While relieved that the United Nations liquidity crisis has eased for now, delegates in the Fifth Committee (Administrative and Budgetary) today voiced their concerns for the long-term financial health of the Organization and its ability to keep delivering on the mandates set forth by the General Assembly, as the United Nations Controller provided an update on the financial situation.
Delegates gathered at the first resumed session of the seventy-sixth session urged all Member States to pay their assessed contributions in full and on time and approved a programme of work that will zero in on the management of the Organization’s thousands of employees.
The representative of Pakistan, speaking on behalf of the “Group of 77” developing countries and China, said budget management must be driven by programme delivery, not available cash, and adequate resources must be provided to ensure the effective and efficient delivery of mandates. Unpredictable collections have repeatedly led to extraordinary measures, such as a slowdown in hiring and controlled spending, which hurt mandate delivery. Liquidity challenges must be reviewed in a holistic way that creates lasting solutions for regular budget operations, he said, emphasizing that the Fifth Committee must examine all proposals thoroughly.
The representative of Switzerland, speaking also for Liechtenstein, said the greater number of Member States that have paid their contributions on time and in full shows that compliance with the Organization’s financial regulations on timely contributions can help effectively avoid future liquidity crises. He encouraged the Secretary-General to keep urging Member States to maintain this shift in payment patterns and to create clear dissuasive measures in case of late or non-payment.
The representative of Australia, also speaking on behalf of Canada and New Zealand, welcomed the easing of the liquidity crisis over the last year yet voiced concern that structural liquidity problems exist that undermine mandate delivery and require sustainable solutions. She urged all Member States to pay their assessments in full, on time and without conditions. “This is both a moral and a legal obligation,” she added. She supported maintaining adequate liquidity reserves, making better use of existing funds and adopting less rigid budgetary procedures to improve the financial situation. “We want the UN to be driven by the programmes Member States approve, not by the available cash on hand,” she said.
Several speakers stressed the importance of effective human-resources management and focusing on improvements in that area during the current session.
The representative of Cameroon, speaking on behalf of the African Group and aligning himself with the Group of 77, said personnel are the Organization’s most important asset and he expected this first resumed session would be dedicated to all aspects of human resources management, including the composition of the Secretariat and desirable ranges. He was worried that other subjects, without direct links to human resources management, are repeatedly finding their way into the first resumed session. This creates an overloaded agenda and prevents Member States from seriously considering all agenda items.
The speaker for Japan said the session’s agenda items include important issues, such as accountability, supply chain activities, after-service health insurance, improving the Organization’s financial situation and, above all, human-resources management. It is regrettable, he said, that Member States have not given the Secretary-General appropriate guidance and promoted his efforts for a more effective, efficient and inclusive Organization.
Saudi Arabia’s delegate, aligning himself with the Group of 77, said he was disappointed with the lack of progress in recruiting staff on as wide a geographical basis as possible. He called for deeper engagement on this issue and strong consideration of qualified candidates from his country. The Secretariat also needs to adopt a rotational scheme for mobility, he said, noting that a proposal now under the Committee’s consideration includes the views of staff unions.
Chandramouli Ramanathan, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, introduced the Secretary-General’s report on the financial situation of the United Nations. He said the liquidity reserves must be set at adequate levels to implement realistic budgets that fulfil the Organization’s mandates.
In outlining the Organization’s financial situation, he said year-end arrears had dropped to $434 million, the lowest level in five years. Yet the liquidity crisis has taken its toll on mandate delivery in 2021, which ended with about 93 per cent budget implementation. The unspent funds will severely impact liquidity for the 2023 budget due to the return of credits, eroding liquidity reserves by the end of 2023. Consequently, 2023 and 2024 will see a recurrence of the liquidity crisis, with spending restrictions becoming inevitable unless the underlying problems are resolved. “This summarizes the regular budget vicious cycle; reduced liquidity leads to reduced implementation, which in turn reduces liquidity again,” he explained.
Abdallah Bachar Bong, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the Advisory Committee’s related report on the financial situation, which noted improvements in the Organization’s liquidity situation since the Secretary-General’s October 2021 report. The current report contained seven proposals related to the regular budget and peacekeeping operations.
On the issue of managing after-service health insurance, Mr. Ramanathan introduced the Secretary-General’s report on the topic, which include proposals to replace the current pay-as-you-go funding practice with a pay-as-you accrue method, starting in 2023, to more prudently manage the programme. He explained that since the programme’s inception, enrolment had grown substantially with significant cost increases that are projected to keep rising, fuelled by an expanding number of retired participants, changing demographics, medical advances and increased costs of medical services.
Mr. Bong introduced the Advisory Committee’s related report, saying that the Secretary-General’s proposal is not comprehensive or convincing. More information and clarification are required in order for the General Assembly to be able to consider it. As such, ACABQ reiterates its recommendation to continue with the pay-as-you-go approach at present.
Also speaking today were the representatives of China, South Africa, Mexico, United Kingdom, Republic of Korea, Rwanda, Russian Federation, United States, Botswana, Syria, Singapore (on behalf of the Association of Southeast Asian Nations), Morocco and the Philippines, as well as the European Union.
