Executive Board Two-hundred and first session

Transcription

1 Executive Board Two-hundred and first session 201 EX/15.INF.3 PARIS, 28 April 2017 English & French only Item 15 of the provisional agenda DRAFT PROGRAMME AND BUDGET FOR (39 C/5) EXPLANATORY NOTE ON INTEGRATED BUDGET FRAMEWORK (IBF) AND STRUCTURED FINANCING DIALOGUE (SFD) SUMMARY As requested during the 9th Intersessional meeting of the Executive Board, this document provides supplementary information on the Integrated Budget Framework which has been reflected in the Draft 39 C/5 budget, as well as on the Structured Financing Dialogue.

2 201 EX/15.INF.3 I. What is IBF and SFD? INTEGRATED BUDGET FRAMEWORK (IBF) AND STRUCTURED FINANCING DIALOGUE (SFD) 1. The Integrated Budget Framework (IBF) aims at providing a holistic picture of the level of resources needed during a biennium to implement the programme and achieve the expected results endorsed by Member States, including not only the regular budget but all other sources of funds, and irrespective of whether funds are already committed or not. Compared with the past wherein the budget of UNESCO has been presented and examined with the main focus only on the regular budget, the IBF represents a significant new step in the way how UNESCO s budget is examined. The IBF will better enable the Organization and Member States to examine the global situation of the Organization s budgetary picture, to understand where the funding gap lies and where available resources can be used most strategically. The integrated budget framework embeds resource mobilization targets in the form of a funding gap in the Programme and Budget approved by Member States. 2. The Structured Financing Dialogues (SFD) are collective donor consultations which complement bilateral dialogues with donors and partners and which aim to improve the quality and sustainability of resources for UNESCO s Programme and Budget (C/5) 3. The Integrated Budget Framework (IBF) and the Structured Financing Dialogue (SFD) go hand in hand. The Integrated Budget Framework is a prerequisite for SFD because it allows Member States and donors to have a holistic view of all resources available (not only the regular budget resources assessed contributions but also extrabudgetary resources) and all resources required to fund UNESCO s programme. II. How did we get here? 4. The SFD and IBF are responses to the challenges and opportunities faced by the United Nations development system (UNDS) as a whole. Over time, most United Nations agencies have witnessed: slow growth and stagnation of core or regular budget funding, and an increased reliance on extrabudgetary resources; a bilateralization of funding and an increased reliance on a limited number of donors; and reduced flexibility in funding as a large portion of the extrabudgetary resources are earmarked to specific areas/topics. 5. In response to these trends, the United Nations General Assembly recommended to organize structured dialogues (QCPR 2012) in an effort to: mitigate the decline of core contributions (regular budget); reduce the imbalance between core and non-core resources; and make resources more predictable and less earmarked. 6. At UNESCO these trends were accentuated by a severe financial crisis which began in 2011, where the level of the Organization s regular budget was reduced by 22% due to the non-payment of assessed contributions from major Member States. The recent financial environment of UNESCO has come to call for a more focused and rational budget allocation and resource mobilization effort. Especially because it is likely that the organization will no longer be able to count on a significant

3 201 EX/15.INF.3 page 2 growth in the assessed contribution of Member States (regular budget), the need for effective funds raising (for voluntary contribution) has become more important than ever. 7. In this regard, UNESCO s Executive Board at its 197th session (in autumn 2015) decided to organize, on an annual basis starting at its 199th session, a structured dialogue on financing with Member States and relevant partners so as to monitor and follow up the predictability, flexibility, transparency and alignment of both regular and extrabudgetary resources provided for in the implementation of the Programme and Budget (C/5), including information on resource requirements. 8. The Executive Board further requested the Director-General to review how the principles and the modalities of the structured dialogue on financing may be adapted to UNESCO s business model, and to present a concrete proposal, including a time-frame, to it at its 199th session (197 EX/Decision 5.III.B, paragraphs 6 and 7). 9. Shortly thereafter, the General Conference, at its 38th session, also requested the Director- General to include an annual structured financing dialogue in the roadmap for the preparation of document 39 C/5 and identified the discussion on appropriate financial instruments, including the special account modality, as a core part of the financing dialogues. (38 C/Resolution 104, paragraph 12) 10. In the meantime, UNESCO analysed the experience of other United Nations agencies with IBF and/or SFD, and worked closely in particular with WHO (World Health Organization) who had already established an integrated budget framework and a procedure for structured finding dialogues, in order to have their experiences shared as to how they had succeeded in introducing these two frameworks. On one occasion of the 2nd intersessional meeting of the Executive Board held in March 2016, the Directors with responsibility for strategic planning and resource mobilization of WHO were invited and provided UNESCO Member States with useful information and advice based on their experiences of having introduced the integrated budget framework and structured financing dialogues in WHO. 11. Subsequently, in response to the Executive Board s request (197 EX/Decision 5.III.B), the Secretariat presented in document 199 EX/5 Part II.F the rationale of a structured financing dialogue, and the key drivers for a success of such a dialogue. It was stressed therein that one of the important prerequisites for the structured financing dialogue was the establishment of an integrated budget framework. 12. Thereafter, document 200 EX/13 Part III provided the Executive Board with the progress achieved in developing the integrated budget framework and on the future plans for implementing the structured financing dialogue. This document provided definitions of the types of resources to be included in the IBF, proposed formats for the IBF budget presentation, possible implications of such a presentation (e.g. on the budgeting techniques, etc.), and guiding principles for the development of the structured financing dialogue. 13. In this regard, the Executive Board in 200 EX/Decision 13.III welcomed the efforts made by the Director-General in the transition to the integrated budget framework, and took note of the methodologies, resource definitions, presentation formats and possible need to review some budgeting techniques as outlined in document 200 EX/13 Part III. The Executive Board, further requested the Director-General when preparing document 39 C/5 in an integrated budget framework, to use the same methodologies and the resource definitions mentioned in the above cited document by taking into consideration the discussion of the Executive Board on these matters, together with any further improvement that might contribute to a better budget construction and presentation and a successful structured financing dialogue.

