Contents
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VII. Constitutional and administrative matters
A. Constitutional and legal matters
B. Administrative and financial matters
A. Constitutional and legal matters
Statutory report on status of conventions and agreements, and amendments thereto
Procedure for election of Chairmen and members of the programme and finance committees
Immunity of the organization from legal process
Statutory report on status of conventions and agreements, and amendments thereto
Multilateral Treaties deposited with the Director-General
313. Pursuant to Rule XXI of the General Rules of the Organization, and in accordance with established practice, the Director-General submitted to the Conference the biennial status of multilateral treaties concluded within the framework of FAO and deposited with him; the status of other multilateral treaties concluded outside the framework of FAO in respect of which the Director-General acts as depositary; and the status of the Convention on the Privileges and Immunities of the Specialized Agencies as applied to FAO.
314. The Conference took note of the status of the multilateral treaties concerned, contained in documents C 87/10 and C 87/10-Sup.1. It was also informed that since these documents had been issued, Equatorial Guinea had accepted on 6 November 1987 the Protocol to the International Convention for the Conservation of Atlantic Tunas and that the Federal Republic of Germany had accepted on 12 November 1987 the amendments to Articles VIII, XVII, XIX and XXI of the Convention on the Conservation of the Living Resources of the Southeast Atlantic.
315. With respect to the International Plant Protection Convention, the Conference recalled that, when approving the amendments to the Convention at its Twentieth Session (1979) by Resolution 14/79, it had urged the parties to the Convention to accept the revised text at the earliest possible time. The Conference noted, however, that 16 acceptances were still required in order to reach the two-thirds majority of contracting parties, which was necessary for the entry into force of the revised text. In view of the importance of the Convention in strengthening international action against the spread of pests of plants and plant products in the context of international trade, the Conference reiterated its appeal to contracting parties that had not yet accepted the revised text of the Convention to deposit an instrument of acceptance as soon as possible.
Procedure for election of Chairmen and members of the programme and finance committees
316. The Conference recalled that at the time of the election of the Members of the Finance Committee at the Eighty-ninth Session (28 November 1985) of the Council a procedural question had arisen as to "whether Rule XXVII.3(c)(ii) should be interpreted in such a way as to make it permissible for any one of the three regions not to be represented, when there was at least one candidate from each of those regions". Following a discussion on this matter, the Council had "requested the Committee on Constitutional and Legal Matters (CCLM) to examine the relevant parts of Rule XXVI and Rule XXVII of the General Rules of the Organization (GRO) and to report its findings, including the texts of possible amendments to the Rules that would clarify the question of regional representation on both Committees, to its session in November 1986".
317. In the Report of the Forty-eighth Session of the CCLM (29 September 3 October 1986), presented to the Ninetieth Session of the Council (17-28 November 1986), three options had been proposed. On that occasion the Council had "reaffirmed the desirability of guaranteeing just and equitable representation on both the Programme Committee and Finance Committee, and considered that each region should be represented if it wished to be. It also considered that such representation should not entail any increase in the number of members on either Committee". The Council decided that the CCLM should examine the problem further, and in particular the implications of alternative 3 in its Report which envisaged an election procedure in two steps.
318. At its Forty-ninth Session (21-23 April 1987) the CCLM concluded that alternative 3 would guarantee just and equitable representation on the Programme Committee and Finance Committee whilst not increasing the number of members of either Committee. However, a number of questions concerning the distribution of seats would have to be solved before any amendment to the General Rules could be adopted and the Committee submitted recommendations on this subject.
319. The Conference recalled that the Council discussed the matter once again at its Ninety-first Session (15-26 June 1987). As a consensus had not been reached as to whether the General Rules of the Organization should be amended or whether the same result could be achieved through practical arrangements among Member Nations, the Council had requested the CCLM to "continue studying the problem", and expressed the hope that further reflection on this matter might make it possible to reach a consensus at its Ninety-second Session .