The Fifth Committee will meet again at 10 a.m. on Wednesday, 9 March, to consider the composition of the Secretariat, activities of the Ethics Office and disciplinary matters; strengthening accountability in the Secretariat; and supply chain activities in the Secretariat.
Organization of Work
MUHAMMAD JAWAD AJMAL (Pakistan), speaking on behalf of the “Group of 77” developing countries and China, acknowledged the Secretariat’s recent efforts to issue reports in a timely manner, but highlighted room for improvement, as receiving documents well in advance allows members to dedicate sufficient time and attention for deliberating upon these important subjects. Turning to the issue of human resources management, he said a resolution is in urgent need to steer the Secretariat in its functioning.
While recognizing the need to improve the Organization’s financial situation, the Group stresses that any administrative alternative for the management of resources will be pointless if the current pattern of payments continue as present. The main approach to remedy this situation must be to urge all United Nations Member States to pay their assessed contributions in full, on time, and without conditions, in particular those who, for political reasons, consistently and deliberately withhold payments. Accountability is central to the viability and efficiency of any organization, he said, emphasizing that the Group will engage constructively in the review of the current system. The Group will engage constructively with partners during deliberations to address some of the issues that have remained unresolved for a few years to reach consensus.
THIBAULT CAMELLI, of the European Union delegation, in its capacity as observer, raising concerns about the increasing number of recommendations seemingly lacking underlying technical basis, trusted that the ACABQ Chair and its members will collectively do their utmost to ensure that it fulfils its technical mandate. Regarding the Fifth Committee’s programme of work, he said members must resist temptation to postpone important items and strive for the adoption of responsible solutions to these long-term structural issues. Highlighting three areas of importance, he said no agreement has been reached on human resource management. It is high time for an improved labour framework, he said, adding that he was encouraged by progress in 2021 and hoped for momentum to continue.
Concerned with recent attempts to undercut the independence of supervisory bodies and hamper their investigations, he reiterated the European Union’s strong commitment towards a robust accountability framework. A cornerstone of management reform, and an integral part of the delegation of authority, accountability of the Secretariat, but also from all stakeholders, is key to foster a culture of ethics and transparency and to prevent and address any type of misconduct. A culture of ethics and transparency must be ensured. Efforts must also focus on funding after-service health insurance, he said, adding that together the Committee should strive to find solutions. Reiterating full support for improving working methods, he said the Committee has proven to be resilient, with consensus being the fundamental key going forward. As such, he encouraged efforts to ensure multilingual debates.
FELIX-FILS EBOA EBONGUE (Cameroon), speaking on behalf of the Africa Group and aligning himself with the Group of 77 and China, said that despite the Secretariat’s efforts, the Group notices some delays in the issuance of documents in all working languages. The Africa Group looks forward to timely issuance of reports by the Secretariat and the Advisory Committee, according to the Assembly’s rule of procedure. He stressed that the availability of simultaneous interpretation during critical parts of the Fifth Committee’s work, in addition to formal meetings, is expected. Human resources are the first and foremost asset of the Organization, he said, expecting that the first resumed session be primarily dedicated to human resources management in all its aspects, such as composition of the Secretariat and desirable ranges. The session also provides the opportunity to consider other important matters, such as the revised estimates relating to the United Nations Support Mission in Libya (UNSMIL), the use of the contingency fund and the Joint Inspection Unit, among others.
He expressed worries that other subjects, with less or no direct link with human resources management, are finding their way into the first resumed session, making it even more overloaded. This prevents Member States from seriously considering each and every point on the agenda. Overwhelming the first resumed session with unclosed items from the main session is a practice that needs to be discontinued. With regards to the substance of human resources matters, the Africa Group, under the guidance of the Group of 77 and China, will focus on the diversification of the workforce, insisting on equitable geographical representation, financial support for the internship programme, and the recruitment process and the mobility of personnel, among others.
FIONA WEBSTER (Australia), also speaking on behalf of Canada and New Zealand, said the first resumed session is an opportunity for the Fifth Committee to increase the Organization’s efficiency and accountability, improve the financial situation and strengthen human resources management. “The most valuable asset of the United Nations is its staff. We are mindful of the difficult working conditions associated with COVID-19 and appreciate the UN’s efforts to adapt its work practices and prioritize staff welfare over the last two years,” she said. The United Nations needs a workforce that reflects the geographical diversity of its Member States, reaches gender parity, and empowers staff. The workforce must operate with the highest standards of efficiency, competence, and integrity.
She regretted that the Fifth Committee was unable to reach consensus on human resources management during the previous three sessions and urged Member States to strive for an outcome on each report, considered on its own merits, to provide clear guidance to the Secretary-General. Regarding the Organization’s financial situation, she said she is pleased the liquidity crisis has eased over the last year. Yet there are structural liquidity problems that are undermining mandate delivery and require sustainable solutions. She urged all Member States to pay their assessments in full, on time and without conditions. “This is both a moral and a legal obligation,” she said. She supported maintaining adequate liquidity reserves, making better use of existing funds and adopting less rigid budgetary procedures to improve the financial situation. “We want the UN to be driven by the programmes Member States approve, not by the available cash on hand,” she said.
