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Progress Made in Strengthening UN Financial Base, But Serious Problems Remain, Budget Committee Told

UN Press Release
Issued on October 22, 2004

Emphasizing the need for the United Nations "to work from a strong and dependable financial base", Under-Secretary-General for Management Catherine Ann Bertini said this morning she was "cautiously pleased" with progress in that direction, although serious problems remained, as she briefed the Fifth Committee (Administrative and Budgetary) on the Organization's current financial situation.

"We have progress, but we also still have problems and concerns based on the fact that we still do not have enough Member States paying in full and on time", she said. Most of the main indicators of the United Nations -– assessments and payments, cash on hand, and debt owed to Member States -– showed improvement as compared with December 2003, and the Organization was in a stronger position than last year. However, she did not want anybody to think the situation "had been fixed", Ms. Bertini stressed.

Turning to the number of Member States that had paid their assessed contributions in full, she said that it was "down somewhat" at 111 (compared with 113 last October) for the regular budget. While the number of countries that had made full payments for the international Tribunals was up at 78 from 69 last October, it was still disturbingly low. There had been some improvement in the "dangerously precarious position" of the Tribunals for Rwanda and the former Yugoslavia, but it remained very critical today. Unpaid assessments for the two Tribunals had doubled between 2002 and 2003 to almost $88 million. By 15 October 2004, that amount had been only slighter lower at $80 million.

While some significant payments were anticipated by the end of December, the shortfall would still remain "at an unacceptably high level", she said. Of the $80 million outstanding at 15 October, the United States accounted for $31 million, Japan for $19 million, Brazil for $10 million, Argentina for $5 million and Mexico for $3 million, with the balance of $12 million owed by 108 Member States. No fewer than 113 Member States still had assessed contributions outstanding for one or both Tribunals as of 15 October, and 13 countries had made no payments of their dues for the two courts since their inception. In that connection, she gave special thanks to the Russian Federation, which had recently made its Tribunals' payments in full. Prior to that, it had not paid for the International Criminal Tribunal for the Former Yugoslavia.

For the regular budget, an amount of over $725 million was still outstanding, she continued, exceeding last year's late dues by over $35 million. Of that total, $530 million was owed by the United States, $75 million by Brazil and $29 million by Argentina. There was an understanding that the major contributor would make a payment of $300 million shortly, thus, breaking the negative trend. However, the continuing high level of outstanding assessments still had clear and negative implications for the core activities of the United Nations. Sincerely thanking the 11 countries that had made full payments to the regular budget, she urged the 52 Member States making some payments for the regular budget and 28 countries that had so far made no payment at all, to pay their assessments as soon as possible.

Turning to cash flow, she said that the Organization had started the year with $23 million in cash and, so far, had only had to resort to cross-borrowing for the regular budget for two weeks in September. Based on the information provided by the major contributor, the United Nations now expected to end the year with a positive cash balance of $96 million. That figure included all the reserves available to fund regular budget activities.

Unpaid peacekeeping assessments, as at 15 October, totalled more than $2.5 billion, as compared with $1.5 billion in 2003. She noted that, while the size of the amount was cause for concern, it should be seen in light of the volume of assessments issued during 2004, and the fact that significant amounts were assessed over the past few months. As a result of new peacekeeping operations in Burundi, Cí´te d'Ivoire and Haiti, total assessments issued for peacekeeping operations in 2004 had increased to more than $4 billion by 15 October. That amount could increase further, depending on actions by the General Assembly and the Security Council.

Of the $2.5 billion debt, the United States owed $881 million, Japan owed $567 million, and Ukraine owed $153 million. Since 15 October, the Organization had received $357 million for peacekeeping, including $328 million from the United States and payments from Cuba, Czech Republic, Hungary, Malaysia, Malta, Netherlands, Russian Federation, Syria, and Sweden.

Projections for the amount remaining in the accounts of closed operations could be as little as $27 million, which could restrict the option of cross-borrowing. She noted, for instance, that the international Tribunals had begun 2004 owing the closed peacekeeping operations $73 million and only gradually repaid that amount during the first quarter of the year. In addition, several ongoing peacekeeping operations had to borrow from the accounts of closed operations eight times during 2004, and the regular budget had to borrow from the accounts once. "It is possible that if assessments are not paid and if there are not enough resources from one place from which we could borrow, we may have to stop activities in a given programme", she warned.

The Organization was expected to owe Member States a total of $605 million for troop and equipment costs at the end of the year. The total debt increase in 2004 was primarily due to the deployment of troops and contingent-owned equipment to three new missions in Haiti, Burundi, and Cí´te d'Ivoire; the faster-than-expected deployment of troops in Liberia; and the higher number of memoranda of understanding signed for contingent-owned equipment for all recent missions. While the Secretary-General remained fully committed to reducing the level of debt to Member States to the maximum level possible, that depended on the extent to which Member States met their financial obligations to the Organization.

In conclusion, she expressed her appreciation to those Member States that had paid all their assessments in full as of 15 October -- Azerbaijan, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, New Zealand, Norway, Russian Federation, Sierra Leone, Singapore, South Africa, Switzerland, United Kingdom, and Zimbabwe. Since then, the Netherlands and Sweden had joined that list.

The Committee will hold its next formal meeting at a date to be announced.

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