320. At its Fiftieth Session (14-16 October 1987), the CCLM reached a consensus on a compromise approach to the problem which lay between the alternative of amendment of the General Rules of the Organization and the alternative of relying solely on improved negotiations and understandings between the regions and within the regions. The compromise consisted in the adoption by the Conference of a resolution laying down certain principles which should be taken into account by members of the Council when electing the Chairman and members of the Programme Committee and of the Finance Committee. The CCLM felt that this compromise would virtually ensure that any region wishing to be represented would be able to obtain a seat, but that if the solution envisaged did not prove to be effective, the matter would have to be reconsidered in due course in order that a more satisfactory solution be found.
321. The Conference recalled further that at its Ninety-second Session (3-6 November 1987) the Council had endorsed the CCLM's proposal and had decided to transmit a draft resolution to the Conference for consideration.
322. The Conference examined in detail the considerations set forth in the report of the Ninety-second Session of the Council as well as the draft resolution submitted to it. There was a general support for the draft resolution. However, a number of Member Nations regretted that the resolution did not, in their view, guarantee equitable geographic distribution on the Programme Committee and on the Finance Committee. It was also pointed out that the Council had noted that if the solution envisaged in its draft resolution did not prove to be effective, the matter would have to be re-considered in due course in order that a more satisfactory solution be found.
323. The Conference also considered an alternative proposal entailing the amendment of Rule XXVII of the General Rules of the Organization. Pursuant to the amendment, there would be a small increase in the number of members of the Finance Committee and a modification of the two-stage election procedure for the membership of that Committee. The first stage would provide for the election of one member from each region other than the region of the Chairman of the Committee. The second stage would provide for the election of the other members from two groups of regions, one composed of Europe, North America and the Southwest Pacific and the other composed of Africa, Asia, Near East, and Latin America and the Caribbean. A mechanism would also be included in order to ensure that the Committee's membership always included a specific number of members from each of the two groups of regions.
324. The Conference felt that the alternative proposal contained a number of elements that merited consideration but that since it raised certain important substantive and legal issues it was not ripe for examination in depth. The substance of the proposal would require further study, in particular to ensure equitable regional representation which might entail an increase in the number of members of the Committee. Many Member Nations expressed the view that any increase should be in proportion to the ratio of the current composition of the Committee whilst others felt that some different formula would be more appropriate. Some Member Nations considered that if the number of members of the Finance Committee were increased, there should be a corresponding increase in the number of members in the Programme Committee; other Member Nations thought that it would only be necessary to modify the composition of the Finance Committee.
325. The Conference decided to transmit the substance of the alternative proposal for study by the Council which should, as appropriate, seek the advice of the Committee on Constitutional and Legal Matters.
326. The Conference further decided to adopt the following Resolution submitted to it by the Council.
PROCEDURE FOR THE ELECTION OF THE CHAIRMEN AND MEMBERS OF THE PROGRAMME AND FINANCE COMMITTEES
THE CONFERENCE,
Noting that the question of the interpretation of Rule XXVII.3(c)(ii) of the General Rules of the Organization had arisen in the course of the election of the Chairman and members of the Finance Committee at the Eighty-ninth Session of the Council (November 1985) and that the Council had referred this matter to the Committee on Constitutional and Legal Matters (CCLM) which considered it at its Forty-eighth Session (September-October 1986),
Noting further that the matter had been considered by the Council at its Ninetieth Session (November 1986), Ninety-first Session (June 1987) and Ninety-second Session (November 1987),
Concurring with the recommendation of the Committee on Constitutional and Legal Matters endorsed by the Council at its Ninety-second Session,
Decides:
1. to affirm the need for just and equitable representation of the various regions on the Programme Committee and the Finance Committee;
2. to underline that an essential element of such representation is that all regions that so wish are in fact represented on the Committee; and
3. that members of the Council should bear the above in mind, as well as the importance of securing equitable rotation among the countries constituting each region, when electing the Chairmen and members of the two Committees in accordance with Rules XXVI.3 and XXVII.3, respectively.