KIMURA TETSUYA (Japan) is pleased the Organization’s financial situation has improved, compared with the last few years, owing to a 113.3 per cent collection rate of regular budget contributions in 2021 and the Secretariat’s continued efforts to better manage liquidity. These collective efforts mean the Organization could even start the year with a cash surplus of more than $300 million. He thanked Member States that have shifted away from the trend of delayed payment and encouraged them to continue to fulfil their obligations. Japan’s determination to actively contribute to the implementation of the Organization’s mandates remains unchanged. He commended the Secretary-General, the Controller and the entire Secretariat for their careful and effective management of liquidity to improve mandate implementation. Yet Japan remains concerned by the liquidity challenges in, inter alia, the regular budget, which prevent the Secretary-General from fully implementing the mandates. He welcomed the Secretary-General’s efforts to propose concrete measures to address this matter and is ready to discuss them constructively. It is important to set realistic resource levels that are necessary and sufficient for the delivery of the given mandates. He also reiterated that the resources of Member States are not unlimited. “It is the shared responsibility of Member States and the Secretariat to constantly seek to improve the effectiveness and efficiency of the use of resources so that we can maintain a high level of accountability to our taxpayers,” he added. Japan will keep calling for budgetary discipline, as it is indispensable for the United Nations to operate and deliver its mandates with accountability.
MOHAMMED ABDULAZIZ H. ALATEEK (Saudi Arabia), aligning himself with the Group of 77, said his delegation is disappointed with the lack of progress in recruiting staff on as wide a geographical basis as possible, calling for deeper engagement and strong consideration of qualified candidates from his country. It is also time for the Secretariat to adopt a rotational scheme for mobility, he said, noting that a proposal currently under the Fifth Committee’s consideration includes the views of staff unions. Turning to the Organization’s financial situation, he encouraged all Member States to pay in full and on time and highlighted practical proposals before the Committee that ensure mandates are delivered, reimburse police- and troop-contributing countries and do not absolve any member from financial responsibility.
CHENG LIE (China), aligning himself with the Group of 77, said that, against the backdrop of a volatile global situation, parties will hopefully continue to work in the “5C” spirit of cooperation, consultation, constructiveness, compromise and consensus to ensure a successful outcome for the session. On human-resources management, he noted that the Fifth Committee has been unable to adopt a resolution thereon for the past three sessions, which deprives the Secretariat of the ability to receive feedback from Member States. The Secretariat must address the issue of many developing countries being under- or unrepresented and give attention to the specific underlying issues and financial situations affecting the same. Emphasizing that a sound financial basis allows the Organization to perform its functions, he said that the main problem is the lack of liquidity; if Member States do not pay their dues on time, no reform initiatives will be able to resolve this issue. Over the years, the largest contributor has not fulfilled its contributions and, further, unilateral coercive measures inhibit the ability of States to pay, he added.
MASOTSHA MONGEZI MNGUNI (South Africa), associating himself with the African Group and the Group of 77, said human resources management in the Organization, especially in relation to reform and strategy, including on mobility, composition, and internship programmes, is among the important issues of priority to his delegation. South Africa would be particularly interested in receiving further clarity from the Secretariat on its efforts to make the internship programme more accessible to deserving young people from developing countries in Africa. It is regrettable that the Committee has not reached consensus on human resources management, he said, recognizing that a successful conclusion of that item is essential in providing the Secretariat with the required policy direction, such as on the pursuit of gender parity and equitable geographical representation in the United Nations. Also of concern to his delegation is the review of efficient administrative and financial functioning of the United Nations, especially receiving further clarity from the Secretariat concerning its proposal on establishing financial regulations for the Office of the United Nations High Commissioner for Refugees (UNHCR).
JESÚS VELÁZQUEZ CASTILLO (Mexico) welcomed the Secretariat’s efforts to tackle the Organization’s financial challenges, resolve its liquidity problems and ensure predictable, stable financing for the regular budget and peacekeeping operations. On human-resources management, he expressed hope that agreement will be reached to ensure a high-quality, responsible and modern system. Further, the responsibilities of staff and management alike must promote mobility, diversity, adaptability, transparency and accountability. Turning to Staff Regulations and Rules, he said that the outcome of the review thereon must be in line with the mandate entrusted to the Secretary-General, which asked him to step-up efforts to ensure gender parity within the Secretariat. On disciplinary issues, he expressed concern at the prevalence of misconduct — especially in the field — and called for measures that discourage the future commission thereof so as not to create precedent and loss of resources for the Organization.
RICHARD CROKER (United Kingdom) said it has been four years since the Fifth Committee has provided guidance on the Organization’s efforts to strengthen its human-resources management. “It is our responsibility to ensure that the UN and its staff have modern, fit-for-purpose human resources policies,” he said. Strengthening the accountability system, and improving transparency, is central to an effectively managed United Nations. Regarding the Organization’s financial situation, he said he hoped the United Kingdom’s decision to realign its payments to the United Nations financial year contributed to the improvement in the Organization’s financial situation. The past two years have demonstrated that integrated, agile and responsive supply chains, as well as cost-effective, transparent, procurement activities, are crucial for efficient mandate implementation and supporting the health of personnel. The Secretariat’s focus on the entire supply chain — and the transition to a circular supply chain — supports efficiency and sustainability. United Nations supply chain activities should reduce climate impacts and support the 2030 Agenda for Sustainable Development.
