With your permission I should like to make some introductory comments to this meeting of the Administrative and Budgetary Committee.
The items before you are "budgetary and administrative", but we all realize that the programme and budget are fundamental policy-making instruments. How the resources are apportioned between different activities says something - though not all - about our members' priorities. It is therefore most appropriate that the process of working out the programme and budget is a very thorough one. It is, indeed, desirable that a consensus should emerge so that we can feel that the programme and budget is embraced by the whole membership. To attain this requires a good deal of mutual tolerance and conciliation among members.
Consensus building is a valuable but cumbersome process. The biennial programming and budgeting is a way of alleviating the heavy burden of work and economising with our time - yours and the Secretariat's. There must also be a reasonable balance between planning, doing and reporting results - with the main effort being on doing! We must not be so attached to microplanning and microreporting that valuable resources are lost for implementation and in flexibility.
As this is the second year of the cycle I venture the hope that the consensus process will not be too difficult. The process can also be facilitated by a concentration on policy rather than on detail and micro-management.
The Deputy Director General for Administration, Mr. Waller, will introduce specific items on the Agenda and I propose to make brief comments only on the financial situation, the budget for 1994, some personnel matters and the report of the External Auditor.
The Agency's Financial Situation
I regret I have to begin with the financial situation, but this question still must have the highest priority. At the last February Board meeting, I expressed concern about the precarious situation and mentioned that on the assumption that the actual patterns of contribution payments were to follow those of the previous years, the Agency would remain "financially afloat". Regrettably, this has not been the case. The status of collection of the 1993 Regular Budget has deteriorated compared to the same period last year. Several Member States, including two with considerable contributions, have not followed their past payment patterns and have so far not paid their 1993 contributions. As a result, as of 30 April 1993 unpaid contributions to the 1993 Regular Budget amounted to around US $150 million. The outstanding balance of prior years' contributions was approximately US $40 million. So the total outstanding balance is now almost US $190 million.
At this point any unexpected non-payment, or further delays in payment, of substantial contributions could lead to a cash deficit of such magnitude that it might not even be possible to have it covered by the Working Capital Fund as that fund stands at present. The situation illustrates the importance of our proposal for another increase of the Fund of two million dollars, i.e. to the level of 14 million dollars. We have consistently held the view that the level of the Working Capital Fund should correspond to the equivalent of at least one month's expenditure, i.e. about $17 million and that we should gradually attain that level. You may know that some other organizations consider that an appropriate level should be 20% of the Annual Budget. The Ford Foundation Independent Advisory Group on UN Financing, which submitted its Report in February this year, recommended inter alia that the level of the Working Capital Fund of the United Nations be raised from $100 million to $200 million and that the difference be financed by a one-time assessment of $100 million. Our proposal is more modest.
The risk of a cash deficit is facing us despite the fact that again this year, in anticipation of delays in payment by the States of the former Soviet Union, the Agency has taken steps to reduce its 1993 expenditures by 12%. As you know, the Secretariat is making every effort to minimize the negative impact of this measure on its programme delivery and a list of deferred programme activities, that may be implemented at a later date, has been drawn up.
As mentioned in the Agency's Accounts for 1992 (document GOV/2642), the Budget year 1991 closed with a final cash deficit of the order of 4.8 million dollars. This cash deficit has now fortunately been offset by arrears payments received during the first quarter of 1993. However, as stipulated in the Financial Regulations as amended last December, "sufficient" arrears payments must be received before the implementation of the 1992 deferred programme can start. I am therefore reiterating my plea to those Member States who have not yet done so to pay as soon as possible their outstanding contributions for prior years as well as for 1993 to enable the earliest possible start to implementing the 1992 deferred programme. In this context, I would like to mention another interesting recommendation of the Ford Foundation Report, namely that the United Nations should require its Member States to pay their dues in four quarterly instalments instead of one single lump sum at the beginning of the year and that the UN be given the authority to charge on late payments interest, which will be deposited in the Working Capital Fund. We have discussed some of these ideas in the Board on earlier occasions but it may be desirable to consider them again in view of the continuing difficulties.
1994 Budget
I turn now to the Agency's Budget for 1994. You will recall that the Agency's programme for 1993-94 (Blue Book) was reviewed in detail and endorsed by the Board and the General Conference last year. The budget estimates for 1994, which are before you in the "White Book" (GOV/2641), are based on the requirements for the second year of the biennium. As outlined in the document, few changes of substance have been introduced. Under the "Radioactive Waste Management" programme, it is planned to strengthen the Radioactive Waste Safety Standards (RADWASS) project. The objective of this project is to develop a set of internationally agreed guidelines to assist Member States in establishing national standards, criteria and regulations for the safe management and disposal of radioactive wastes. Under the "Safeguards" programme, additional resources are required for the "Safeguards Operations" subprogramme to cope with the recently revised estimates of the additional workload expected in the States of the former Soviet Union, and with an urgent need to replace safeguards equipment earlier than originally scheduled and with a readjustment of the installation schedule for equipment at facilities coming under safeguards. On the other hand, it was possible to make significant reductions in other current and previously planned safeguards verification activities. It has thus become possible to offset the net increase in "Operations" by a decrease in "Support and Development". Details of programme changes of the 1994 budget are available in an internal document, a practice which had been introduced last year.
