Genre: Information/Explanation

Industrial Development Board Twenty-fifth session Vienna , 15-16 May 2002 Item 4 of the provisional agenda Report by the Director-General The financial situation as at 31 March 2002 can be summarized in the following major points : ( a ) The regular budget is being implemented with an initial allocation of 97 per cent of the 2002 appropriations . Expenditure for the first quarter amounted to 26.5 per cent ; ( b ) The operational budget recorded a surplus of € 1 . 6 million during the first quarter of 2002 ; therefore , the level of the operational budget reserve increased from € 3 . 3 million ( $ 2 . 98 million ) as at 1 January 2002 to € 4 . 9 million as at 31 March 2002 ; ( c ) The level of regular budget cash resources ( including the Working Capital Fund and the unencumbered balances of appropriations ) was € 34 . 7 million . In comparison , the cash balance as at 31 March 2001 and 2000 was € 29 . 8 million and € 24 . 3 million , respectively ; ( d ) The collection rate of 2002 assessed contributions was 47.2 per cent and was favourable compared to the 2001 and 2000 rates of 35.7 and 35.9 per cent , respectively ; ( e ) The collection rate of prior years' arrears , as compared to the current year's assessments , was 2.3 per cent . The rates as at 31 March 2001 and 2000 , as compared to the assessments of those years , were 12.4 and 2.7 per cent , respectively ; ( f ) Outstanding contributions amounted to € 144 . 9 million ( including arrears of € 69 . 3 million by the United States of America , and € 2 . 1 million by the former Yugoslavia ) ( annex I ) . The outstanding amounts as at 31 March 2001 and 2000 were € 152 . 7 million and € 158 . 6 million , respectively ( for comparison revalued at the December 2001 United Nations rate of exchange , $ 1 = € 1 . 123 , in accordance with GC . 9 / Dec. 15 ) ; ( g ) The Working Capital Fund is at the level of € 7 , 423 , 030 ( $ 6 , 610 , 000 converted at the December rate of $ 1 = € 1 . 123 ) . However , an amount of € 259 , 212 was outstanding as at 31 March 2002 ; ( h ) Pursuant to General Conference decision GC . 9 / Dec. 12 , Ukraine and UNIDO signed a payment plan on 25 March 2002 , and the first instalment under the plan was received on 28 December 2001 . Consultations are continuously taking place with a number of Member States regarding settlement of their arrears through payment plans ; ( i ) In compliance with General Conference decision GC . 9 / Dec. 10 , unencumbered balances of appropriations , income from new Member States and interest income in excess of budgetary estimates ( total amount € 7 , 195 , 414 ) are being allocated as requested by Member States ( annex II ) ; ( j ) Recent actions and developments with respect to the transition to a single currency system , as well as issues encountered , are provided as background information in a conference room paper ( IDB . 25 / CRP . 3 ) . Regular and operational budgets , 2002-2003 Regular budget implementation of the approved programme and budgets , 2002-2003 , commenced as planned . In view of the expected collection rate of assessed contributions of some 97 per cent during the year ( both for current and prior years ) , as well as the healthy cash position of the Organization at the beginning of 2002 , an average release of 97 per cent of the appropriations for 2002 under the regular budget , including UNIDO's share of Buildings Management Services , was approved . This included 100 per cent release for staff costs , the Regular Programme of Technical Cooperation , field operating costs and information technology ; and an average of 86.3 per cent under consultants , travel , meetings and operating costs . The pattern compares favourably with the start of the 2000-2001 biennium , whereby after the first three months of 2000 only 90 per cent of appropriations were released . The Buildings Management gross appropriation was released at the level of 96 per cent , reflecting the actual higher-than-budgeted vacancy rate under established posts . Operating costs were fully released . Expenditure during the period 1 January to 31 March 2002 amounted to € 18 . 1 million under the regular budget . This amount corresponds to 26.5 per cent of the total appropriation for 2002 and is comparable with the preceding biennium . The current value represents a smooth budget implementation with a lesser risk of delaying or non-implementing approved programmes . The initial allocation under the operational budget was set at 95 per cent of the approved estimate . With a $ 32 million delivery of technical cooperation activities as of 31 March 2002 ( delivery as of 31 March 2001 for the same period was $ 27 million ) , income for the first quarter amounted to € 4 . 1 million ( $ 3 . 6 million ) for support cost reimbursement . Expenditure for the same period amounted to € 2 . 5 million , leading to a surplus of € 1 . 6 million during the first quarter of 2002 . Therefore , the level of the operational budget reserve increased from € 3 . 3 million ( $ 2 . 98 million ) as at 1 January 2002 to € 4 . 