JUN JI SUN (Republic of Korea), associating herself with the Group of 77, said human resources are the Organization’s greatest asset and their long-term management is crucial. Recalling that the seventy-third session was the last time that guidance on that issue was adopted, she expressed hope for progress on approving a related draft resolution during the current session. She went on to emphasize that Member States must pay their dues on time, encouraging the introduction of innovative proposals to resolve that issue.
Mr. UZAMBUMWANATONA (Rwanda), endorsing the statement delivered on behalf of the African Group, emphasized: “We must hold ourselves accountable and give the United Nations the tools it needs to conduct its work effectively and efficiently.” He said that, in light of the grave financial landscape, Rwanda remains concerned about outstanding assessments and reimbursements to troop-contributing countries. In light of these and other issues, he said Rwanda anticipates frank and productive discussions with a view to reaching consensus decisions.
DMITRY S. CHUMAKOV (Russian Federation) discussed and made several points about his Government’s special military operation in Ukraine, rejecting the false accusations by many Member States against the Russian Federation’s right to defend itself against security threats and protect innocent people. Underscoring that Russian forces are not striking civilian facilities, he said that threats to civilians come from Ukrainian nationalists using them as human shields. It is not the Russian Federation’s policy to diminish the interests of Ukraine; rather, it is to protect the citizens of the Russian Federation. Turning to the work of the Fifth Committee, and stressing that the current information war should not hamper the Committee’s work, he said that the main items on the Committee’s agenda will be procurement, human-resources management and accountability. There has been no General Assembly resolution on either procurement or human resources for five years, and no resolution was reached on accountability in 2021, but he expressed cautious optimism that progress will be made on these resolutions in the General Assembly in 2022. He went on to say that recent meetings have shown that, if delegations deem a particular agenda item to be important, they attend the meeting in person. Therefore, an increase in the number of both formal and informal in-person meetings would be helpful, he said.
CHRISTOPHER P. LU (United States) said the priority is to reach consensus on a resolution that allows the Secretariat to modify and diversify its staff while improving human resource management. “Our failure to act on these long overdue changes” must end, she added. Expressing support for the Secretary-General’s efforts to manage the liquidity crisis and strengthen the Organization’s accountability issues, she stressed the need to ensure that lessons learned during the pandemic, including those concerning flexible working arrangements, will be applied.
KATLEGO BOASE MMALANE (Botswana), associating herself with the Group of 77 and the African Group, noted the Fifth Committee will consider several reports in the coming weeks, most important among them being one on human resource management. Pledging to engage in frank and productive discussions on that matter, she said Botswana’s longstanding position has been the call for equitable geographical representation at all levels, refining performance management and addressing deficiencies in the staff selection processes. In human resource management, Botswana will take a keen interest in various clusters, namely reform and strategy, with a particular focus on mobility; composition and desirable ranges; the Ethics Office and the Joint Inspection Unit on conflict of interest; proposed amendments to Staff Regulations and Rules; internship programmes; and change management. More innovative methods are needed to ensure that all 193 Member States are represented in the composition of the United Nations workforce. Another key priority is the annual report of the Joint Inspection Unit for 2021 and programme of work for 2022, she said, adding that his delegation will actively participate in deliberations on this matter in order to achieve a positive outcome for the Organization’s administrative operations.
ESSAM ALSHAHIN (Syria), endorsed the statement made by Pakistan on behalf of the Group of 77 and China. Speaking in his national capacity, he joined the Russian Federation in condemning the comments from several delegations that are hostile to the Russian Federation. The Russian Federation has the right to defend its territory against all threats to Russian security. The Fifth Committee is mandated to discuss budgetary and financial matters. This is not the place to mention political issues and he asked colleagues to focus on the matters at hand.
ABDALLAH BACHAR BONG, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), said the Advisory Committee always tries to be impartial in the delivery of its reports. All measures are taken to be sure the reports are given to the Member States in a timely manner.
The Fifth Committee then approved the programme of work by consensus.
Improving the Financial Situation of the Organization
CHANDRAMOULI RAMANATHAN, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, introduced the report of the Secretary-General on improving the financial situation of the United Nations (document A/76/429). While the Secretary-General remains committed to the effective and efficient use of resources to fulfil the Organization’s mandates and deliver results, the budget must be realistic and the Organization must be able to count on predictable and adequate financial contributions. Liquidity reserves must be set at adequate levels to implement such budgets.
