ex United Nations Educational, Scientific and Cultural Organization Executive Board Hundred and sixtieth Session 160 EX/26 PARIS, 14 September 2000 Original: English Item 7.3 of the provisional agenda REPORT BY THE DIRECTOR-GENERAL ON THE STATUS OF CONTRIBUTIONS OF MEMBER STATES AND OF PAYMENT PLANS SUMMARY The Director-General reports herewith on the status of contributions of Member States, the cash flow of the Organization and the cash position. In accordance with resolution 02 adopted by the General Conference at its 30th session, document 160 EX/26 further reports on payment plans agreed with Member States in arrears in the payment of their contributions. Decision required: paragraph 8.
160 EX/26 INTRODUCTION 1. This report is divided into two Parts. Part I covers the collection of contributions during 2000 up to 31 August, the status of contributions at that date, the cash flow and the cash position. Part II provides a report on the actual position concerning all payment plans agreed with Member States in arrears as required under 30 C/Resolution 02. Part I - COLLECTION OF MEMBER STATES CONTRIBUTIONS 2.1 Total contributions for 2000 received by 31 August 2000 amounted to $217.7 million as against $272.2 million assessed, which represented 79.99% of the total assessed for 2000. The balance outstanding amounted to $54.5 million. Contributions unpaid for 2000 and previous years amounted to $98.9 million at 31 August. In addition an amount of $26.8 million, which exceeds the Working Capital Fund, has been deferred under instalment plans for payment in future years. The total of contributions unpaid for 2000 and previous years, including amounts deferred under payment plans represented 46.17% of the amount assessed for 2000. This is a substantial improvement compared with the 73.04% unpaid at 31 August 1998. 2.2 Of the 188 Member States requested to contribute for 2000, 64 have paid their contribution in full for 2000. In addition, 31 Member States have paid part of their contribution for 2000. Of the five Associate Members requested to contribute for 2000, two have paid in full for 2000 and one has paid part of its contribution and two have made no payment. 2.3 At the end of 1998 there were 116 Member States that owed $95.1 million in respect of 1998 and prior years, including amounts due on payment plans. By the end of August 2000 $51.2 million had been received from them. Consequently, there was still $43.8 million due from 79 Member States for previous biennia at the end of August 2000. 2.4 The following chart shows comparative figures for arrears of contributions at the end of August, as a percentage of the amount assessed for each current year in 2000, 1998 and 1996. Arrears of contributions at end August as a percentage of amount assessed for each current year 80 Percentage 70 60 50 40 30 20 10 25.94 20.01 31.19 41.85 37.36 40.20 % prior years % current year 0 45,95 73,04 77,56 N.B. Contributions due in euros for 2000 and in French francs for 1998 and 1996 are converted into dollars at the constant rate of exchange of US $1 =.869 euros or FF 5.70.
160 EX/26 page 2 The comparison shows an overall improvement in contribution collection at end August 2000 compared with the two comparative years, although the amount of arrears still gives cause for concern. This improvement is largely attributable to the current contribution due and also to results of efforts made by certain Member States with large arrears to gradually reduce them. Another important contributory factor towards the improvement has been UNESCO s immediate alignment of its scales of assessments in recent years to those of the United Nations, thus reflecting most recent economic reality and respective payment capacities of Member States. 2.5 Annex I to this document shows the summary status of contributions as at 31 August 2000 as well as comparative figures for two previous years. Annex II shows the detailed situation regarding each contribution assessed and of advances to the Working Capital Fund at 31 August 2000. Information concerning further receipts from Member States will be communicated when this item is discussed at the Executive Board. 3. Assessment action for 2000 3.1 Financial Regulation 5.5 states that contributions and advances shall be considered as due and payable in full within thirty days of the receipt of the communications of the Director-General referred to in Regulations 5.3 and 5.4 above or as of the first day of the year to which they relate, whichever is the later. As of 1 January of the following year the unpaid balance of such contributions and advances shall be considered to be one year in arrears. 