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UNITED
NATIONS
A

        General Assembly
A/44/13/Add.1
17 October 1989

Forty-fourth session
Official Records


REPORT OF THE COMMISSIONER-GENERAL OF THE UNITED NATIONS
RELIEF AND WORKS AGENCY FOR PALESTINE REFUGEES IN THE NEAR EAST


Addendum


1. The present addendum to the report of the Commissioner-General of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) to the General Assembly contains information on the financial results for 1988, the financial achievements to date in 1989 and the Agency's budget estimates for 1990. The 1990 budget will be further refined, finalized and approved as the operational budget of the Agency by the Commissioner-General for the appropriation of funds in 1990.

2. Direct assistance to the Palestine refugees is also provided by local Governments in the area of operations. Information on this assistance as provided by the Governments concerned is contained in annex I.

I. FINANCIAL RESULTS FOR 1988


3. The Agency's income to its General Fund and ongoing activities amounted to $US 206.1 million, in 1988. To maintain the regular programmes at their planned levels, the Agency spent $204.3 million, which was $1.8 million less than received. The balance has enabled the Agency to replenish its much depleted working capital reserve. Currently this reserve amounts to $29.3 million, which is considered inadequate when measured against the size of the Agency's operation and the manner in which it is funded. The Agency's financial position still needs strengthening in order to achieve a measure of financial security.

4. Expenditure on capital and special projects was planned at a level of $14.9 million for 1988; $6.8 million of this amount was funded by special donations and $2.3 million from the General Fund.

II. FINANCIAL SITUATION IN 1989


5. The Agency's consolidated budget estimates for 1989 as presented to the General Assembly were $233.6 million. Of this amount, $202.6 million was for the General Fund, $16.4 million for funded ongoing activities and $14.6 million for capital and special projects. This original budget was subsequently adjusted to account for the devaluation of the Jordanian dinar that took place late in 1988 and resulted in the 1989 budget being reduced to $227.4 million. The operational budget at the revised level was authorized for expenditure by the Commissioner-General in December 1988.

6. At the time of preparing the present report, the Agency is expecting total income to amount to $179.3 million against the cash section of the General Fund budget, amounting to $180.0 million. The ongoing activities section of the budget is fully funded, while income for the capital and special projects section falls short of planned expenditure by about $11.4 million (see annex II for the total of income actually pledged against the entire budget). The effect of the shortfall in income for capital and special projects is that much needed construction and renovation work on the Agency's education, health, relief and social service facilities will have to be delayed until additional funds are made available. The effect on the education programme is that operating costs are higher than necessary because the Agency will have to continue using rented unsuitable premises as school buildings. In addition to the rental costs, staffing levels in rented premises are normally higher than in "standard" Agency schools because of inadequate class-rooms and the consequent size of the class formations.

7. The Agency's financial situation is very sensitive to changes in the exchange rates of a number of currencies that are of special importance to the Agency, affecting either its income or expenditure. The decreasing value of the Jordanian dinar has in 1989 resulted in significant initial savings, enabling the Agency to contain its expenditures in United States dollar terms, although its has had to increase substantially its area staff salaries as expressed in local currencies. Further increases that may become necessary might soon fully offset the exchange rate savings so far obtained by the Agency.

III. EMERGENCY OPERATIONS


8. Separate from the regular operations covered by the budget of UNRWA, the Agency is currently running two supplementary budgets to cover emergency operations in Lebanon, the West Bank and Gaza. Planned expenditure for these operations in 1989 amounts to $18.7 million for Lebanon and $25.1 million for the West Bank and Gaza. The 1990 budget for the operations has not yet been finalized; to the extent that the operations will continue in 1990, they will need to be funded separately over and above the funding required for the regular budget of the Agency. In addition, the Agency is also running a supplementary budget specifically aimed at improving the infrastructure in the refugee camps in the West Bank and Gaza. The Agency is aiming for total donations of $65 million to cover this programme; to date, an amount of $30.3 million has been pledged by various donors.

III. MEDIUM-TERM PLAN


9. The Agency's fourth annual review of the medium-term plan sets out its programme plans, operational work-plans, and financial forecasts for the period 1990-1992, with the emphasis on its three substantial programmes: Education, Health and Relief Services. This plan outlines long-term and specific short-term objectives, programme strategies, priorities, budgetary limitations and management directions to enable the Agency to carry out its mandate over the next few years. The projected expenditure in the medium-term plan has been held at a level to match the expected level of funding over the next three years. The medium-term plan has formed the basis for the policies that have been applied in the preparation of the 1990 budget.