The Secretary-General has repeatedly conveyed his concerns about the Organization’s deteriorating financial health, he said. A major cause of this deterioration has been the increase in arrears, which grew alarmingly since the last report in 2019. It was also exacerbated by fluctuating payment patterns throughout the year. Large payments in December, with significant uncertainty about their timing and volume, compounded an already difficult planning problem, he said, adding that the trend makes the current regulatory framework increasingly difficult to follow without seriously compromising mandate delivery. While liquidity problems have been experienced in the regular budget before, the situation over the past few years has worsened and affected mandate delivery significantly. Hiring delays, used to manage the liquidity crisis, have adverse consequences, including a vicious cycle of declining budget implementation and increasing pressure on existing staff. “This is not a desirable or sustainable workaround,” he said.
For the regular budget, he continued, the Secretary-General is again recommending measures that would strengthen liquidity-bridging mechanisms, recognizing that Member States did not approve previous proposals for greater flexibility in managing the budget. The Secretary-General is repeating an earlier request to provide $200 million more liquidity by increasing the level of the Working Capital Fund to $350 million, and also proposing the replenishment of the Special Account by $63.2 million, as its role as a liquidity reserve was weakened by Assembly decisions to draw down that amount in 2013 and 2015 to pay for the regular budget and the Capital Master Plan. The Secretary-General is seeking the concurrence of Member States to return credits only if outstanding assessments are less than the regular budget liquidity reserves. “This is intended to break the vicious cycle of declining liquidity,” he said.
He then outlined changes in the financial situation since the publication of the financial report in October 2021, noting that 153 Member States had paid their dues in full for 2021, the highest number in nearly 20 years. The Organization had collected 113.3 per cent of the assessments and as a result year-end arrears dropped to $434 million, down from $808 million last year. This represents the lowest level in five years, and the lowest amount as a percentage of the assessment since 2012. He said $903 million was collected in the last quarter; nearly 84 per cent of those collections were paid before December.
Yet the liquidity crisis has taken its toll on mandate delivery in 2021, which ended with about 93 per cent budget implementation, he said. The unspent funds will severely impact liquidity for the 2023 budget due to the return of credits, eroding liquidity reserves by the end of that year. Consequently, 2023 and 2024 will see a recurrence of the liquidity crisis, with spending restrictions becoming inevitable unless the underlying problems are resolved. “This summarizes the regular budget vicious cycle; reduced liquidity leads to reduced implementation which in turn reduces liquidity again,” he explained.
Turning to peacekeeping operations, he said these operations also face liquidity challenges though they are not as serious as the regular budget. Peacekeeping operations do not have working capital to cover cash shortages. The Peacekeeping Reserve Fund of $150 million is available only to support new missions and the substantial expansion of existing missions. To address the issue of timely payments to troop- and police-contributing countries, the Secretary-General has proposed several measures; he is committed to working with Member States to implement practical and common-sense solutions to the problems and restore the Organization’s financial health. The proposals set out in the report aim to address the current unsustainable situation and include proposals for peacekeeping operations that can build on the success of the measures already approved in 2019. Yet these proposals do not diminish the obligation of Member States to fulfil their financial obligations to pay in full and on time.
Mr. BONG, ACABQ Chair, introducing the Advisory Committee’s related report (document A/76/7/Add.29) and noting improvements in the Organization’s liquidity situation since the Secretary-General’s October 2021 report, said the current report contain seven proposals related to the regular budget and peacekeeping operations. On the three proposals on the regular budget, ACABQ, among other things, recognized the Organization’s recent liquidity challenges of the regular budget, but it does not note a sustained pattern of such challenges. Noting the improved liquidity situation during 2021, ACABQ remains unconvinced of the proposal to increase the level of the Working Capital Fund at this stage and recommends against the proposal. It also recognized that the Special Account serves as an important additional liquidity tool to complement the Working Capital Fund in managing regular budget cash flows. A decision about whether to replenish the Special Account by transferring the credits is a matter within the purview of the General Assembly. ACABQ recommends against the approval of the proposal to return credits for the regular budget only if outstanding assessments are less than the regular budget liquidity reserves and to limit the amount to the difference between the liquidity reserves and the outstanding assessments.
Turning to the four proposals related to peacekeeping, he said the Secretary-General should have requested the Assembly’s approval for the management of the cash resources of the active missions as a pool. The Advisory Committee recommends that the Assembly ask the Secretary-General to present options for potentially charging interest on internal borrowing and provide modalities for calculating, charging, collecting and accounting for interest. On the Peacekeeping Reserve Fund, the Advisory Committee sees merit in its proposed use as a liquidity mechanism for active peacekeeping operations. However, the approved purposes of the Reserve Fund should be safeguarded by keeping adequate resources for new missions and the expansion of existing missions. As such, the Advisory Committee recommends that the Assembly approve the use of the Peacekeeping Reserve Fund as a liquidity mechanism up to $110 million for active peacekeeping operations and keep $40 million in reserve to support new missions and the expansion of existing missions as originally intended for the Fund. On the return of credits for any active peacekeeping operation in proposal, the Advisory Committee does not see the need for the proposal at this stage and therefore recommends against it.
