PROGRAMME, BUDGETARY, FINANCIAL AND ADMINISTRATIVE MATTERS

Programme Implementation Report 1992-931

19. Following on its discussion of the Programme Evaluation Report at its June 1993 session, the Council welcomed the first version of the Programme Implementation Report, as an informative and well-presented document which could be improved in future versions. It noted that the document had been examined by the Programme and Finance Committees at their Sixty-eighth and Seventy-seventh Sessions, respectively. It considered the detailed comments and observations, made in particular by the Programme Committee, as a very useful input to its own consideration of the report. Accordingly, the Council shared the generally positive assessment made by the Committees of the value of the Programme Implementation Report in the family of programme-planning documents submitted to the Conference, which were aimed at facilitating decisions by Member Nations in directing and evaluating the work of the Organization.

20. The Council observed that Member Nations would have the opportunity to consider the document in depth at the Twenty-seventh Session of the Conference. In order to facilitate this examination, the Council agreed to draw to the attention of the Conference the observations of the Programme and Finance Committees on the Programme Implementation Report, and confined its discussion to the following key aspects.

21. The Council appreciated the integrated presentation in the Programme Implementation Report of FAO's Regular and Field Programmes. It stressed the pertinence of providing illustrations of the links between both sets of activities. In noting the important degree to which the field activities of the Organization captured the resources of the Regular Programme, the importance of member participation in setting the policy guidelines and directions and in overseeing the field activities of FAO was underlined. The Council welcomed the synthesis of views expressed by its own main technical committees on FAO's field activities of interest to them, and urged that continued attention be given to their examination of field activities in the future.

22. The Council noted with some concern the contrasting trends of gradual recovery of the financial situation of FAO under the Regular Budget, while the Organization was experiencing a decline in resources under extra-budgetary funding. The Council invited all sources of funding to continue to support FAO's field programmes so as to enable the Organization to meet pressing demands for assistance.

23. In addressing the various sections of the report, the Council noted the observations in the Director-General's Introduction on a number of important aspects of FAO's work. The Council considered that Chapter 1 provided a succinct but informative overview, which demonstrated that the Organization had been responsive to internationally-recognized priorities, as well as having been active in assisting Member Nations in key areas falling within its mandate. The Council welcomed FAO's full participation in the United Nations Conference on Environment and Development and the International Conference on Nutrition, and urged a vigorous follow-up to these conferences.

24. The Council, in general, expressed satisfaction over the quantitative and qualitative achievements reported, respectively, under Chapters 3 and 4 of the Programme Implementation Report. A few members felt, however, that future versions of the document should be further improved in terms of more precise information to permit Member Nations to assess the impact and efficiency of reported activities, in measurable terms. As well, any deviations from the specific plans and targets detailed in the Programme of Work and Budget should be described and justified in this report.

25. The Council underlined the results of the streamlining initiatives reported in Chapter 6, carried out in the context of the International Cooperative Programme Framework for Sustainable Agriculture and Rural Development (ICPF/SARD), and noted the potential for greater efficiency.

26. The Council welcomed the additional information provided on follow-up to key resolutions on operational activities adopted by the General Assembly of the United Nations, as provided in Supplement 1 to the Programme Implementation Report, and invited continued attention to this aspect in the future.

27. In addressing the two options proposed by the Director-General in the Introduction to the document regarding future versions of the Programme Implementation Report, most members expressed preference for Option 1, especially taking account of the suggested approach by the Programme Committee which combined some positive features of both options.

Programme of Work and Budget 1994-952

28. The Council considered the Programme of Work and Budget 1994-95, together with the views of the Programme and Finance Committees, as contained in the reports of their individual and joint sessions. Bearing in mind that a more extensive debate would take place on the Programme of Work and Budget proposals in Commission II of the Conference, the Council focused its discussion on the following main features of the proposals.

29. The Council noted that the format of the Programme of Work and Budget document was broadly similar to that of the 1992-93 biennium, the major aspects of which had been endorsed. It was considered that further improvements could still be made, to enable the Programme of Work and Budget document to fulfil its due role in supporting intergovernmental discussions and in facilitating decisions by Member Nations, for instance by providing clearer indicators of intended performance or setting proposed budgetary provisions against effective expenditures incurred in the preceding biennium. The Council was informed of possible improvements in the document, as well as of practical difficulties involved in pursuing such suggestions. It recognized that further consideration of this issue was warranted.