As you know the preliminary budget estimates for 1994, as contained in the Blue Book for 1993-94, were $1.2 million above zero real growth. To the extent possible comments received from groups of Member States and individual members during the consultation period have been taken into account and the 1994 estimates now before you are back at a zero real growth level for Agency programmes in total and also for each appropriation section. I believe the proposals before you are consistent with the intent of the Agency's membership as expressed in last year's General Conference resolutions GC(XXXVI)/RES/587 and 596 concerning continued adherence to Articles II and III.A of the Statute, and the need for "adequate balance" amongst the Agency's main activities.
While the Regular Budget of the Agency has remained static during the past nine years, extrabudgetary resources in support of Agency projects financed from the Regular Budget have increased substantially, i.e. from $8.3 million in 1984 to $38.2 million in 1992. It is only thanks to these contributions that the Agency has been able to respond expeditiously to several demands of great importance to its Member States. I must express appreciation to those Member States which have generously contributed extrabudgetary resources. I should also stress that such contributions should not become a substitute for financing secured through the Regular Budgets.
Personnel Issues
On a number of occasions, the Secretariat has brought to the attention of Member States its concerns about the remuneration system of Professional staff which is outdated and often no longer attractive for top-notch specialists from a number of countries. A very detailed assessment of the Agency's problems in this respect was submitted to the A&B Committee in April 1991 in document GOV/INF/608. The Agency's concerns, which are shared by the specialized agencies in the United Nations system, were brought to the attention of the International Civil Service Commission (ICSC). However, so far, the attempts to bring about improvements have been unsuccessful. The only proposal which the Commission has made so far concerns the introduction of special rates for specific occupational groups with demonstrated recruitment and retention problems. The Agency has taken the position - which is shared by almost all other organizations - that such rates would not solve any of the problems but would rather add to them. At the last meeting of the Administrative Committee on Co-ordination (ACC), Executive Heads have reiterated their concern about the continued lack of competitiveness of the conditions of service of Professional staff. The Commission and the General Assembly have acknowledged that the remuneration levels of major international organizations outside the common system are higher than those of the common system. In the view of the Executive Heads, this fact cannot be ignored since, for the recruitment of highly-qualified staff, United Nations agencies are in direct competition with those organizations. This is especially true for the Agency, which has to compete with other international or regional organizations such as EC, OECD and the World Bank. For the Agency, some changes in the salary structure would be essential, such as the introduction of a new P-6 grade to allow a meaningful differentiation between different levels of responsibilities at senior Professional levels.
Another problem is the review of pensionable remuneration of General Service staff carried out by the Commission and which the staff fear would result in reductions or longlasting freezes. The position adopted by the Advisory Committee on Co-ordination on this issue is that any modifications to the methodology must be technically sound and should not result in erosion of the current conditions, as were experienced by Professional staff.
I would like to ask you to bring these concerns to the attention of your competent authorities so that account might be taken of them when your representatives in the Fifth Committee of the United Nations General Assembly take up these matters later this year. Too often, I fear, the representatives of governments at the United Nations are insufficiently aware of the situation in the UN system as a whole and focus on the New York stage.
External Auditor's Report
As a last point, I would like to refer to the External Auditor's Report which is contained in the Accounts for 1992. I have noted with satisfaction that the External Auditor's opinion on the 1992 financial statements is positive and without reservation.
In its details, the Report refers to subjects which had already been taken up by the Auditors in the past, as for instance the Agency's publications - a matter which is still under review by the Secretariat.
In addition, new areas have been reviewed by the External Auditor and we are grateful to him for his review and expert advice. The report on Technical Co-operation is being studied with great attention. In particular, I hope that the Board will approve and Member States will fund a review and revision of the Financial Regulations in which specific regulations covering TC will be incorporated. We fully agree with the External Auditor that the deferred programmes cannot be a long-term solution of the Agency's cash problems which are attributable to the non-payment of Member States' assessed contributions. I hope that the Agency's financial situation will be normalized before too long so that it will not be necessary to take these additional measures, like the deferred programme activities, which do add complications to the Agency's financial management.
As regards the comments made by the External Auditor on cash management, we are still in consultation and expect to receive details of the External Auditor's findings and assumptions so that we can further consider their suggestions. As the External Auditor states, the Secretariat is taking a conservative approach in its cash management policy.