4 201 EX/15.INF.3 page 3 III. How is the IBF presentation different from the presentation of UNESCO s programme and budget to date? A more holistic information 14. Previous Programme and Budget documents (C/5 documents) mainly provided information concerning the Regular Budget. Since these funds are financed by the assessed contribution of Member States and are approved by the General Conference, more attention and details were paid to this category of funds. 15. Certain elements concerning extrabudgetary resources were also presented, but for information only. These extrabudgetary amounts included: voluntary contributions to be implemented during the biennium where funds were already in hand or firmly committed; and the costs of established posts financed by FITOCA and by certain revenue-generating funds. 16. Resource mobilization targets were not included in the programme and budget submitted to Member States for approval. They were presented separately. 17. The IBF aims at providing a more comprehensive and holistic picture, by focusing on the level of resources which the Organization estimates that it needs to achieve the expected results by taking into consideration all the available funds, rather than focusing narrowly on the assessed contributions. In this regard, the IBF can be seen as including two main components: funds in hand and a funding gap (i.e. areas where fundraising is needed). The funds in hand include the regular budget (assessed contribution), voluntary contributions already received or firmly committed, and FITOCA and other relevant revenue-generating funds. For all sources of funds, the budgetary figures presented in document 39 C/5 represent the amounts foreseen to be spent in the biennium. Identification of funding gap: efforts for fundraising 18. For the first time resource mobilization targets by expected result are embedded in the C/5 itself in the form of a funding gap. The funding gap is defined as the financial resources needed in order to achieve the biennial programmatic targets of the C/5 document minus available resources comprising assessed contributions and extrabudgetary funds in hand. 19. In estimating the funding gap, the following elements were taken into account: capacity to deliver, opportunity to mobilize the funds (projects in the pipeline) past trends (what was raised, what was spent, etc.). 20. The funding gap corresponds to amounts/areas for which financing has not yet been fully identified, thus need effort for fundraising. These areas/amounts would be the focus of resource mobilization efforts including the Structured Financing Dialogues. 21. Indeed, on the one hand, reinforced efforts are certainly required for funds mobilization in order to bring in more and more voluntary contributions, especially in the recent environment wherein it is difficult to expect a significant growth in the regular budget (assessed contribution). In this sense, sectors will need to be ambitious in fundraising, i.e. setting the funding gap. On the other hand, the global budget picture including the funding gap presented to Member States should not be unrealistic. For document 39 C/5, a great effort has been made to well balance these conflicting factors, but it is expected that an optimal equilibrium will be attained through experiences. In any

5 201 EX/15.INF.3 page 4 case, the Gap estimated under each sector and under each expected result is an important information for the structured financing dialogues which aims at raising funds and attributing them to the most needed areas. 22. The integrated budget for the Draft 39 C/5 budget scenario which includes the regular budget of $518 million has come up as shown below: Draft 39 C/5 IBF budget by category of funds (RP $518M) 23. The funding gap shown above which represents 29% ($339M) of the global budget may appear to be a huge amount, but this is the result of sectors careful studies of their capacity to deliver, the projects in the pipeline, the past trends of their voluntary contribution raised and spent, etc. When combined with the committed voluntary contributions of $266.9M, the total voluntary contributions presented in the Draft document 39 C/5 compares fairly well vis-à-vis the recent past trends. $ million 35.0 Voluntary contribution + Gap Comparison 37 C/5, 38 C/5 and Draft 39 C/ extrabudgetary expenditure 2016 extrabudgetary expenditure x 2 Draft 39 C/5 voluntary contribution plus Gap ED SC IOC SHS CLT CI

6 201 EX/15.INF.3 page 5 IV. What are the advantages of the SFD and the IBF? A more focused and structured approach to resourcing the C/5 A more precise and realistic notion of the resource mobilization targets fully integrated into the bottom up process of preparing the C/5 document, and based on a careful assessment of funding opportunities, capacity and past trends. A stronger institutional commitment to the achievement of resource mobilization targets because they are embedded in the C/5 document as a funding gap and approved by Member States. A more holistic and comprehensive approach to planning and resource mobilization based on what UNESCO needs to achieve, not what it can achieve with assessed contributions. Trust and confidence of Member States and donors built up through enhanced transparency about all resource flows to UNESCO s Programme and Budget; Communication on the results, impact and relevance of UNESCO s action improved inter alia through the Transparency Portal. A more coordinated resource mobilization effort focusing on areas for which a strengthened resource mobilization effort is required based on efforts to fill the funding gap, rather than a solely opportunistic approach to fundraising. More strategic bilateral consultations with donors and partners complemented by collective donor consultations providing a basis for better information sharing not only between UNESCO and donors, but among donors, and allowing for more strategic and catalytic investment of resources. A better alignment between the targeted budget and actual resource flows to the programme and budget through a realistic assessment of the funding gap and enhanced flexibility in the deployment of resources. A framework for resource mobilization prioritizing diversification of the donor base and enhanced predictability in resource flows to help reduce the vulnerability of the Organization. Printed on recycled paper