(Adopted 26 November 1987)
Immunity of the organization from legal process
327. The Conference recalled that the question of FAO's immunity from legal process in Italy had been under discussion by the Conference and Council since 1982 on account of a judgement rendered by the Corte di Cassazione containing an interpretation, considered restrictive, of Section 16 of the Headquarters Agreement which provided that the Organization enjoyed "immunity from every form of legal process" unless it waived such immunity. The Conference further recalled that, since no satisfactory solution had been found whereby FAO's immunity from legal process could be safeguarded in the future, at its Twenty-third Session (November 1985) it had considered the question whether an advisory opinion should be sought from the International Court of Justice on the interpretation of Section 16 of the Headquarters Agreement. At that session, it had agreed "that it would not be desirable at this stage to submit the questions forwarded to it by the Council to the International Court of Justice and that it would be preferable to reconsider the matter, as necessary in the light of a report by the Director-General on developments, at its next session". In the meantime, it had invited "the Director-General and the Italian authorities to explore all possible means of arriving rapidly at a definitive solution which would ensure that FAO would enjoy immunity from all forms of legal process in Italy".
328. The Conference was informed of the last developments that had occurred since its last session. Pursuant to the wish it had expressed, representatives of the Host Government and the Director-General had met on a number of occasions in 1986 with a view to identifying a mutually satisfactory solution to the problems that had arisen as a result of the Corte di Cassazione's judgement. In the course of these discussions, the representatives of the Host Government had pointed out that the promulgation of new legislation would give rise to considerable procedural and other difficulties, and that on account of the independence of the judiciary, new legislation would not provide a guarantee that the Organization's immunity would invariably be upheld, since it too would be subject to interpretation by the Italian courts. Therefore, an alternative solution recommended by the Host Government had been explored. This solution was based on the fact that Italy had become a party to the Convention on the Privileges and Immunities of the Specialized Agencies (CPISA) on 30 August 1985, following its withdrawal of reservations made in 1952, one of which sought to limit the immunity from legal process of the specialized agencies to that accorded to foreign states, and had therefore not been accepted by the specialized agencies.
329. The above-mentioned solution was based on Sections 4 and 31(a) of the CPISA. Section 4 provided, in the same terms as Section 16 of the Headquarters Agreement, that the specialized agencies "shall enjoy immunity from every form of legal process" except insofar as they have waived their immunity. Section 31(a) provided as follows:
"Each specialized agency shall make provision for appropriate modes of settlement of:
(a) Disputes arising out of contracts or other disputes of private character to which the specialized agency is a party".
Thus, the obligation contained in Section 31(a) was the natural corollary to the immunity from legal process contained in Section 4; if an organization did not waive its immunity it was bound to ensure that such immunity did not lead to a denial of justice. And, since such a provision did not exist in the Headquarters Agreement, the applicability of the CPISA to FAO laid down an express treaty obligation for the Organization instead of an obligation which had previously been recognized merely on the basis of FAO's consistent practice.
330. In the light of the new situation that had arisen as a consequence of Italy's having become a party to the CPISA, the Host Government and the Director-General had entered into official correspondence setting forth in detail the way in which the Organization would implement Section 31(a) of the CPISA. This correspondence had been submitted by the Director-General to the Committee on Constitutional and Legal Matters which, at its Forty-ninth Session (April 1987), recognized that the correspondence in question did not carry the weight of new legislation which had received formal parliamentary approval. Nevertheless the CCLM had felt that since the correspondence would be published in the Gazzetta Ufficiale it would undoubtedly have considerable persuasive value if invoked before an Italian court, since it contained a detailed description of the ways in which FAO would ensure that any potential claimant would receive a fair hearing. The CCLM had also concluded that, although new legislation would have placed the Organization's immunity on a firmer legal basis, the correspondence constituted an appropriate and practical solution. It hoped, however, that the Host Government would not discard the possibility of ultimately taking legislative measures that would give further legal protection to FAO.
331. At its Ninety-first Session, the Council concurred with the CCLM's conclusions, and endorsed the view of the Host Government and the Director-General that the correspondence represented a practical approach to the solution of the problem of securing the Organization's immunity from legal process in Italy.
332. The Conference, having considered the developments that had taken place since its last Session, agreed with the views expressed by the CCLM and the Council. The Conference therefore concluded that there was no need to request an advisory opinion from the International Court of Justice and expressed the hope that in practice the solution devised by the Host Government and the Director-General would effectively safeguard the Organization's immunity from legal process in the future. In this connection, the Conference noted with satisfaction the statement made by the representative of Italy to the effect that the Host Government would not discard the possibility of promoting at the appropriate time legislative measures that would give further legal protection to FAO and expressed its appreciation for the contribution that he had made towards reaching a solution to the problem.
