RESTRICTED  
  
WT/BFA/W/565 /Rev.1  
 
7 October  2021 
(21-7572) Page: 1/2 
Committee on Budget, Finance and Administration    
 
  
PROPOSED UTILIZATION OF THE 2020 BUDGETARY SURPLUS  
Revision  
1.  Financial R egulation 23 states that the Director -General shall make proposals to the Committee 
on Budget, Finance and Administration ( CBFA ) regarding the use of the Budgetary Surplus . The  
proposals may  be as follows :  
a. application as income against the budget for the second financial period following that in 
which the surplus occurs, thereby reducing Members' contributions ;  
b. transfer to the Wor king Capital Fund; or  
c. use for any other purpose decided upon by the General Council.  
 
2.  The Director -General, in her presentation of the 2022-2023 budget proposal to the CBFA on 
22 June, stated  that the total amount of the proposed annual budget is the same as that for each of  
the preceding 11 years. She further indicated that she would be assessing the needs of the 
Organization and optimal ways of allocating financial and other resources and may come bac k to 
Members with a varied budget proposal for 2023 , at the mid-term review of the budget.  
3.  The Director -General 's propose d utilization of the budgetary surplus as at 31 December 2 020, as 
described in Paragraph 9 below , is a good faith effort to demonstrate her recognition of calls by 
some Members for a signal from the Secretariat , given the significant effects of the COVID -19 
pandemic.  
4.  This proposal is premised on the fact that the budgetary surplus for 2020 was largely dr iven by 
constraints that resulted from the pandemic. The proposal is made on an exceptional basis for 2022 
and should not be seen as leading to a reduction to Members' assessed contributions  for other years 
ahead . 
5.  In making this proposal prudential con siderations with respect to the WTO's long -term liabilities 
have been weighed alongside the dire circumstances that many Governments are facing  to cope 
with the crisis, including in financial terms. In addition, the proposal covers a modest sum relative 
to tot al liabilities.  
6.  As Members may recall, the Organization adopted International Public Sector Accounting 
Standards (IPSAS) in 2012. This came with a number of obligatory changes to the presentation of 
the Organization's Financial Statements. Notably, IPSAS make the disclosu re of the long -term assets 
and liabilities pertaining to pension and After Service Health Insurance (ASHI) in the Statement of 
Financial Position obligatory. This has a considerable effect as the pension liabilities are considerably 
higher than the pension  assets . In addition, there is a large balance of ASHI liabilities, which are 
unfunded as there are no ASHI assets. Specifically, as at 31 December 2020, the WTO Financial 
Statements reflected an overall negative net equity of CHF 836 million. This reflects the structural 
imbalance in the assets and liabilities of the WTO as the liabilities surpass the assets by this amount.  
7.  The underfunding of long -term liabilities has been the subject of many discussions and papers at 
the CBFA over several years, i ncluding three working groups which submitted their reports to the 
CBFA.  
8.  In 2018, the Secretariat made a proposal that a portion of the accumulated budgetary surplus 
for the years 2011 to 2017 (approximating CHF 52 million) be used to create ASHI assets. The 
Committee did not reach consensus on the proposal.  In the end, the Committee recommended that WT/BFA/W/565 /Rev.1  
 
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  the General Council approve the allocation of the circa CHF 52 million to the Working Capital Fund.  
The General Council approved the recommendation.  
9.  With the a bove background, the Director -General proposes that the budgetary surplus as of 
31 December 2020 , totalling CHF 11,771,979 , be utilized as follows:  
o CHF 9.8 million to be applied against Members' contributions for 2022 . This is on a once -off 
basis, in consider ation of the effect of the pandemic on the global economy  and the 
availability of unspent resources due to the pandemic ; and  
o CHF 1,971,979 to be transferred to the Working Capital Fund.   
10.  In view of the Director -General's proposal, the following rec ommendation is  to be considered 
by the CBFA:  
The Committee on Budget Finance and Administration (CBFA) recommends to the General 
Council that the WTO  Budgetary Surplus as at 31  December  2020, amounting to 
CHF 11,771,979 , be utilized as follows: CHF 9.8 mil lion to be applied against Members' 
contributions for 2022; and CHF 1,971,979 to be  transferred to the Working Capital Fund.  
The recommendation is linked to the pandemic and does not create a precedent for future 
recommendations pertaining to the budgetary  surplus  and is not a de facto lowering of 
future assessed contributions . 
 
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