9 million as at 31 March 2002 . Regular and operational budgets , 2000-2001 The accounts for the biennium 2000-2001 have been submitted for audit to the External Auditor . In accordance with legislative mandates , the report of the External Auditor , financial performance report and programme performance report for the biennium 2000-2001 will be submitted to the twenty-sixth session of the Board through the Programme and Budget Committee . The overall implementation of the regular budget for the last biennium was 96.4 per cent , resulting in a provisional surplus of $ 4 , 248 , 200 , which represents 3.6 per cent of the restated appropriations after applying the adjustment formula shown in the GC . 8 / Dec. 17 to take account of the average exchange rate actually experienced during the biennium . This implementation compares favourably with the last four bienniums ( 1998-1999 : 91.7 per cent ; 1996-1997 : 80.7 per cent ; 1994-1995 : 88.3 per cent ; 1992-1993 : 94.5 per cent ) . The higher implementation of the biennium 2000-2001 is due to the favourable cash position of the Organization , which , inter alia , has resulted from a better collection rate of both current and prior years ' assessed contributions . The programme support cost income of the operational budget for the biennium amounted to $ 18 . 65 million , with expenditures of $ 17 . 29 million . As a result , the operational budget recorded a surplus of $ 1 . 36 million . The reserve level thus increased from $ 1 . 62 million on 1 January 2000 to $ 2 . 98 million as at 31 December 2001 . Technical cooperation delivery during 2001 amounted to $ 84 . 7 million . However , should technical services at the programme and project levels of United Nations Development Programme and Industrial Development Decade for Africa supplementary activities be included , the volume of technical services provided by UNIDO during the year totalled more than $ 90 million . Collections A total of 27 Member States , including two least developed countries ( LDCs ) , have made full payments and 20 Member States , including five LDCs , have made partial payments of their assessed contributions for the year 2002 . The collections in the period from January to March 2002 , broken down by Lists of States , are shown in table 1 . Table 1 . Collections , January-March 2002 ( In millions of euros ) * As contained in document GC . 9 / 16 . Outstanding contributions The detailed status of assessed contributions outstanding as at 31 March 2002 is contained in annex I to the present document . The scale of assessment and outstanding contributions as at 31 March 2002 , broken down by Lists of States , are shown in table 2 . Table 2 . Scale of assessment and outstanding contributions , as at 31 March 2002 * As contained in document GC . 9 / 16 . On 6 December 2000 , the Federal Republic of Yugoslavia deposited the instrument of accession to the Constitution of UNIDO and thus became a new Member State . As the former Yugoslavia has ceased to exist , a decision will have to be taken with regard to the treatment of the arrears of the former Yugoslavia , amounting to € 2 , 084 , 146 . The issue is among the items on the agenda of the United Nations General Assembly and document A / 56 / 767 of 9 January 2002 contains details . The Secretariat is closely following further developments and any decision to be taken by the General Assembly in this respect will be conveyed to the UNIDO governing bodies . As indicated in annex I to the present document and as summarized in table 3 , the voting rights of 61 Member States had been suspended as at 31 March 2002 in accordance with Article 5.2 of the Constitution and financial regulation 5.5 ( b ) . Table 3 . Suspension of voting rights , as at 31 March In order to restore their voting rights for the remainder of 2002 , these Member States must pay their full contributions for 1999 and prior years , including advances to the Working Capital Fund , as well as a partial contribution for 2000 . The minimum total amount that would have to be paid by these Member States is € 22 , 259 , 710 . Information was provided in document GC . 9 / 10 of 22 October 2001 on the implementation of the measures recommended by the open-ended discussion group on timely payment of assessed contributions . Since that time one payment plan has been concluded ( with Ukraine , as approved by the General Conference in decision GC . 9 / Dec. 12 ) , and the first instalment under the plan has been received . Informal consultations are continuously taking place with a number of Member States regarding settlement of their arrears through payment plans . As reported in document GC . 9 / 10 , the United States of America owes € 69 , 264 , 731 ( equivalent to $ 61 , 678 , 302 ) , against assessed contributions for the years 1994-1996 and € 953 , 547 ( $ 849 , 107 ) against the Tax Reimbursement Agreement – a total amount of € 70 , 218 , 278 . There has been no further development on the collection of this amount , although the Secretariat has again followed up this year with the Permanent Representative of the United States of America to the United Nations ( Vienna ) for the settlement of the arrears . PRIATIONS , INCOME FROM NEW MEMBER STATES AND INTEREST INCOME IN EXCESS OF BUDGETARY ESTIMATES Detailed information on the unencumbered balances of appropriations , income from new Member States and interest income in excess of budgetary estimates was provided in document GC . 