the Account.
91. The Council reviewed the options for replenishment of the Special Reserve Account, as provided for in Conference Resolution 13/81, and examined the proposal by the Director-General for the replenishment of the Account by a special assessment on Member Nations of US$32.6 million, in order to bring the resources of the Account to its statutory level of 5 percent of the effective working budget, as proposed for the next biennium.
92. Several members could not support the proposal for a special assessment. Whilst accepting that some protection of the Programme from fluctuations in exchange rates was necessary, they considered that further study was needed on alternative mechanisms that were available.
93. The majority of the Council accepted the principles of the case for replenishment of the Special Reserve Account, attached importance to the Account having the requisite level of resources to fulfil its statutory purposes and supported the proposal by the Director-General. The only aspect of regret and reservation, in their view, concerned the burden of an extra assessment on Member Nations, particularly those countries facing severe economic problems.
94. The Council supported the proposal by the Director-General and recommended the following draft Resolution for consideration by the Conference:
REPLENISHMENT OF THE SPECIAL RESERVE ACCOUNT
THE CONFERENCE,
Noting that the Special Reserve Account has been fully exhausted in the biennium 1990-91, as a result of the negative variance on staff costs due to the decrease in the Lire/US dollar exchange rate from the budget rate of Lire 1 335,
Recalling Resolution 13/81 in which it decided that such portion of the cash surplus in the General Fund at the end of a biennium as is required to bring the level of the Special Reserve Account to 5 percent of the effective working budget for the subsequent biennium shall be withheld and credited to the Special Reserve Account,
Noting that at the end of the biennium 1990-91 there will be a deficit in the General Fund,
Considering that the implementation of the Programme of Work and Budget adopted by the Conference for 1992-93 is at peril without the protection provided by a solvent Special Reserve Account, in view of the continued delays in payment by some Member Nations, and in particular the largest contributors,
Concerned by the level of contributions outstanding from the largest contributor, both in current assessments and in arrears, and the settlement of these possibly extending over many years,
Conscious of the substantial claims on the arrears of contributions for the elimination of the deficit in the General Fund to be carried forward to 1992, and for the restitution of advances from the Working Capital Fund:
1. Decides to make a special assessment on Member Nations to provide for the replenishment of the Special Reserve Account, in the amount of US$32 585 400;
2. Requests the Director-General to inform the Finance Committee and the Council in the subsequent biennium of the progress made in the replenishment of the Special Reserve Account.
95. The Council considered the Report of the CCLM on the legal aspects of the proposed Conference resolution regarding the resources of the Special Reserve Account. The Council also noted that the CCLM had considered the resolution from a strictly formal point of view and concluded that it was legally correct. The Council concluded that there were no legal objections to the transmittal of the resolution to the Conference for adoption.
96. The Council endorsed a minor amendment required in the second article of Conference Resolution 16/89 to give recognition to the practice of distributing Commissary net profits to the Staff Welfare Fund, after setting aside for any necessary reserves. It therefore recommended the following Resolution for consideration and adoption by the Conference:
AUTHORIZED TRANSFERS TO RESERVES
THE CONFERENCE,
Having noted that over the past years the Commissary had obtained specific authorization to establish certain reserve accounts, which are reflected in the annual financial statements,
Recognizing that a minor amendment is required to the second article of the Conference Resolution 16/89 to give recognition to the practice of distributing Commissary net profits to the Staff Welfare Fund after setting aside for any necessary reserves,
Decides to adopt the following recommendation (to amend the second article of the Conference Resolution 16/89):
"that the equivalent of 0.5 percent of the total sales and any net profits of the Commissary, after the distribution to reserves, shall continue to be transferred to the Staff Welfare Fund, for use in accordance with policies and procedures to be developed jointly by the Director-General and the Staff".
97. The Council noted the evolution of the post adjustment classification for Rome. It was informed that 5 percent of post adjustment had been consolidated into the base salary in March 1991 on a "no-gain no-loss" basis (i.e., the increase in base salary had been offset by an equivalent decrease in post adjustment). In June 1991 a new class of post adjustment had been granted to reflect local inflation.
98. The Council was informed that in accordance with the decisions taken at its Eighty-second and Eighty-sixth Sessions,17 an interim adjustment of 4.77 percent in net salaries had been implemented effective 1 June 1991.
99. The Council noted the statistics relating to the number of established posts and other forms of personnel services which had been provided to the Finance Committee. The Council further noted the progress in the presentation, reliability and detail of the information.
100. The Council was informed of the recommendations presented by the International Civil Service Commission (ICSC) to the Forty-sixth Session of the General Assembly (1991) with regard to personnel issues and noted the consequent changes regarding the conditions of service of staff in the Professional and higher categories. It was further noted that these recommendations were still subject to review and approval by the General Assembly.
101. The Council noted the ICSC recommendation to increase the current net base salary scale for Professional and higher categories by 8.6 percent through a consolidation of post adjustment classes on 1 March 1992 with a simultaneous reduction of post adjustment levels ("no-loss, no-gain"). It also noted the ICSC recommendation that, in order to avoid a prolonged freeze of post adjustment, the General Assembly rescind its former decision requiring the Commission to manage the margin on a five-year period so that the average margin would be around the mid-point (115) of the range. It also recommended that partial post adjustment be granted within the maxium 120 of the range of the margin.
102. The Council noted the ICSC recommendation to grant an increase in the net remuneration level of Assistant Secretaries-General/Under- Secretaries-General (ASGs/USGs) in the range of 7 to 11 percent to reflect the improved conditions of the officials of the comparator civil service (the US Federal Civil Service) at equivalent grade levels, and to authorize Executive heads to decide on approval of housing subsidy arrangements for such staff.