3.2 Letters of assessment for 2000 were dispatched on 17 December 1999. In these letters the Director-General reminded the Member States of the current cash difficulties of the Organization and that he would appreciate full and timely payment of contributions due. 3.3 Paragraph 5 of the Annex to resolution 82 adopted at the 30th session of the General Conference states that After the Conference session, the Director-General should send a letter to the governments concerned to remind them that their payment plans have been approved by the General Conference and, at the same time, to inform them of all the possible consequences of non-observance of those commitments. Accordingly reminder letters were sent on 29 February 2000 to the 35 Member States concerned. 3.4 The letters of assessment for 2000 contained reminders of arrears to those Member States with contributions then outstanding. Further reminder letters were dispatched to all Member States in arrears on 30 May 2000, including those with instalments outstanding on payment plans. In addition, personal representations including letters and telephone calls were made to many contributors, particularly those of significant size. 4. Payment of contributions in national currency 4.1 The Director-General welcomes requests from Member States facing serious payment difficulties for information on the existing options for the payment of assessed contributions and for the settlement of arrears and to help them to devise solutions that are appropriate for their specific situation. Such options include payments in local currencies and Swap arrangements. 4.2 In this respect, during the 1998-1999 biennium the Director-General accepted a total of $2,102,212 in payment of contributions to the budget in national currency. During the current biennium up to the end of August Member States have already paid a total of $977,104 in contributions in national currency and further offers of acceptance have been made.
160 EX/26 page 3 4.3 To assist in these options, the UNESCO Secretariat benefits from the active support of UNDP regarding the use of national currencies where it cannot itself identify users for such currencies within a one-year period. It must be noted, however, that with the globalization of markets, there are more and more Member States for which national currencies are convertible or where foreign currency is readily accessible to them. Thus there is a declining interest for payment of contributions in national currency. 5. Cash flow 5.1 During the 2000-2001 biennium to end August 2000, contributions received for 2000 and previous years totalled $248.0 million as detailed in Annex II to this document. Annex III attached shows the end-of-month cash position of the Organization over the period December 1999 to August 2000. The cash situation has notably improved compared with the last biennium. No external borrowing has been required since early January 2000 and no internal borrowing has been needed since February 2000. 5.2 The interest cost of borrowing deducted from miscellaneous income during the 1998-1999 biennium amounted to $1.4 million as compared with $2.1 million at 31 August 1997. The cost for borrowing incurred in 2000 to end August amounts to $248,000 as compared with $442,000 in August 1998. 6. Incentive scheme to encourage prompt payment of contributions 6.1 At its 28th session the General Conference decided by resolution 24.32 that the then existing positive incentive scheme to encourage prompt payment of contributions should be strengthened and continued in a revitalized form for an experimental six-year period, expiring 31 December 2001. By this resolution the General Conference broadened the income base by adding categories of resources that could provide increased revenue for the incentive scheme effective 1 January 1996. 6.2 The resources that became available under the enhanced incentive scheme for the 1998-1999 biennium, which amounts to $675,000, will be apportioned over 94 Member States who paid their contributions in full during 1998-1999, in accordance with the timing and amounts of their respective contribution payments as specified in the formula approved under 28 C/Resolution 24.32, and surrendered to the eligible Member States by deduction from contributions assessed to them for 2001. Part II PAYMENT PLANS 7.1 Further to the modification of Rule 83 of the Rules of Procedures of the General Conference which states, inter alia, that Member States requesting voting rights at the General Conference should state the measures taken in order to settle arrears normally a payment plan for settlement of arrears in annual instalments over a period of three biennia, the number of payment plans has increased. 7.2 There were 27 Member States with approved plans for settlement of arrears in annual instalments prior to the 30th session of the General Conference. At its 30th session, the Conference approved a net additional eight payment plans, taking into account the rescheduling of nine pre-existing plans. The total due on these payment plans at 31 August 2000 is $32.1 million of which an amount of $5.3 million is due for 2000 and prior years and