333. The Conference also noted that the CCLM and the Council had felt that the efficacy of the above solution could only be tested if another action were brought against the Organization in the Italian courts and that the solution would be more likely to be effective if FAO were to put in an appearance in court with the sole purpose of pleading its immunity. Bearing the above in mind, the correspondence with the Host Government and the latter's having become a party to the CPISA, the Council had concluded that there were grounds for the Organization to take a more flexible position than the one that it had confirmed at its Eighty-seventh Session (June 1985), whereby the Director-General should avoid any participation in proceedings before the Italian courts that was inconsistent with the Organization's immunity from jurisdiction. The Conference agreed with the Council's conclusions and decided that, henceforth, if the Director-General deemed it appropriate in the circumstances, he should be free to arrange for the Organization to plead its immunity in court, possibly through the Avvocatura Generale dello Stato whose services had been offered by the Host Government.
334. In conclusion, the Conference expressed its satisfaction at the continued cooperation between the Host Government and the FAO reflected in the decisions related to the questions of immunity.
B. Administrative and financial matters
Audited accounts
Scale of contributions
Status of contributions
Payment of contributions
Status of cash flow and other information on the financial position
Summary of budget appropriation and expenditure by programme
Replenishment and level of the working capital fund
Replenishment of the special reserve account
Measures to deal with problems of delayed payment of assessed contributions
Amendment of procedures for applications of cash surplus
Execution of the approved programme for 1988-89
Italian government contribution in support of the technical cooperation programme
Headquarters accommodation
Personnel matters
335. The Conference noted the views expressed In the Report of the Ninetieth Session of the Council.
336. The Conference adopted the following Resolution.
AUDITED ACCOUNTS
THE CONFERENCE,
Having considered the Report of the Ninetieth Session of the Council,
Having examined the following audited accounts and the External Auditor's Reports thereon:
| Regular Programme 1984-85 | C 87/5 |
| United Nations Development Programme 1984-85 | C 87/6 |
| World Food Programme 1984-85 | C 87/7 |
Adopts the above audited accounts.
(Adopted 26 November 1987)
337. The Conference took note that the Finance Committee and the Council had agreed that the FAO proposed Scale of Contributions for 1988-89 be derived again directly from the UN Scale of Assessments in force for the three-year period 1986-88.
338. The Conference accordingly adopted the following Resolution:
SCALE OF CONTRIBUTIONS 1988-89
THE CONFERENCE,
Having noted the recommendations of the Ninety-first Session of the Council:
Confirming that as in the past FAO will continue to follow the United Nations Scale of Assessments subject to adaptation for the different membership of FAO:
1. Decides that the FAO Scale of Contributions for 1988-89 should be derived directly from the United Nations Scale of Assessments in force during 1987;
2. Adopts for use in 1988 and 1989 the Scale as set out in Appendix E of this report.
(Adopted 26 November 1987)
339. The Conference noted the status of contributions from Member Nations to the Budget of the Organization for 1987 (Appendix G). The Conference was advised that 46 Member Nations had made no cash payment at all in 1987, while 41 Member Nations still had arrears outstanding. A total of US$ 94.2 million was still outstanding of which US$ 67.4 million was due from the largest contributor.
340. The Conference noted that until the end of September 1987, the rate of receipt of contributions had been most favourable as compared to previous years, However, since that date few contributions had been received and it was expected that the percentage of current assessments received in 1987 would be under 70 percent, or similar to the 1986 rate of 67 percent.
341. The Conference urged all Member Nations to pay their outstanding contributions as soon as possible, in order to enable the Organization to ease its current liquidity problem.
342. The Conference was advised that 28 Member Nations had responded to the appeal of the Council with regard to deferring or relinquishing their share of the Cash Surplus, which should improve the financial position of the Organization during the remainder of 1987 by approximately US$ 9 million. Moreover, so far the Host country (Italy) as well as another Member Nation (Angola) had relinquished their share of the cash surplus 1984-85. All Member Nations were invited to follow these good examples.