He said ACABQ believes that the special commitments centrally approved for 2019 and 2020, with deficiencies identified by the Board of Auditors, should be exceptions, rather than becoming a “new normal”. The Assembly should request the Secretary-General to provide detailed information on the impact of liquidity on mandate delivery and underperformance. Consolidated information on lessons learned and best practices from the COVID-19 pandemic and austerity measures implemented by the Secretary-General during the liquidity situation, and efficiency gains, should be included in the foreword and introduction of each programme budget’s budget sections, as well as in the peacekeeping overview and the peacekeeping mission reports. In addressing the liquidity situation, ACABQ has made other recommendations, including those related to previous options submitted by the Secretary-General and has expressed the view that the steady increase in accumulated surplus generated through the cost-recovery services merits further analysis.
Mr. AJMAL (Pakistan), speaking again for Group of 77 and China, said that although the liquidity crisis has improved, the long-term financial health of the Organization is still of concern, particularly the deep and persistent liquidity problems in the regular budget. He urged all Member States to pay their assessed contributions in full, on time, and without conditions. Adequate resources must be provided to ensure the effective and efficient delivery of mandates that need to be funded not just adequately, but in a predictable manner, he stressed, adding that budget management must be driven by programme delivery and not available cash. Expressing empathy with Member States who are genuinely unable to meet their financial obligations for reasons beyond their control, he said all efforts should be made to facilitate the payments of assessed contributions of Member States.
Noting that the unpredictability in the pattern of collections has resulted time and again in extraordinary measures, such as the slowdown in hiring and controlled spending, both of which negatively affect mandate delivery, he expressed concern that almost half of the current regular budget arrears can be attributed to a single Member State. On the peacekeeping front, he said the Group is encouraged that the measures approved in Assembly resolution 73/307, namely the cross-borrowing mechanism and the inclusion of the full estimated budget for the entire peacekeeping fiscal year in assessment letters, has facilitated the timelier payment of liabilities to troop- and police-contributing countries. However, the cash shortfalls in the regular United Nations budget continue to be covered by borrowing from accounts of closed peacekeeping missions, which is neither a good budgetary practice nor sustainable. “The Group of 77 and China bears an ever-increasing share of the financial burden of the Organization and remains committed to participate constructively towards all efforts aimed at resolving the financial difficulties of the Organization,” he said, confident that its partners will reciprocate in the same spirit, at a time when the success of the Organization is most imperative.
Mr. CAMELLI, of the European Union delegation, in its capacity as observer, expressed relief about the improved financial situation, adding that were it not for the efforts of the Secretary-General and the Controller, further activities and outputs would have been postponed or canceled and persistent under-execution would have hampered the relevance of the Organization. Welcoming the reduction of arrears by some Member States, he urged all others who have accumulated arrears to address this matter of utmost priority. As the Secretary-General described in his letter, “the system is clearly broken”, he said, adding that: “We need to address the structural root causes of the cash liquidity’s downward spiral.”
Turning to the United Nations regular budget, he said the rigid regulatory framework makes effective management and an already tense cash situation difficult. The Organization is facing a vicious cycle where lower budgetary implementation requires the return of unspent appropriations to Member States, thus further deepening the cash deficit; in 2023, this could exceed $200 million. On peacekeeping operations, he welcomed progress, including significant improvements in timely payments of uniformed personnel, but regretted to note that shortfalls in the regular budget continue to impede the liquidation of closed peacekeeping operations. As strong defenders of the principles of multilateralism, and as the largest collective financial contributor to the United Nations, the bloc reiterates its commitment to providing the necessary resources to the Organization so it can implement all its mandates, fully and effectively. Ensuring the financial health of the Organization is a shared responsibility, fundamental for the ability of the United Nations to respond to its numerous mandates and missions. Reiterating the call upon the Fifth Committee to rise up to this challenge, he also called for the adoption of responsible and sustainable solutions to this issue.
TSU TANG TERRENCE TEO (Singapore), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), commended Member States for efforts in improving the financial situation and noted the Secretary-General’s related proposals. The Organization’s financial challenges are mainly due to the late payment of assessments, and more flexibility to manage financial resources will be of little use if there are insufficient resources to begin with. The only truly sustainable solution to overcoming persistent liquidity challenges is for all Member States to pay their assessments in full, on time and without conditions, she said, adding that this is a legal and financial obligation. Expressing hope that the high collection rates for 2021 will signal a new trend, rather than an anomaly, in collection patterns, she urged the Secretary-General to continue to exercise prudence in expenditures to avoid relapsing into a deeper financial crisis.
While ASEAN’s share of the regular budget is increasing, she said, it remains committed to paying its assessments so as to support the Secretary-General and the work of the United Nations. ASEAN also remains committed to engaging constructively in any efforts towards resolving the Organization’s financial difficulties. At the same time, she stressed that such efforts must not result in unfair additional burdens and negative consequences on Member States, she said, adding that: “We look forward to a constructive and robust discussion on how we can best help the Secretary-General to implement the mandates we have laid out for him.”