103. The Council was informed that the UN Joint Staff Pension Board had held its Forty-third Session in July 1991, and that two agenda items had been of particular importance to organizations and staff: the review of modifications to the pension adjustment system and the comprehensive review of the pensionable remuneration and consequent pensions of the staff in the General Service and related categories.
(a) Modifications to the Pension Adjustment System
104. The Council recalled that the problem of maintaining the real value of UN pensions, calculated in US dollars, for staff in the Professional and higher categories in countries of residence other than the United States of America had been a recurrent item before the Board.
105. The Council was informed that the Pension Board at its July 1991 session had decided to recommend to the UN General Assembly that the pension adjustment system be modified to provide an income replacement ratio reasonably close (but not identical) to that in New York. In order to achieve this, the Board had recommended that some parameters of the existing formula be modified.
106. The Pension Board had also recommended that the effective date of the proposed modification be 1 April 1992 and that the transitional measure introduced with effect from 1 January 1991 should expire on 31 March 1992 as agreed in 1990. However, the Pension Board had proposed that the above modification apply retroactively to survivors' and disability benefits due between 1 January 1991 and 31 March 1992.
107. The Council recalled that at its Ninety-ninth Session18 it had taken note of the Director-General's concerns regarding the serious problems of staff pensions in the Professional and higher categories and had supported his initiatives in seeking appropriate modifications to preserve the stability of and to strengthen the pension system. The Council was informed that the FAO Staff Pension Committee had examined the entire issue of long-term modifications to the pension adjustment system and, while joining the consensus on the modification proposed by the Pension Board, had expressed reservations regarding the longer-term viability of the proposed modification.
(b) Comprehensive Review of the Pensionable Remuneration of General Service Staff
108. The Council was informed that the Pension Board had resumed its review of the pensionable remuneration and consequent pensions of General Service staff which began in 1990. Based on a review of the current methodology, which followed universal rates of staff assessment, the conclusion was reached that no workable alternative for immediate implementation was available. The Pension Board did request, however, that the ICSC and the Pension Board in close cooperation pursue studies which would include inter alia the feasibility of determining General Service pensionable remuneration and/or pensions by reference to the best prevailing practices in each locality.
109. The Council was informed of the legal reasons that had led to the discontinuation of the Staff Cultural and Social Association, CASA (an unlimited association) and its conversion into a limited liability cooperative, known as the COOP. The Council was advised on the desirability of the COOP discontinuing commercial operations, as well as of the recommendation that its related income be replaced in order to enable it to concentrate on its welfare activities.
110. The Council endorsed the recommendation that the income derived by FAO from agreements with concessionaires should be paid into the Staff Welfare Fund through the Commissary instead of being credited to Miscellaneous Income.
111. The Council was informed of the progress made in the three phases of the project since the June 1991 session:
Phase 1 - Construction of a new parking space
Phase 2 - Construction of a new eighth-floor Building "F" to link Buildings "C" and "D"
Phase 3 - Construction of an additional floor on top of Building "A"; construction of an additional floor on top of the two bridges connecting Buildings "A" and "B"; construction of a third bridge in the centre between the same buildings.
112. The Council expressed its appreciation for the Host Government's generous efforts and in particular, for the personal intervention of the Permanent Representative of Italy to FAO, His Excellency Ambassador Luigi Valenza and his closest colleagues, for their assistance.
113. Concern was expressed by one member at problems experienced in the implementation of the FINSYS System.
114. Members of the Asia Region noted that their region had not been adequately represented on the Finance Committee over the last few terms. They requested that the principle of equitable geographical representation should be adhered to in this regard.
1C 91/8; CL 100/4; CL 100/4-Corr.1; CL 100/PV/2; CL 100/PV/6.
2C 9.1/23; CL 100/4; CL 100/4-Corr. 1; CL 100/PV/2; CL 100/PV/6.
3C 91/3; C 91/3-Sup.1; CL 100/4; CL 100/4-Corr.1; CL 100/PV/2; CL 100/PV/3; CL 100/PV/6.
4CL 100/5; CL 100/5-Corr.1 (E only); CL 100/9; CL 100/9-Sup.1;
CL 100/LIM/2; CL 100/PV/5; CL 100/PV/6.
5C 91/4; C 91/4-Corr.1; C 91/4-Sup.1; C 91/4-Sup.2; CL 100/4; CL 100/4-Corr.1 (E only); CL 100/PV/5; CL 100/PV/6.
6CL 100/4.
7C 91/21; CL 100/4; CL 100/4-Corr.1 (E only); CL 100/PV/5; CL 100/PV/6.
8CL 100/3; CL 100/PV/5; CL 100/PV/6.
9CL 100/4; CL 100/4-Corr.1; CL 100/LIM/1; CL 100/PV/1; CL 100/PV/6.
10CL 100/4; CL 100/PV/3; CL 100/PV/6.
11CL 100/4 paras 4.14-4.25; CL 100/PV/3; CL 100/PV/6.
12 CL 100/4, paras 3.72—3.79, CL l00/PV/4; CL lOO/PV/6.
13 CL 100/4, paras 3.80—3.89; CL 100/PV/4; CL 100/PV/6.
14CL 100/4, paras 3.90-3.99.
15CL 100/4, paras 3.108-3.113.
16CL 100/4, paras 3.120-3.137; CL 100/4-Corr.1 (E only); CL 100/PV/3; CL 100/PV/6.
17CL 82/REP, paras 186-187; CL 86/REP, para. 160 (b).
18CL 99/REP, para. 226.
19CL 100/4, paras 3.152-3.154; CL 100/PV/3; CL 100/PV/6.
20CL 100/PV/6.