10. Following the practice adopted in 1985, the proposed 1990 budget estimates of UNRWA are being submitted during the forty-fourth session of the General Assembly in the present addendum to the Commissioner-General's report. These estimates are subdivided into the following three sections: (a) General Fund; (b) Funded ongoing activities and (c) Capital and special projects.


VI. BUDGET ESTIMATES FOR 1990

A. Background


11. The 1989 budget as submitted to the General Assembly in October 1988 amounted to $233.6 million, of which $209.8 million represents cash and $23.7 million in -kind, mainly in the form of donated food commodities. These estimates are largely based on calculations in local currencies covered into United States dollars at United Nations operational exchange rates of September 1988. However, throughout the latter half of 1988, the value of the Jordanian dinar - one of the principal currencies involved - declined sharply against the United States dollar, resulting in considerable initial budgetary savings for the agency. In view of this development, Commissioner-General decided by the end of 1988 to reduce the budget estimates as submitted to the General Assembly by about $6 million. Thus, the Agency's operating budget for 1989 was established at the level of $227.4 million, as reflected in table 1 below.

12. Although savings may occur for some time owing to exchange-rate changes, it cannot be assumed that the effects of such changes will remain indefinitely. This has to be taken into account and sufficient provisions built into the budget for the purpose of meeting such cost increases that may arise in 1990. This has brought the total budget estimate for 1990 to $242.3 million. This amount is 6.5 per cent higher than the reduced operating budget for 1989 as approved by the Commissioner-General, but only 3.7 per cent over and above the 1989 budget as submitted to the General Assembly in October 1988. The corresponding percentage increases for the cash portion of the budget amounts to 2.2 per cent over the 1989 General Assembly budget, while it is proposed that the in-kind budget, representing about one ninth of the total budget, will increase by as much as 17.5 per cent. This considerable increase in the in-kind budget is to some extent caused by a need for more food commodities due to a larger number of Special Hardship Cases, who are by definition the most destitute of the Palestine refugees. However, the major part of the increase is caused by a significant rise in the world market prices for food commodities, and is, of course, completely beyond the Agency's control.

B. General Fund


13. The General Fund budget represents the minimum resources needed by the Agency to operate its major programmes and maintain its facilities. These recurrent costs for the education, health and relief programmes of the Agency include costs for staff, consumable materials, transportation, contractual services, grants and subsidies. Each of these main programmes is described in greater detail in the sections that follow.

14. For 1990, the General Fund budget estimates amount to $208.3 million, of which $189.5 million represents cash expenditure and $18.5 million expenditure on donated food commodities and services. This is an increase of $11.3 million or 5.7 per cent over the approved General Fund budget for 1989 (see table 1, sect. A.)

C. Funded ongoing activities


15. The Agency's ongoing activities as shown in annex III are fully funded in 1989 by special contributions pledged by various donors. It is estimated that $19.1 million will be required for these activities in 1990, an increase of $3.5 million i.e., 22.6 per cent over 1989. This increase is mainly due changes in the valuation of donated food commodities (see table 1, sect. B).


D. Capital and special projects

16. Owing to financial constraints lasting for many years, UNRWA has not been able to implement several needed construction projects. Resources are required in 1990 to construct schools, health clinics and other facilities to provide an acceptable standard of service to the Palestine refugees. If fully implemented, this construction programme would enable the Agency to implement its programmes more efficiently and at lower cost in the future. In 1989, only part of the $14.9 million requirement has been funded, therefore a number of these projects will be carried over into 1990 (see table 1, sect. C.) If funds are not found to enable the Agency to build these much-needed facilities, additional buildings will have to be rented which will increase the overall operating costs of the Agency.




E. Staffing

17. Staff costs make up a large part of the operational budget of UNRWA, as shown in table 2, parts I and II. These costs are carefully controlled and monitored throughout the operational year. The planning assumptions for the 1990 budget were (a) to allow an increase in the education, health and relief programmes to meet additional requirements due to the growth in population; (b) to increase staffing in the health and relief programmes aimed at slightly improving the level of services provided by these programmes to the refugee population; and (c) to allow a limited increase in staffing levels in operational and common services to cope with the increasing demands for programme support. Table 3 contains the staffing table of the Agency. It indicates the source of funding (regular budget and extrabudgetary funds) and shows the total number of staff employed. Efforts to improve the productivity of staff are continuing through the expansion of Agency-wide training programmes and the introduction of improved equipment and facilities.

18. At the time of the review of the 1990 budget, the total number of area staff posts in the Agency was 18,111. It is planned that this number will increase in 1990 by about 309 posts.