MIKE MARTIN AMMANN (Switzerland), speaking also on behalf of Liechtenstein, said the increase in the number of Member States that have paid their contributions on time and in full is proof that compliance with financial regulations regarding the payment of contributions is an effective way to avoid future liquidity crises. He encouraged the Secretary-General to continue to urge Member States to maintain this shift in payment patterns in the future and to put in place clear dissuasive measures in case of late or non-payment. Pointing out that the various restrictions on non-post spending have been inadequate to deal with increasing liquidity gaps between cash inflows and outflows, he said that without a sustained and decisive intervention by the General Assembly to address that problem, Member States would need to expect systemic underfunding of United Nations mandates. Ultimately, the prioritization of tasks by the Secretariat, which is necessary considering the financial situation, poses a risk for Member States’ control over the mandate’s implementation. Thus, it is essential to review the liquidity challenges in a holistic way and seek lasting solutions for regular budget operations, and the Fifth Committee must examine all proposals thoroughly. As the Secretary-General should have more leeway in managing the budget, he should, for example, be authorized to reallocate resources to sections of the budget as needed, while ensuring full accountability and transparency to Member States.
KIMURA TETSUYA (Japan) said the agenda items before the Committee in this relatively short session include important issues such as accountability, supply chain activities, after-service health insurance, improving the Organization’s financial situation and, above all, human-resources management. Japan will carefully consider these agenda items on their own merits and in the context of ensuring better delivery of the Organization’s mandates by making the United Nations stronger, more integrated and more accountable. Human resources management, particularly, is a key element of the Organization’s effective and efficient operation. Yet, regrettably, Member States have failed in previous years to give the Secretary-General appropriate guidance and promote his efforts for a more effective, efficient and inclusive Organization. Member States should redouble their efforts in this area, giving proper guidance and negotiating by clusters with more focused discussions of each item. Japan reiterates the critical importance of preserving the role of the Fifth Committee, which holds responsibility for the Organization’s administrative and budgetary matters, and its long-established practice of achieving agreement by consensus.
HIND JERBOUI (Morocco), aligning herself with the Group of 77, emphasized that, as the financial well-being of any organization is crucial, it is the responsibility of Member States to pay their assessed contributions fully and on time to guarantee that the United Nations has sufficient resources to carry out its work as mandated by Member States. She welcomed the improved financial situation resulting from the Secretary-General’s 2021 appeal, commending the latter’s efforts to ensure financial stability and predictability for the Organization. She went on to note that Morocco was among the first to honour its regular-budget commitments for 2022, urging other States to similarly meet their obligations under the Charter of the United Nations. Morocco is near the top of the list of countries that paid their contributions within the 30-day timeline, she added.
MARIVIL VILLA VALLES (Philippines), endorsing the statements delivered on behalf of the Group of 77 and ASEAN, said that whereas the liquidity constraint has had a huge impact on United Nations programme implementation and mandate delivery, there were some improvements, especially in terms of the outstanding arrears in the regular budget, which decreased from $808 million at the end of 2020 to $517 million as of November 2021. The General Assembly must again review and deliberate on certain proposals to ensure the Organization’s sustainability of operations, he emphasized. A further review of the proposed solutions and an analysis of the regular budget’s liquidity situation is needed, given the intricacies of such proposals, which could possibly lead to increased assessments for Member States, he cautioned. The Philippines also wishes to hear updates on the Secretary-General’s initiatives to explore possible options for replenishment of the special account, he added, emphasizing that all measures to be implemented in managing the Organization’s liquidity should be in full compliance with the Financial Rules and Regulations. On the peacekeeping front, he welcomed the continued management of the cash resources of active missions as a pool for the timely settlement of payments to troop- and police- contributing countries. As for the Secretary-General’s proposal to return credits for any active peacekeeping operations for unspent funds only if payments to police- and troop-contributing countries due and payable have been settled, he said a further review of that matter is also needed, considering the proposed continuation of the cash pool arrangement for active peacekeeping operations and in view of the improvement in the settlement of arrears or payments due to those countries, which were reduced from $248.5 million to $80.5 million in the period 2019 to 2021.
MR. VELÁZQUEZ CASTILLO (Mexico) welcomed the Secretariat’s efforts to address the Organization’s financial challenges and resolve its liquidity problems. He also welcomed certain trial measures for managing peacekeeping resources, stating that such measures that prove useful should continue to be implemented. Mexico will look closely at proposals relating to the regular budget and to peacekeeping operations, taking into account the ACABQ’s guidance, with the key objective of creating solutions that use existing funds and do not increase Member States’ assessed contributions. Emphasizing that improving the United Nations financial situation is closely linked to reform, he said that it is the responsibility of Member States to effectively support the Organization and collaborate with the Secretariat to remove structural obstacles, offer flexibility in budget management and ensure predictable, sustainable financing for the regular budget and peacekeeping operations.
Managing After-Service Health Insurance
Mr. RAMANATHAN, introducing the report of the Secretary-General on managing after-service health insurance (document A/76/373), outlined the after-service health insurance programme, explaining that since its inception, enrolment has grown substantially with significant cost increases that are projected to keep rising, fuelled by an expanding number of retired participants, changing demographics, medical advances and increased costs of medical services. In contrast to pension entitlements, the programme is funded on a pay-as-you-go basis, an approach that has resulted in increasingly large unfunded liabilities projected to, by 2051, total $23.4 billion, alongside projected annual budgets reaching $499.7 million.