30. The Council observed that the proposals in the full Programme of Work and Budget had been the result of an extensive consultative process. It was pleased to see the concrete steps which had been taken to respond to recommendations made on earlier proposals. In recalling its consideration of the Summary Programme of Work and Budget at its last June session, the Council in particular welcomed the changes in resource allocations over those indicated in the Summary. It underlined the pertinence of increased resources under Major Programme 2.3, Forestry and appreciated the efforts made to greatly mitigate the earlier reductions affecting Major Programme 2.2, Fisheries, as well as several activities under Major Programme 2.1, Agriculture.

31. More generally, the Council concurred with the endorsement by the Programme and Finance Committees of the proposed substantive priorities in the Programme of Work and Budget, with overall emphasis on follow up to the United Nations Conference on Environment and Development and the International Conference on Nutrition. Many members reiterated the importance they attached to selected priority areas, such as FAO's work on plant and animal genetic resources, its assistance to Integrated Pest Management programmes and National Forestry Action Plans in Member Nations, the expanded use of Codex standards, FAO's support to human resources development, Central and Eastern European countries and national capacity building in developing countries, etc. Broad support was expressed for the Conference on the sustainable contribution of fisheries to food security, which the Government of Japan proposed to hold. The provision of additional means to the General Fisheries Council of the Mediterranean (GFCM), within the resources proposed for the Major Programme Fisheries in order to enable it to fulfil its mandate, was supported. It was also noted that support for other priorities in the Major Programme Fisheries, such as the acceleration of work on the Code of Conduct, would be considered in further discussions of the Programme of Work and Budget.

32. With regard to the Technical Cooperation Programme (TCP), the Council welcomed the additional US$1 million to offset, in part, the net decrease shown in the Summary. The Council reiterated the high value of the Technical Cooperation Programme, while noting with interest that the share of the TCP in the total budget level would increase from 11.7 percent in the present biennium to over 12.3 percent, as a consequence of the strengthening of the US dollar. Many members expressed regret that the 17 percent target had not been attained and requested that the Technical Cooperation Programme be strengthened, in conformity with the targets of Conference Resolution 9/89.

33. The Council noted that the absence of any real programme growth which had characterized proposals in the Outline and Summary, had been pursued in the full Programme of Work and Budget.

34. In connection with the base level for developing proposals, the majority of members endorsed the Programme of Work of US$676.9 million, as unanimously approved by the last Conference, as the base level for the 1994-95 biennium. A few members supported the figure of US$645.6 million, indicated in Conference Resolution 4/91 as the net base budgetary appropriation.

35. The Council also noted that the proposals had been developed on the basis of a lapse factor of 3 percent, as approved by the FAO Conference at its Twenty-fifth Session in 1989. The majority of members fully endorsed this approach. A few others reiterated earlier reservations expressed on the use of this percentage figure. As highlighted by the Programme and Finance Committees which had carried out an extensive discussion on the lapse factor at their September 1993 sessions, they stressed that the issue would need to be re-examined in the future, and the External Auditor should review this aspect.

36. The Council noted the positive developments regarding key financial parameters in the Programme of Work and Budget. It welcomed the lower provision for cost increases of US$76 million at the present budgetary rate of exchange. The Council received updated information in the light of current exchange rates which could lead to a significant reduction in the total budget level over earlier estimates. Taking into account the use of part of expected arrears payments in 1994-95 to finance budgetary appropriations, as proposed by the Director-General, Member Nations would experience lower assessments in 1994-95 than those for the present biennium. A few members, however, continued to question the proposed funding arrangement, and were concerned about the longer-term implications for future Programmes of Work and Budget when similar positive circumstances might no longer prevail to reduce the burden on Member Nations.

37. With regard to the total budget level resulting from the above factors, the majority of members underlined their full support to the proposals. A few members reserved their position until the consideration of the Programme of Work and Budget by the Conference. In general, the Council agreed that the Director-General's proposals for the Programme of Work and Budget 1994-95 offered a good basis for seeking Conference approval.

38. The Council accordingly commended the Director-General's Programme of Work and Budget for consideration and approval by the Conference, and expressed the firm hope that further intergovernmental consultations would culminate in unanimity of support by Member Nations.

Reports of the Sixty-eighth Session of the Programme Committee and of the Seventy-seventh Session of the Finance Committee3 (Rome. 21-30 September 1993)

- Appointment of the External Auditor

39. 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 the accounts for the biennium 1992-93.

