. /.   WORLD TRADE  
ORGANIZATION  WT/BFA/W/178 
10 November 2008 
 (08-5481) 
Committee on Budget, Finance and Administration  
  
 
UTILIZATION OF THE 2007 SURPLUS 
 
 
1. WTO Financial Regulation 26.3 (WT/L/156/Rev.2) states that:  " If at the end of a financial 
period the Surplus Account shows a credit balance,  the Director-General shall make proposals to the 
Committee on Budget, Finance and Administration with regard to its use which may be:  
(i) application as income against the budget for the second financial period following that 
in which the surplus occurs, thereb y reducing Members' contributions; 
(ii) transfer to the Working Capital Fund;  or 
(iii) use for any other purpose deci ded upon by the General Council." 
2. It is recalled that the Director-General's Budge tary and Financial Report for 2007 disclosed a 
credit balance in the Surplus Account of CHF 12,051,716 (WT/BFA/W/168, Statement 3). 
3. In view of the fact that the building project approved by the General Council on 
27 May 2008
1 currently contains a number of uncertainties a nd risks, it is proposed that a part of the 
credit balance of the Surplus Account as at 31 December 2007 be utilised to establish a building 
contingency fund. 
4. The building project is still in its early stages.  As yet detailed plans are not available, and the 
additional operating costs that will inevitably be incurred during the construction work in order to 
maintain normal Secretariat operations have yet to be  fully determined.  In addition, the new facility 
will provide an opportunity to review and furt her modernize the Secretariat's operations.  A 
significant proportion of the associated costs w ill have to be borne by the Organization. 
(a) As with all building projects, the current pr oject contains a number of inherent risks 
which are magnified by the number of external actors involved in the project (FIPOI, Canton de Genève, Swiss Federal Authoriti es, architects and building companies). 
(b) Additional operating expenditure will be  incurred during the building project.  
Operating a building site alongside WT O's normal operations may require both 
parties to make rapid adjustments to cope with unforeseen events .  For instance, it 
may be necessary to rent external conferen ce space if sufficient in-house facilities are 
no longer available owing to the ongoing cons truction work.  Similarly, it is not yet 
clear whether it will be possible to maintain an in-house cafeteria service throughout the project.  Furthermore, safety considerations may make it necessary to vacate larger portions of the building than orig inally foreseen in order not to place the 
building occupants at risk.  The staff and equipment movements during the building 
work will need to be precisely determined  and financed.  The inevitable disruption 
                                                     
 
1 WT/BFA/W/170 "Agreement between the Swiss Confederation and the WTO on the long-term 
housing needs of the WTO". WT/BFA/W/178 
Page 2  
 
  caused by the building project must have a minimal impact on the Secretariat's ability 
to continue to provide the necessary services to Members. 
(c) The building project will inevitably lead to changes in the way the Secretariat 
operates and serves the Members.  The opp ortunity will be taken to review the 
infrastructure, operating processes and systems, such as conference room equipment, 
IT network, furniture and fixtures.  Th ese costs are not included in the existing 
financial envelope for the project and woul d not normally be absorbed by the Swiss 
authorities.  
5. There is currently no contingency fund for the building project, and the additional operating 
and final installation costs are not yet fully determined.  The transfer of almost 300 staff to the 
temporary premises at Chemin des Mines has al ready given rise to some CHF 3.6 million of 
expenditure for the Organization, representing CH F 1,200 per staff member.  By taking the same 
assumption, the installation of 670 staff in the ne w and renovated wings of the CWR building would 
cost some CHF 8 million.  Given the present uncertainties and risks, the establishment of a CHF 8 million contingency fund is a rather conserva tive approach in the cont ext of a building project 
costing CHF 130 million.   
 6. The establishment of a building project contingency fund would provide Members with a 
budget safety net to absorb any fluctuation up to th e amount of the contingency fund.  It would also 
ensure more financial stability in the biennium budget cycle of the Organization, by having a clearer 
and more transparent distinction between the nor mal operating budget and the specific expenditures 
on the building project.  The Secretariat would c ontinue to absorb minimal requirements from its 
regular budget.  The use of the fund would be subject to the approval of the Committee. 
 
7. Taking into consideration the above-mentioned po ints, the Director-General proposes that the 
credit balance of the 2007 Surplus Account be used as follows: 
 
a) CHF 8,051,716 to establish a building continge ncy fund.  The use of the fund will be 
subject to the approval of the Committee until the project is completed in 2013, after which any un-used funds will be re turned to the WTO accounts;  and 
 
b) CHF 4,000,000, to be used as income against the 2009 budget, thereby reducing 
Members' contributions. 
8. The Committee may therefore wish to consider the following recommendation: 
 The Committee recommends to the General Council that the credit balance of the 
Surplus Account as at 31 December 2007 am ounting to CHF 12,051,716 be utilized in 
accordance with Financial Regulation 26, paragraph 3 as follows : 
 
a) CHF 8,051,716 to establish a building contingency fund.  The use of the fund will 
be subject to the approval of the Commi ttee until the project is completed in 2013, 
after which any un-used funds will be returned to the WTO accounts;  and  
 
b) CHF 4,000,000 to be used as income  against the 2009 budget, thereby reducing 
Members' contributions.  
 
 
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