343. The Conference adopted the following Resolutions:
PAYMENT OF CONTRIBUTIONS - ANTIGUA AND BARBUDA
THE CONFERENCE,
Noting that the Government of Antigua and Barbuda had made a proposal that it liquidate its arrears of contributions over a period of ten years commencing in 1987 in addition to paying each current contribution in the calendar year of assessment,
Decides that:
1. Notwithstanding Financial Regulation 5.5 the arrears of contributions of Antigua and Barbuda totalling 561 507.00 shall be settled through the payment of ten equal instalments of $6 150.70;
2. The first instalment together with the assessed contribution for 1987 shall be payable in 1987;
3. The annual payment of the instalments referred to above, together with the payment of each current contribution in the calendar year of assessment and any advances to the Working Capital Fund, shall be considered as fulfilment of the financial obligations of Antigua and Barbuda to the Organization.
(Adopted 7 November 1987)
PAYMENT OF CONTRIBUTIONS - GUYANA
THE CONFERENCE,
Noting that the Government of Guyana had made a proposal that it liquidate its arrears of contributions over a period of ten years commencing in 1988 in addition to paying each current contribution in the calendar year of assessment,
Decides that:
1. Notwithstanding Financial Regulation 5.5 the arrears of contributions of Guyana totalling $66 100.00 shall be settled through the payment of ten equal instalments of $6 610.00;
2. The assessed contribution for 1987 shall be payable in 1987. The first instalment shall be payable in 1988;
3. The annual payment of the instalments referred to above, together with the payment of each current contribution in the calendar year of assessment and any advances to the Working Capital Fund, shall be considered as fulfilment of the financial obligations of Guyana to the Organization.
(Adopted 7 November 1987)
Status of cash flow and other information on the financial position
344. The Conference welcomed the information provided on the status of cash flow and the financial position of the Organization for the current biennium through December 1987. A hypothetical outlook, based upon the best information available, was provided for the 1988-89 biennium. Several Member Nations expressed appreciation for the submission of this information, and expressed their grave concern as to the situation depicted in the hypothetical outlook for 1988-89 which foresaw a large cash deficit by the end of that biennium. The delegation of the major contributor expressed the view that while the assumptions made regarding receipt of assessed contributions may he based upon the latest information available, the situation with regard to the payment of its assessed contribution could prove to he significantly worse.
Summary of budget appropriation and expenditure by programme
345. At the request of one Member Nation the Conference was also provided with a summary of budget appropriation and expenditure by programme. Several Member Nations also expressed their appreciation for this document.
Replenishment and level of the working capital fund
346. The Conference noted the report of the Ninety-second Session of the Council. It discussed alternative approaches to deal with budgetary and financial uncertainties being encountered by the Organization. It concluded, following extensive debate, that the current level of the Working Capital Fund was inadequate to perform satisfactorily its functions as stipulated in Financial Regulation 6.2. In its discussions the Conference noted that a series of negative factors had contributed to the current difficult financial situation and that these factors were unlikely to be all resolved in a short time. For this reason the Director-General had proposed to increase the Fund from its present level of US$ 13.25 million to US$ 20 million as from 1 January 1988 and US$ 26 million as from 1 January 1990.
347. The majority of Member Nations supported the proposal which they considered provided a practical means to protect the integrity of the approved programme against delayed receipt of contributions which were beyond the control of the Organization. Many Member Nations expressed their reservations about the advisability of increasing assessments on Member Nations at this time, particularly given the sharp increase in assessments, which was not compatible with national objectives of restraint in public expenditure of several member countries. A number of others expressed their strong opposition in principle to being required in effect to offset the non-payments of some Member Nations by increasing the level of the Working Capital Fund. Some Member Nations questioned the need for any increase in the level of the Working Capital Fund and did not support the proposal to increase it. Some others indicated their agreement to an increase in the Working Capital Fund to US$ 20 million, but expressed reservations on the second proposed increase to US$ 26 million. With a view to reaching wider support it was proposed that the Working Capital Fund be increased to US$ 17 million as from l January 1988 and US$ 20 million as from 1 January 1989.
