I have pleasure in submitting the Summary Programme of Work and Budget 2000-01 through the Programme and Finance Committees to the Council. This document is for your consideration and guidance so that I can prepare the full Programme of Work and Budget for eventual decision by the Conference in November this year.
The development of this budget has been a hard task. The practical reality is that Members are seeking more and more in the way of services and programmes than ever before. Conversely, the capacity of the institution to respond is finite. Certainly, we have done much over the last few years to "do more with less" and we can, I think, be proud of the way in which we have managed to absorb significant budget cuts without excessive damage to the programme as well as considerable reduction in posts without undue consequences on staff morale as it has been possible to avoid forced terminations.
But the combination of increasing demand for our services and the stagnant or declining supply of resources does eventually require that I say "no - we can do no more". I have examined what has been requested of us in recent times through Council, the Programme Committee, the Technical Committees and the Regional Conferences. I have addressed these requests as much as possible within a scenario based on zero real growth (ZRG) in the budget level, but I am left with the inescapable fact that much of the work must be left undone or that you the Members must agree to increase the resources available to the Organization either through the regular appropriation or by other means.
You will find a list of additional requests which total some US$ 22.6 million beyond ZRG, an amount which represents the incremental cost beyond what has already been included within the ZRG scenario. Each item shows the source of request in terms of the authority for it in the form of the report reference and paragraph numbers. You will find that all of the references imply additional resources for particular priorities - some explicitly and others implicitly.
Turning now to the strategy behind this budget, I would mention that this is essentially a budget for consolidation. We are nearing completion of the lengthy period of implementation of the reforms which started in June 1994 following the Council approval of my proposals. While the vast majority of the changes could be undertaken in a relatively short period of time, the logistics of decentralization and the time required to rebuild financial and administrative systems are such that we have not quite reached the stage where we can say that we have completed the implementation of all planned reforms.
On the other hand, most of what was planned has been completed and we are now in a position to begin a period of assessment and evaluation. Have we been successful in achieving what we set out to do? Where things have not worked out the way we intended, what needs to be adjusted or changed to make them work better? Clearly, one does not embark on further change until such an analysis has been completed and it takes some time to observe the operation of the Organization with its revised structure, its new modalities, and its new support systems and infrastructure.
Besides, the programmes proposed in this budget are much more than a continuation of the past. We have listened attentively and we have revised and modified priorities and approaches. At the same time we have introduced a new and much more rigorous form of programme planning through the introduction of the new programme model as approved by the Conference in November 1997. Progress in this regard has been formidable in that we have had the entire Programme of Work summarized using this new approach (although much needs to be done to complete the full set of programme documents in support of the entire budget). Recognizing that what you have before you is "work-in-progress", I would welcome Members' views on whether they feel we are going in the right direction.
Moreover, this has also been a period when intense effort has been put into developing the FAO Strategic Framework. The process has inevitably influenced our thinking about programmes. But what is included in the Programme of Work can be traced back to your decisions of June 1994 and subsequent Councils and/or Conferences, as well as to the World Food Summit.
With respect to the hard facts of the budget itself, I will concentrate on the net appropriation as this is what affects the Members' assessed contributions. The ZRG scenario implies that an accurate estimate be made of anticipated cost increases and that this should be added to the approved budget level for 1998-99 of US$ 650 million. Using a constant rate of exchange (Lire 1 690 to US$ 1), the cost increase provision is estimated at US$ 34.7 million or 4.65% of the base. This represents an annualized rate of 3.07%, somewhat higher than average inflation. However, the figure includes two extraordinary amounts covering the adjustment for the General Service language allowance in Rome and the increase in the current service cost of after-service medical coverage as determined by the Actuary. Full explanations are given in the document and will be subjected to the usual detailed review by the Finance Committee. In any event, this estimate will continue to be reviewed until finalization of the full Programme of Work and Budget. The total ZRG Appropriation at a constant rate of exchange would therefore be US$ 684.7 million.
However, it may be recalled that the eventual provision for cost increase, and hence the total budget level, will depend upon the rate of exchange at the time the Conference takes action, although this methodology is currently under consideration by the Finance Committee and there may be some change in the precise way in which this adjustment is made in the future.
In addition, Members may decide that they wish to provide additional funds to cover all or some part of the list of activities for which they have, in one fora or another, requested that I allocate further resources in the Programme of Work and Budget 2000-01. The total incremental cost is estimated at US$ 22.6 million.
In concluding, I wish to state that I am very aware of the range of views which Members hold as regards the budget level - from zero nominal growth (ZNG) which implies a budget cut of US$ 34.7 million to a growth budget which implies a real increase of US$ 22 million or a nominal increase of US$ 56.7 million.
I can only urge that, in arriving at a compromise which is fair and reasonable, Members recall the heavy reductions already faced by this institution, the excellent progress made at improving cost effectiveness and the undeniable priority for our mission.