40. The Council considered the recommendation made in this regard by the Finance Committee. It noted that the Committee had reviewed the proposals made by the French Cour des comptes and of the current incumbent. The Council recognized that both audit organizations were highly professional and fully equipped to perform a thorough audit. It further noted that the cost quoted by the United Kingdon was lower due in particular to its longstanding experience in performing audit functions for the Organization.

41. Noting that the Cour des comptes proposed to devote a larger share of its resources to management audits, the Council approved the appointment of the Senior President of the French Cour des comptes as External Auditor. It also decided that the appointment should be for four years commencing with the year 1994. The Council adopted the following Resolution:

Resolution 1/104

APPOINTMENT OF THE EXTERNAL AUDITOR

THE COUNCIL,

Noting that the Finance Committee recommends the appointment of the Senior President of the French Cour des comptes as External Auditor of the Organization,

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

Decides to appoint the Senior President of the French Cour des comptes as External Auditor of the Organization for a period of four years commencing with the year 1994.

42. The Council expressed its appreciation to the present External Auditor for the over forty years of valuable service to the Organization.

43. The Council requested that in the future, a larger number of countries, including developing countries, in a position to offer the required services, be invited to submit proposals.

- Commissary Accounts4

44. The Council considered the proposal made by the Director-General and unanimously recommended the following draft Resolution for adoption by the Conference.

DRAFT RESOLUTION FOR THE CONFERENCE

COMMISSARY ACCOUNTS

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 in consideration of the commercial nature of the Commissary operations, it would be useful to grant Senior Management, in consultation with the Finance Committee, greater discretion over related decisions,

Decides that:

1. the authority to determine the amounts for distribution to funds and reserves, as well as the transfer of any net profits to the Staff Welfare Fund, shall be vested in the Director-General who will report on such matters to the Finance Committee;

2. accountability for respective decisions shall be preserved by continuing to present the annual accounts to Governing Bodies, without delaying their presentation for audit;

3. starting for the year ending 31 December 1992, the equivalent of one percent of the total sales shall be transferred to the Staff Welfare Fund and that the Director-General decide whether any net profits of the Commissary are to be carried forward to the next year or transferred to the Staff Welfare Fund.

- Personnel Matters5

(a) Recent Developments in the Activities of ICSC and the UN Joint Staff Pension Board

45. The Council was informed of the recent developments in the activities of the United Nations Joint Staff Pension Board (UNJSPB) and the International Civil Service Commission (ICSC).

46. In particular the Council noted that the ICSC, after having considered the Pension Board's views, had formulated recommendations to the General Assembly on all aspects of the methodology to determine pensionable remuneration for staff in the General Service and related categories, including:

1. the acceptance of the use of the income replacement approach;

2. the introduction of the interim adjustment procedure;

3. the introduction of common staff assessment scales for all categories of staff in 1997; (iv) the use of 66.25 percent of net pensionable salary as the grossing-up factor in determining the staff assessment rate to derive the gross pensionable salary.

47. The Council also noted that the ICSC had recommended to the Forty-eighth Session of the General Assembly an increase in the base/floor salary scale of the Professional and higher categories by 3.6 percent, through the consolidation of post adjustment points on a no-gain/no-loss basis with effect 1 March 1994.

(b) Professional and Higher Categories

- Post Adjustment

48. The Council noted the evolution of the Rome post adjustment classification, as determined by the International Civil Service Commission. It was informed that in March 1993, an increase of a partial class of post adjustment due to inflation had been granted concurrent with the consolidation of 6.9 percent of post adjustment into base salaries on a "no-gain, no-loss" basis. It was also informed that from April 1993, the multiplier paid included the special measure approved by the ICSC at its March 1993 session.

- Staff Post Adjustment Problems arising from the Italian Lira Devaluation

49. The Council recalled that the ICSC had recognized that special consideration was warranted to address the negative impact of the devaluation of the Italian lira on the remuneration of staff in the Professional and higher categories and the Organization's ability to recruit and retain staff and had approved an ad hoc special measure. The Council also recalled that, at its Hundred and Third Session, it had noted with concern the comments of the Finance Committee on the problems of Professional staff remuneration in Rome, as well as the report on this matter submitted by the Secretariat. The Council had further noted that the special measure adopted by the ICSC was deemed to have done little to provide relief to staff or to improve the Organization's ability to compete for high quality staff. It had, therefore, agreed to mandate the Secretariat to pursue the issue with the ICSC to evaluate the situation in greater detail, and had suggested that it would be useful to have a new in-depth cost-of-living survey.

