The cost study assumed the benefit of multilateral contributions to be equal to the additional cost of directed multilateral contributions. An analysis to quantify the incremental costs incurred in connection with directed multilateral contributions indicated that incremental costs were being incurred by several organizational units at the Secretariat. This analysis concentrated primarily on the development programme category which, prior to the implementation of the new Resource and Long-term Financing policies, had been principally multilateral. WFP has used various approaches for categorizing costs as direct or indirect in country offices. The basic infrastructure in most of the country offices is funded, as PSA, from Indirect Support Costs.
Any incremental support required is considered direct support costs of emergency operations.
However, some offices, established to respond to emergencies, in countries which would not have been eligible for WFP assistance in normal circumstances, are financed entirely from direct support costs. This approach has created a situation in which the differentiation between direct and indirect support costs are not totally equitable in all countries. To remedy this situation, the cost study has recommended that WFP may consider establishing separate indirect support cost rates for emergency operations on the basis of the eligibility of the country for normal WFP assistance. It is the Secretariat's view, however, that it may be premature to make this distinction on the basis of a few otherwise non-eligible countries being included in the calculation of average costs. Such a distinction, together with the reassessment of the categorization of direct and indirect costs, needs to be carefully considered in the review of the new Resource and Long-term Financing policies.