348. The Conference adopted the following Resolution
INCREASE IN THE LEVEL OF THE WORKING CAPITAL FUND
THE CONFERENCE,
Recalling its Resolution 18/81, by which the level of the Working Capital Fund was Fixed at US$13 250 000,
Regretting that in spite of the Council's appeals to all Member Nations to fulfill their obligations in full and promptly, the rate of receipt of contributions to the Budget was not satisfactory and expressing concern at the possibility of such a pattern being repeated,
Noting that the present level of the Working Capital Fund constitutes only three percent of the present Budget level and that this was lower than in most comparable organizations,
Having examined the recommendations of the Council:
Decides that the authorized level of the Working Capital Fund shall be US$17 000 000 as from I January 1988 and US$20 000 000 as from 1 January 1989 and that Member Nations shall be re-assessed in accordance with the provisions of Financial Regulation 6.2(b) (iv) and (v) as from 1 January 1988 and l January 1989 on the basis of the Scales of Contributions then in effect.
(Adopted 26 November 1987)
Replenishment of the special reserve account
349. The Conference recalled that the Special Reserve Account had been established by Conference Resolution 13/81 to protect the Programme of Work and Budget against unbudgeted additional costs, and to cover additional staff costs resulting from adverse movements in the Italian lira/US dollar rates, as compared to the adopted budget rate. It noted that the level of this account had been established at five percent of the total effective working budget for the biennium: this amounted to US$21 850 000 for the 1986-87 biennium. The corresponding figure would be US$24 618 000 for the 1988-89 biennium.
350. The Conference noted with concern that due to the weakening of the US dollar against the Italian lira the account had been entirely exhausted as of July 1987. It was informed that the forecast deficit on the account at 31 December 1987 was currently estimated at US$7.5 million which would he charged against the budget.
351. Following extensive discussion on possible ways to replenish the Special Reserve Account, and with many Member Nations objecting to the replenishment by further assessments, the Conference decided that the best solution, as recommended by the Council, was to replenish the Account with a special assessment of up to half of its level, leaving open the possibility that the balance would accrue from the receipt of arrears of contributions, and from eventual favourable movements of currency rates.
352. The Conference concurred with the Council in requesting the Finance Committee to take speedy action in studying the problem of exchange rate fluctuations and seek other alternative solutions such as dual currencies and market basket of related currencies, following which it would report its findings and recommendations to the Council.
353. The Conference adopted the following resolution:
REPLENISHMENT OF THE SPECIAL RESERVE ACCOUNT FOR 1988-89
THE CONFERENCE,
Noting that the Special Reserve Account has been fully exhausted in the biennium 1986-87, as a result of the negative variance on staff costs due to the decrease in the lira/US dollar exchange rate from the budget rate of fire 1 760,
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 five 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 1986-87 there will be a negative balance in the General Fund,
Considering that by Resolution 13/81, it authorized the Director-General, in the event that a cash surplus should not arise at the end of any biennium adequate to bring the Special Reserve Account to the level. specified, to apply to the Special Reserve Account any sums received In the subsequent biennium in payment of arrears of contributions.
Conscious of the uncertainties regarding the payment of contributions by the largest contributor, troth in the current year and in the subsequent biennium, and of the substantial claims on the arrears of contributions for replenishment of the Working Capital Fund and elimination of the negative balance in the General Fund to he carried forward to 1988:
1. Decides to make a special assessment on Member Nations to provide for fifty percent of the replenishment of the Special Reserve Account, in the amount of US$12 309 000.
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 and of any further action required to bring the level up to that authorized.
(Adopted 26 November 1987)
Measures to deal with problems of delayed payment of assessed contributions
354. The Conference noted the Council's recommendations regarding the replenishment of the Special Reserve Account and the increase in the level of the Working Capital Fund which were necessary if the Organization was to ensure a smooth implementation of the approved Programme of Work and Budget in spite of possible adverse currency movements and delays in the payment of assessed contributions. It was agreed that complementary approaches to deal with financial uncertainties were necessary. The Conference endorsed the Council's recommendation for two additional measures aiming at inducing the timely payment of assessed contributions and providing cash flow relief if so required. In this connection the Conference was informed of the measures being considered by other agencies of the United Nations System.