50. The Council was informed that at the Thirty-eighth Session of the ICSC (July 1993), at the request of FAO, an item concerning the quantification of the special measure applied to the Rome post adjustment had been added to the ICSC agenda. Following considerable discussion, the ICSC had concluded that it had at its previous session agreed upon suitable arrangements to alleviate the situation, and that sufficient new elements had not been presented which would warrant a revision of its earlier decision. At this same Thirty-eighth Session, however, the ICSC had confirmed arrangements necessary for the conduct of the next round of place-to-place cost-of-living surveys beginning in 1994.

51. The Council was informed that, as the Commission had decided not to improve the special measure, the Organization had been left in a situation where it was at a loss to consider what measures it could take further to those already pursued to redress these problems, other than to await the results of the next place-to-place (Rome/New York) cost-of-living survey arranged to take place early in 1994. All efforts would be made to ensure that the survey considered those areas which affected the recruitment and retention of staff, e.g. the high housing, schooling and medical costs in Rome.

(c) General Service Category

- Interim Adjustment

52. The Council was informed that, in accordance with the procedures for interim adjustments approved at its Eighty-sixth Session,⁶ an increase of 3.38 percent in net salaries of General Service staff in Rome had become due effective 1 June 1993, and had been implemented in the July payroll.

(d) Personnel Statistics

53. The Council noted that the Finance Committee had reviewed the data relating to the number of established posts and other forms of personnel services in use in FAO as at 30 June 1993, and had requested that corresponding information on filled posts be included in the future. The Council also noted the data and the trends which were emerging as a consequence of the changes which were taking place in the Field Programme.

- Payment by the European Economic Community to cover Administrative and other Expenses arising out of its Membership in the Organization

54. The Council considered the recommendation of the Finance Committee regarding the methodology for determining the sum to be paid by Member Organizations to cover administrative expenses arising out of their membership in the Organization. The Council noted that the option recommended by the Finance Committee was one of several it had considered and which it deemed consistent with Article XVIII-6 of the Constitution.

55. Several members of the Council considered it difficult to endorse the recommended option because they felt that its effect would be to change the current "flat" amount to a formula which was incompatible with Article XVIII-6 of the Constitution. They thus felt that it would result in a regional economic integration organization contributing to the FAO budget. They therefore indicated that they would wish to see the Conference maintain the amount of the European Economic Community's (EEC) payment for the following biennium to cover all expenses at the level of US$500 000.

56. The Council agreed to recommend that the issue be considered by the General Committee of the Conference to permit the Conference to take such action as it would see fit.

- Other matter

57. The Council was informed of the financial efforts that had been made by the EEC. While appreciating the size of the contribution already made by the EEC to FAO's Field Programme, a number of members expressed the wish that this be increased in the future.

- Working Arrangements of the Programme and Finance Committees7

58. The Council noted that according to its own request, the Programme and Finance Committees had held extensive discussions on a review of the working arrangements of the Committees, i.e. formerly referred to as "revitalization". It took note with particular interest of the preliminary analysis undertaken by the Programme Committee covering a number of important aspects such as the availability of documentation, attendance by observers and alternates, role of members in the preparation of agendas, use of rapporteur, size of the Committees, and so forth.

59. The Council stressed the key advisory role played by the Programme and Finance Committees in support of its own deliberations and decisions. It therefore generally agreed that any measure contributing to the strengthening of this role merited consideration. It also concurred with the conclusion of the two Committees that further discussions would benefit from the context of the new membership of these Committees in the next biennium.

60. The Council looked forward to the Programme and Finance Committees proceeding with further discussions of their working arrangements and its own further consideration of the matter at future sessions.

61. The Council also noted that the Programme Committee had discussed the important issue of farmer participation in development on the suggestion of the Independent Chairman of the FAO Council and in commemoration of the twentieth anniversary of the death of Mr Josué de Castro, former Chairman of the Council. It welcomed the Committee's recommendations stemming from its discussion and endorsed its conclusion that FAO intensify its support to people's participation as a key factor of sustainable agriculture and rural development.

Financial Position of the Organization8

-Collection of Assessed Contributions (Outstanding and in Arrears)

(a) Status of Contributions to the Budget

62. The Council considered the financial position of the Organization on the basis of Appendix D to this Report, together with an oral report on the recent receipt of contributions. While appreciating the often difficult financial situations of some countries, emphasis was nonetheless placed on importance for all Member Nations, irrespective of size, to honour their financial obligations towards the Organization.