F. Non-staff costs

19. Expenditure in 1990 will increase for the maintenance of buildings, facilities, supplies, replacement of unserviceable equipment and for subsidized hospital services in all fields. Estimated expenditure in 1990 for goods and services is $73.1 million, as compared to $65.0 million in 1989. This increase is mainly due to increases in the cost of supplies.








VI. PROGRAMMES

20. In 1990, the education programme accounts for about 49.7 per cent of the total budget, while health programme represents 20.0 per cent, relief services 10.9 per cent, operational services 6.4 per cent, and common services 13.0 per cent. Each of these substantive operations are described below.

A. Education

21. The Agency's education programme consists of elementary and preparatory schooling and vocational and professional training in Agency-operated training centres. A small scholarship programme is operated to help young refugee students seeking higher education in or near the Agency's area of operation. Currently the general education programme for elementary and preparatory age group students provides schooling for 355,000 pupils, enrolled in 638 Agency schools, supported by a teaching staff of 10, 459. In addition to those pupils in Agency schools, there are 9,635 refugee students subsidized by the Agency enrolled in government or private schools in Lebanon. Projections for the 1990/91 school year indicate an increase of about 4,250 pupils requiring about 115 additional teachers in the autumn of 1990.

22. The vocational and professional training programme operates out of eight training centres situated in the area of operations providing 5,046 training places for Palestine refugee students. The type and content of courses are continually updated by the Agency so that students are provided with the best opportunity to obtain employment and participate in the continuing development of the region. In the current academic year, UNRWA awarded 450 scholarships for students to attend universities.

23. The policy initiatives taken in the 1990 general education budget for implementation during the 1990/91 school year are as follows:

(a) To increase the number of elementary and preparatory teachers, head teachers and school supervisors necessary to cope with the natural increase in the school population;

(b) To expand the number of support posts in certain areas aimed at improving the effective use of existing resources in the education programme;

(c) To provide an enhanced vocational training programme by developing and introducing new courses and redeploying resources previously used in courses that are being stopped because they no longer provide students with the skills needed for employment.

24. Estimated costs for the education programme amount to $120.4 million in 1990, an increase of $0.6 per cent. The increase in the budget for Headquarters in 1990 is due to the inclusion of a provision for increased staff costs Agency-wide. The spread of expenditure in the Agency's area of operations is shown in Table 4.




B. Health

25. Primary health care is provided through curative and preventive medical care services and maternal and child health programmes. These programmes are operated through a network of 100 health centres/health points, polyclinics, hospitals, laboratories and rehabilitation centres, which provide services to about 2.1 million Palestine refugees eligible for health care.

26. UNRWA provides basic community sanitation services in 61 camp locations, housing Palestine refugees and displaced persons. These services cover the provision of potable water, sanitary disposal of solid and liquid wastes, drainage of storm water and the control of disease-carrying insects and rodents.

27. The policy objectives incorporated in the 1990 budget estimates have been aimed at improving the effectiveness of the health care programme; establishing new programmes for the prevention and control of non-communicable diseases; expanding family planning and health education programmes. These major developments are supplemental to other enhancements to the ongoing maternity, preventive and curative medical programmes. Finally, a major reorientation of the supplementary feeding programme that was started in 1988 will be accelerated in 1990 with an increase in the number of health centres being converted to monitor and identify deficiencies in the development of children, and provide the necessary nutritional support to ensure their normal development.

28. Estimated costs for the health programme amount to $48.4 million in 1990, which is an increase of about 6.8 per cent over the 1989. This increase is due to the planned implementation of the developments outlined above and an increase in the cost of supplies. The increase in the budget at Headquarters in 1990 is specifically due to the inclusion of a provision for increased staff costs Agency-wide. The spread of expenditure in the Agency's area of operations is shown in table 5.




C. Relief

29. The major goals of the Agency's relief programme is to assist destitute refugee families through its special hardship case programme, which provides basic food needs, blankets, clothing and shelter. Currently, this programme services 146,800 beneficiaries. Limited cash grants are given to special hardship cases and an adult training programme is operated aimed at improving the income earning ability of the family unit. Because of increased economic difficulties in the Agency's area of operations, the number of special hardship case applications is expected to increase by 10,420 in 1990. Food and clothing are distributed to the eligible refugees throughout a network of distribution centres and distribution points located throughout the camps, with food distribution being made either monthly or bimonthly, while clothing is distributed twice annually.

30. Expansion of the relief programme falls into two categories. First, the upgrading of current services provided to Palestine refugees. This is planned to be done by improving the quality of material benefits distributed to the most needy and by improving the quality of staff employed by the Agency who provide these services. Second, by expending current specialized programmes for the disabled to cover all areas in which the Agency operates and expanding the current self-support/income-generating programmes aimed at helping the most needy improve their economic circumstances.