355. The Conference adopted the following Resolution:
MEASURES TO DEAL WITH PROBLEMS OF DELAYED PAYMENT OF ASSESSED CONTRIBUTIONS
THE CONFERENCE,
Noting with concern the severe limitations on the capacity of the Organization to implement the approved programme of work arising from the delayed payment of contributions, and of arrears,
Recognizing that current Financial Regulations provide no incentive for Member Nations to pay contributions promptly,
Considering that current Financial Regulations do not provide a rational and equitable allocation of the interest income element of a cash surplus, which arises primarily from prompt payment of assessed contributions,
1. Decides that, notwithstanding the provisions of Financial Regulation 6.1(b),
(a) the interest income element of any cash surplus shall be allocated on a weighted basis, in accordance with the amount and the timing of payment of their contributions during the financial period:
(b) all other elements of any cash surplus, other than interest income, shall continue to be allocated in accordance with financial Regulation 6.1(b), among all Member Nations, based on the Scale of Contributions applicable to that period:
(c) all other elements of any cash surplus other than interest income, shall be released to Member Nations which have riot paid in full their assessed contributions For the period, only after receipt by the Organization of payment in full of the amounts due For that period.
2. Requests that the Director-General report to the Council and then to the next Conference on the adoption of measures, as from the 1990-91 biennium, to distribute among Member Nations all interest arising on contributions to the Organization's budget during the previous biennium, on a weighted basis in accordance with the amount and timing of payments made by each Member Nation.
(Adopted 27 November 1987)
Amendment of procedures for applications of cash surplus
356. With regard to the application of the cash surplus, the Conference considered the proposal put forward by the Council. This foresaw that, should the Organization be affected by substantial delays in the receipt of contributions during any biennium, the Conference might delegate to the Council authority to decide that any cash surplus might be withheld until the subsequent meeting of the Conference. Such deferment only meant a delay in the distribution of the cash surplus, which ultimately would be credited to Member Nations as prescribed by the Financial Regulations. It was pointed out by many Member Nations that, in stringent financial situations similar to the present, this could provide a temporary means for increasing cash resources until the financial crisis was overcome.
357. Several Member Nations opposed the proposal on principle. Generally, they believed that the shortfall in income and therefore in cash resources was caused by delayed payment of contributions by other Member Nations, and the effect of this proposal would place an additional burden of payment on those who made their contributions on time.
358. The Conference adopted the following resolution:
AMENDMENT OF PROCEDURES FOR APPLICATION OF CASH SURPLUS
THE CONFERENCE,
Noting that in accordance with Financial Regulation 6.1(b) any cash surplus in the General Fund at the close of any financial period shall be allocated among Member Nations and, as of 1 January following the year in which the audit of the final accounts of the financial period is completed, shall be released and applied to liquidate, in whole or in part, first, any advance due to the Working Capital Fund, secondly, any arrears of contributions, and thirdly, contributions for the calendar year following the year in which the audit is completed,
Noting further, that at its Twenty-second Session (November 1983), the Conference delegated authority to the Council to withhold all or part of the distribution of the cash surplus from the 1982-83 biennium in order to ensure that sufficient funds were available to implement the 1984-1985 Programme of Work and Budget in full,
Considering the need to maintain at all times a cash flow sufficient to ensure full implementation of the current Programme of Work and Budget,
Bearing in mind that the Director-General keeps the Finance Committee regularly informed of the financial situation, including the cash flow and status of contributions,
Considering that additional measures might be necessary to ensure implementation in full of future approved Programmes of Work and Budget:
1. Requests the Director-General to continue to keep the Finance Committee fully informed of the financial position of the Organization, and to submit to the Council detailed information concerning the status of assessed contributions, as well as that of the Working Capital Fund and the Special Reserve Account;
2. Delegates to the Council the authority to decide, in the event of a significant delay in the receipt of contributions, and notwithstanding Financial Regulation 6.1(b), that cash surpluses which may arise in the present and future biennia be withheld in full or in part, with a view to ensuring that sufficient funds are available to implement in full the current approved Programme of Work and Budget;
3. Decides that it shall review the financial situation of the Organization after the Council has exercised the authority delegated to it in paragraph 2 above and determine the time of release of any cash surplus withheld:
4. Urges all Member Nations to ensure that action is taken as soon as possible to pay in full their outstanding contributions, and to remit in the future their assessed contributions in accordance with Financial Regulation 5.5.
(Adopted 27 November 1987)
Contents
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