Highlighting the Secretary-General’s concerns, he pointed to the level of unfunded insurance liabilities and the financial pressure the pay-as-you-go funding method places on current and future budgets. The Board of Auditors has also cautioned that the employee benefit liability is likely to consume an increasing portion of the regular budget over time, should it remain unfunded. Adoption by the United Nations of a systematic method for funding accrued after-service health insurance liabilities to ultimately replace pay-as-you-go funding is needed for more prudent financial management of the programme. Several United Nations organizations have adopted their own funding strategy and have achieved various levels of funding, he said, adding that: “It is now time for the United Nations to initiate funding of [after-service health insurance] benefits as they accrue.”
Highlighting the report’s proposal, he said it would call for a gradual transitioning to pay-as-you-accrue funding of the Organization’s share of after-service health insurance costs starting in 2023. The strategy entails maintaining pay-as-you-go funding for a closed group of existing staff and retirees and initiating a charge against salary costs to provide for the future benefits of new staff. Given the high sensitivity to demographic and economic factors, gradual partial funding of up to 75 per cent of the after-service liability is proposed through a 6 per cent charge against salary costs. While the proposed strategy will initially require additional assessment, it will considerably reduce budget requirements in the long-term, securing the financial viability of the programme. He said the health-care benefits provided by the programme are a vital element of social security for eligible retiring staff as they enable the Organization to ensure retiree access to appropriate health care wherever they reside at a cost that takes into consideration their pension income. Stressing that the Secretary-General attaches high importance to this programme and its ongoing sustainability, he said adoption of the proposed funding strategy will serve to ensure financial viability over the long-term while also providing more evenly distributed and ultimately lower budgetary requirements.
Mr. BONG, introducing the Advisory Committee’s related report (document A/76/579), provided an overview. Acknowledging the cost containment efforts undertaken by the Secretariat, he also noted the steady increases in health insurance expenditure incurred by the Organization for active staff members from 2016 to 2020. As such, ACABQ recommends that the Assembly ask the Secretary-General to include information on budgeted and actual health insurance expenditure for active staff in the context of future regular and peacekeeping budget submissions. Concerning the ongoing preparation of an audit of medical claims, the Advisory Committee considers that such an audit of the medical claims and performance of third-party administrators is overdue and looks forward to receiving the audit findings. Taking into account the Secretariat’s positive experience in leveraging national health insurance plans in the United States and Austria, he said the Assembly should request the Secretary-General to renew efforts to explore such opportunities with national Governments in countries with a significant population of Secretariat retirees and to report on the outcome in the Secretary-General’s next report. He welcomed inclusion in the after-service programme of the information on projections for the eligibility of staff serving in peacekeeping operations, as requested by the Assembly.
On the Secretary-General’s recommendations for funding the after-service liability, he said the related report does not provide a comprehensive proposal, as requested by the Assembly, that would introduce a change in the Organization’s approach to funding liabilities. The Committee would have expected a better substantiated proposal, with clear criteria for the application, as of 1 January 2023, of the pay-as-you-accrue versus the current pay-as-you-go funding streams. It also would have expected clearer justification for changes introduced to previous proposals, and well-established and consistent funding and investment strategies. As such, more information and clarification are required in order for the General Assembly to be able to consider the Secretary-General’s proposals.
He said the Secretary-General’s new funding proposal presents significant differences to prior proposals, which are not identified in his report or explained upon enquiry. The proposal lacks clarity and consistency in the explanation of how the pay-as-you-go and the pay-as-you-accrue funding streams would work. Also, the rationale provided for the change from full funding of after-service liabilities to partial funding up to 75 per cent of a potential reserve fund is not convincing, nor is the proposal to initially invest after-service funds from regular and peacekeeping budgets in the existing short- to medium-term pool. Moreover, the 2020 actuarial valuation retained some of the assumptions found to have a high level of error identified by the Board of Auditors. The objective of ensuring the availability of adequate resources to settle the recognized employee benefit liabilities can be achieved without necessarily immediately creating a reserve. As such, ACABQ reiterates its recommendation to continue with the pay-as-you-go approach at present and recommends against the approval of recommendations (b) and (c) contained in paragraph 77 of the Secretary-General’s report. It also recommends the further exploration of options for the management of potential after-service health insurance reserves, in particular by the United Nations Joint Pension Fund.
Mr. AJMAL (Pakistan), speaking on behalf of the Group of 77, reiterated the importance it attaches to the welfare of United Nations staff members and its commitment to the settlement of their end-of-service liabilities, including those related to after-service health insurance. He said the Group has carefully considered the Secretary-General’s report and has noted concerns regarding significant after-service health insurance liabilities and the implications they could have on the sustainability of the after-service health insurance and solvency of the Organization in the future. Further, it is deeply mindful of the long-term implications that decisions on that issue can have on future budgets of the United Nations and its staff members, he said, adding that the Group will seek during informal sessions a more in-depth understanding of the proposed payroll charge, bearing in mind the fundamental interests of the United Nations staff and Member State contributions.