63. The Council noted the status of contributions at 3 November 1993 compared with the same date in 1992, as well as the details of amounts received from each Member Nation during 1993 and of outstanding contributions, as shown in Appendix D.

^aOf which US$550 000.00 relates to the Tax Equalization Fund.

(b) Current Assessments (Appendix D sets out details of receipts and of amounts outstanding)

64. The month-end cumulative percentages of 1993 assessments received during the first ten months of 1993, as compared to receipts during the preceding four years, was shown in the following
statistics.

^aReceipts at 3 November; all other figures are at month-end.

65. At 3 November 1993 the position of Member Nations (and the number with arrears outstanding), with comparative figures at the same date during the four preceding years, was as follows:

66. The Council noted that receipts at 3 November 1993 of the 1993 assessments were lower than those at the same date in 1992, although the situation compared favourably with any of the other three years in consideration.

67. However, only 60 Member Nations had paid their current assessments in full, while a further 15 had made a partial payment, leaving 84 Member Nations who had made no cash payment at all during 1993.

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

68. At 3 November 1993, a total amount of US$107 811 350.75 of arrears of contributions remained, of which US$79 663 363.86 overdue from the largest contributor. Ninety-four Member Nations had made cash payments as at 3 November 1993, of which 27 had paid their arrears in full. Amounts of more than US$1 million were due from eight Member Nations, totalling US$100 484 872.86 and representing 93.20 percent of the arrears outstanding.

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

69. Of the total amounts outstanding at 1 January 1993 of US$22 566 178 and US$1 997 442, respectively, 87 Member Nations had made cash payments as at 3 November 1993, leaving balances of US$13 374 433 and US$1 747 792, respectively, outstanding on 3 November 1993.

(e) Need for all Member Nations to pay Current Assessment and Arrears

70. The Council expressed concern that notwithstanding the Director-General's appeals to Member Nations for payment of their arrears and outstanding contributions, 99 Member Nations had made no payment or only partial payment of 1993 assessed contributions, and 72 Member Nations still owed arrears for 1992 and prior years. Furthermore, 24 Member Nations owed arrears of contributions in such amounts as could cause them to lose their right to vote at the forthcoming Twenty-seventh Session of the Conference.

71. The Council urged therefore that all Member Nations pay their outstanding arrears and current assessed contributions in full as soon as possible, in order to enable the Organization to continue to fulfil its mandate.

- Measures to Improve the Collection of Assessed Contributions9

72. The Council considered the proposal of the Director-General contained in Appendix E to this Report to permit under certain conditions payment of contributions in local currency.

73. The majority of members stressed the importance of the proposal to those with non-convertible currencies. They urged the Council to forward the proposal to the Twenty-seventh Session of the FAO Conference for a full discussion and decision due to the difficulties a number of developing countries were facing in paying assessed contributions in convertible currencies. Several members urged referal of the matter to the Finance Committee for fuller study. These members expressed their conviction that the aim of an objective debate would not be advanced by the inclusion of the text of a draft resolution that presumed specific Conference action. The Council decided to refer the proposal to Commission III of the Conference for an in-depth discussion on the basis of Appendix E and for submission of its recommendations for further action to the Conference.

¹ C 93/8; C 93/8-Sup.l; CL 104/4; CL 104/PV/l; CL 104/PV/2; CL 104/PV/6.

² C 93/3; C 93/3-Corr.l (E only); C 93/3-Sup.l; CL 104/4; CL 104/PV/2; CL 104/PV/3;CL 104/PV/6.

³ CL 104/4 paras 3.68 - 3.73; CL 104/PV/3; CL 104/PV/4; CL 104/PV/7.

⁴ CL 104/4, para. 3.52; CL 104/PV/3; CL 104/PV/4; CL 104/PV/7.

⁵ CL 104/4, paras 3.74 - 3.88; CL 104/PV/3; CL 104/PV/7.

⁶ CL 82/REP, paras 186-187; CL 86/REP, para. 160 (b).

⁷ CL 104/4; CL 104/PV/3; CL 104/PV/4; CL 104/PV/6.

⁸ CL 104/4, paras 3.30 - 3.48; CL 104/LIM/l; CL 104/PV/3; CL 104/PV/7.

⁹ CL 104/4, paras 3.30-3.48; CL 104/LIM/2; CL 104/PV/3; CL 104/PV/7.