31. Estimated costs for the relief programme amount to $26.5 million for 1990, an increase of about 14.3 per cent over the 1989. This increase is due to an increase in the number of special hardship cases, an increase in the cost of supplies and the planned expansion of the programme as noted above. The increase in the budget for Headquarters in 1990 is specifically due to the inclusion of a provision for increased staff costs Agency-wide. the spread of expenditure throughout the Agency's area of operations is shown in table 6:





D. Operational services

32. The three substantive programmes of the Agency are supported by a supply and transport operation and an architectural and civil engineering services group. The supply and transport operation provides procurement, warehousing, freight transport, and passenger transport services in all the areas of operation. In 1989, 51,750 tons of general cargo are being handled through a network of central and satellite warehouses for final distribution to the beneficiaries of the Agency's programmes. The Agency's fleet of vehicles is used to transport commodities and general stores, for garbage collection, water distribution, sewage clearance services and for the transport services required by the education, health and relief programmes. In total, the Agency has a fleet of 703 vehicles. All of these vehicles are maintained by the Agency's vehicle maintenance staff. The proposed budget for this operation in 1990 is $10.6 million, an increase of 20.5 per cent over 1989. The increase in the budget provision is mainly due to the inclusion of a provision for the customs clearance and transport of supplies in the West Bank and Gaza, formerly funded by the Government of Israel, and the inclusion in the Headquarters budget of a provision for increased staff costs Agency-wide.

33. The architectural and civil engineering group is responsible for the design of all new Agency facilities and for the maintenance of existing Agency premises. In 1989 the staff are working on the design of buildings to the value of $9.5 million, supervising construction worth about $33.5 million and implementing a maintenance programme of $3.2 million. The budget estimate for architectural and civil engineering services in 1990 is $4.8 million, an increase of 9.5 per cent over 1989. However, the increase in support costs associated with the construction of new facilities are, in most cases, recovered as a direct charge to the construction funds.

34. The increase in the number of staff in operational services is only 1.3 per cent over the staffing level for 1989. The cost of providing this support to the substantive programmes in the Agency's area of operations is illustrated in table 7:




E. Common services

35. Common services support all programmes run by the Agency and cover two distinct areas: general management and administrative services. General management consists of the office of the Commissioner-General and Deputy Commissioner-General, the offices reporting directly to them (Executive Office, Office of the Co-ordinator of Operations, External Relations, Public Information, Internal Audit and Programme Planning and Evaluation Office), the Department of Legal Affairs and the Office of the Director in each field. Administrative services include financial, personnel and data processing functions.

36. The proposed budget for common services in 1990 is $31.6 million, an increase of 20.5 per cent over 1989. The increase in the budget provision is mainly due to the inclusion of Agency-wide reserves, such as price inflation reserves and staff costs reserves in the Headquarters budget. The increase in the number of posts is only 0.7 per cent over the staffing level for 1989. The costs of providing these services to the substantive programmes in the Agency's area of operations is shown in table 8.




37. The consolidated budget as allocated among the Agency's area of operations is shown in table 9.






VIII. FINANCING THE 1990 BUDGET

38. The cash and in-kind income required to finance the 1992-1993 biennial budget is shown in the following table.




39. Apart from its limited working capital, UNRWA has no other financial reserves on which to draw to finance the 1990 budget. Funding of the Agency's programmes in 1990 will depend on the contributions received from donors. These contributions are normally made to the Agency in two forms: cash and in-kind, the latter in most cases are donations of basic commodities and services.

A. Cash requirements

40. In order to continue its education, health, relief programmes, UNRWA will need $189.4 million in cash for its General Fund. This compares with an estimated income in 1989 of $179.3 million. Continuing support of about $10.0 million is anticipated for the especially funded ongoing activities, which is about $1.1 million more than in 1989. In addition to the above cash resources, a further $15.0 million will be needed for capital and special projects in 1990. Special donations will be sought for these projects.

B. In-kind requirements

41. The in-kind requirements for 1990 are estimated to be $27.9 million, representing an increase of $4.2 million over 1989. This increase is largely due to increases in the market price of basic commodities over 1989. It has been customary for some donors to make in-kind contributions of basic commodities and services to UNRWA in the past and it is anticipated that these contributions will be adequate in 1990 with the possible exception of flour supplies.

Notes

1/ See Official Records of the General Assembly, Forty-fourth Session, Supplement No. 13 (A/44/13).















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