9 / 10 . The following amounts in euros were due for distribution to eligible Member States ( i . e . those that had fully paid their assessed contributions for the respective biennium ) in accordance with financial regulations 4.2 ( b ) and ( c ) : While adopting the decision on the scale of assessments ( GC . 9 / Dec. 10 ) , the General Conference strongly encouraged Member States to consider renouncing voluntarily their shares of the balances and income referred to above , for the regular budget and / or for technical cooperation activities of UNIDO , and requested the Director-General to report to the Board on the amounts renounced and purposes specified by Member States . From early January 2002 , the Secretariat solicited from Member States their intention as to the utilization of their respective share and requested replies to be returned by 28 February 2002 . Responses received as at 31 March 2002 are shown in annex II and are summarized below . As reported in various documents , including GC . 9 / 10 ( chap . VII ) , UNIDO gradually introduced a new computerized financial performance control system ( FPCS ) during 2000-2001 . After one year of parallel operation of the previous mainframe system and FPCS , UNIDO has been using FPCS as the sole system for all accounting transactions since 1 January 2002 . The parallel operation was helpful in fine-tuning the application and adjusting procedures to make best use of the features offered by the new system . The switch-over coincided with the introduction of the euro as the base currency for UNIDO's accounts . Most of the remaining issues with the new system are related to the requirement of continuing the accounting for technical cooperation activities in United States dollars , whereas the base currency is now the euro . Work will also continue in the area of designing various reports based on transaction data captured by the new system as well as linking it to existing executive management systems . In addition , the application will be rolled out to all staff involved in financial operations for capturing data at the point of origin , and enabling staff to have on-line information on the status of activities for which they are responsible . In accordance with General Conference decision GC . 8 / Dec. 16 , a single currency system of assessment based on the euro became effective with the current fiscal period 2002-2003 . Since the adoption of that decision in 1999 , the Secretariat has kept Member States informed of steps taken for the introduction of the single currency system . Recent action and developments with respect to the transition , as well as issues encountered , are provided as background information in a conference room paper ( IDB . 25 / CRP . 3 ) , and a document on the subject will be issued to the Programme and Budget Committee at its forthcoming eighteenth session . Among the steps taken in compliance with decision GC . 8 / Dec. 16 was the amendment of the concomitant Financial Regulations of UNIDO . A conference room paper containing the updated regulations will be issued under the symbol IDB . 25 / CRP . 4 . The Industrial Development Board may wish to consider adopting the following draft decision : " The Industrial Development Board : " ( a ) Takes note of the information provided in document IDB . 25 / 6 ; " ( b ) Also takes note of the information on the implementation of General Conference decision GC . 9 / Dec. 10 ( IDB . 25 / 6 , chap . VI ) ; " ( c ) Urges those Member States that have not yet paid their assessed contributions , including advances to the Working Capital Fund and prior years' arrears , to do so without delay . " Annex I As at 31 March 2002 ( in Euros ) Notes : ( p ) Partial payment . Voting rights of 61 Member States have been suspended in accordance with Article 5.2 of the Constitution of UNIDO . Four Members of the Industrial Development Board are without voting rights : Belarus , Côte d ' Ivoire , Guatemala and Libyan Arab Jamahiriya . The General Conference has approved a payment plan for Ukraine to settle its arrears and its voting right was regained ( GC . 9 / Dec. 12 ) . Outstanding contribution to be resolved following decision by the United Nations General Assembly . Member State of UNIDO until 31 December 1996 . Since 31 March 2002 , full or partial payments were received from the following Member States : Belgium , Côte d ' Ivoire , Cuba , Cyprus , Denmark , Ecuador , Guatemala , Mexico and Oman ( an update will be issued as a conference room paper ) . Annex II STATUS OF UNENCUMBERED BALANCES OF APPROPRIATIONS , INCOME FROM NEW MEMBER STATES AND INTEREST INCOME IN EXCESS OF BUDGETARY ESTIMATES ( GC . 9 / Dec. 10 ) As at 31 March 2002 ( in Euros ) Provides information on the financial situation of UNIDO , including arrears , as at 31 March 2002 . Also refers to the initial experience of the Organization in the transition to a single currency system of assessment . A conference room paper will be issued during the session to provide updated information on the status of assessed contributions , voting rights and disposition of unencumbered balances of appropriations , income from new Member States and interest income in excess of budgetary estimates . For reasons of economy , this document has been printed in a limited number . Delegates are kindly requested to bring their copies of documents to meetings .