160 EX/26 page 4 $26.8 million is deferred for payment in future years in declining aggregate amounts up to the year 2006. Full details are provided in Annex IV attached. 7.3 Member States in arrears on their payment plans were reminded of amounts due in the letters of assessment dispatched to them at the end of 1999 and again on 29 February 2000 as well as on 30 May 2000. On 1 January 2000 $1.5 million was overdue on payment plans. An additional amount of $6.9 million became due for payment in the year 2000 bringing the total due for 2000 and prior years to $8.4 million, of which up to end August 2000, only $3.1 million has been collected on plans from 15 Member States. Thus a balance of $5.3 million relating to payment plans payable by 30 Member States due for payment in 2000, and in most cases by 30 June 2000, remains unpaid at 31 August 2000. Whilst appreciating the difficulties many of these Member States have, the Director-General urges them to make every effort to respect the commitments they have made so as to preclude the need to request voting rights at the next General Conference. 8. The Executive Board may wish to adopt a decision along the following lines: TheExecutiveBoard, 1. Having examined the report of the Director-General on the collection of contributions of Member States (160 EX/26) and having taken note of the up-to-date information provided during the debate of the Financial and Administrative Commission, 2. Expresses its gratitude to Member States that have paid their contributions for the year 2000 and to those who have made efforts to reduce their arrears of contributions in response to appeals; 3. Notes that the considerable efforts made by many Member States have not been enough to prevent recourse to borrowing to supplement the resources of the Working Capital Fund for the purpose of financing the approved programme; 4. Strongly supports the approaches the Director-General is continuing to make to Member States with a view to obtaining timely payment of contributions; 5. Recalls that the prompt payment of contributions is an obligation incumbent on Member States under the Constitution and the Financial Regulations of the Organization; 6. Urgently appeals to those Member States that are behind with the payment of their contributions to pay their arrears without delay; 7. Urges Member States, on receipt of the Director-General s request for payment of assessed contributions, to inform him, as promptly as possible of the probable date, amount and method of payment of the forthcoming contribution in order to facilitate his management of the Organization s treasury function; 8. Noting in particular the failure of 30 Member States to pay up to the end of August 2000 the amounts due by them against payment plans approved by the General Conference for settlement of their accumulated arrears in instalments, in addition to current year contributions, as well as the request of the General
160 EX/26 page 5 Conference to the Director-General to report to the General Conference at its 31st session thereon; 9. Appeals to those Member States in arrears on payment plans to settle their outstanding instalments at the earliest possible time as well as their regular assessed contributions, bearing in mind the risk of loss of voting rights that may otherwise ensue at the 31st session of the General Conference.
160 EX/26 Annex I ANNEX I STATUS OF CONTRIBUTIONS AT 31 AUGUST 2000 Comparative status for 2000, 1998 and 1996 Contributions due [see footnote (a) (b) & (c)] $ Total due as a percentage of amount assessed for first year of biennium Status at 31 August 2000 Contributions for 2000 54,470,462 20.01 Contributions for previous years 38,534,719 14.16 Instalments for 2000 and prior years under payment plans 5,292,833 1.94 Instalments deferred to future years 26,779,285 9.84 Total due at 31 August 2000 (d) 125,077,299 45.95 Status at 31 August 1998 Contributions for 1998 113,465,089 41.85 Contributions for previous years 67,657,204 24.95 Instalments for 1998 and prior years under payment plans 4,860,696 1.79 Instalments deferred to future years 12,053,681 4.45 Total due at 31 August 1998 (d) 198,036,670 73.04 Status at 31 August 1996 Contributions for 1996 103,835,083 40.20 Contributions for previous years 85,748,676 33.19 Instalments for 1996 and prior years under payment plans 3,476,972 1.35 Instalments deferred to future years 7,286,347 2.82 Total due at 31 August 1996 (d) 200,347,078 77.56 Notes: (a) For further details of amounts due at 31 August 2000, please refer to Annex II. (b) Contributions due in French francs for 1998 and 1996 are converted into dollars at the constant rate of exchange of US $1 = FF 5.70. (c) Contributions due in euros for 2000 are converted into dollars at the constant rate of exchange of US $1 = euro 0.869. (d) Including Associate Members and new Member States.