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Report of the Working Group on the Financing of the United Nations Relief and Works Agency for Palestine Refugees in the Near East
Rapporteur: Mr. Sverre BERGH JOHANSEN (Norway)
A. Origin and background of the Working Group
2. At the twenty-fifth and succeeding sessions, the General Assembly considered the reports submitted to it by the Working Group, 1/and adopted resolutions commending the efforts of the Working Group and requesting it to continue them for a further year. 2/
3. The Working Group consists of the representatives of France, Ghana, Japan, Lebanon, Norway, Trinidad and Tobago, Turkey, the United Kingdom of Great Britain and Northern Ireland and the United States of America. The Chairman of the Working Group is Mr. liter Turkmen of Turkey.
5. At the 19th meeting of the Committee, on 4 November 1986, the representative of the Netherlands introduced a draft resolution entitled "Working Group on the Financing of the United Nations Relief and Works Agency for Palestine Refugees in the Near East" (A/SPC/41/L.9), sponsored by Austria, Canada, Denmark, Germany, Federal Republic of, India, Indonesia, Liberia, Malaysia, the Netherlands, New Zealand, Nigeria, Pakistan, the Philippines, Spain, Sweden and Yugoslavia, subsequently joined by Bangladesh.
6. Under the terms of the draft resolution, the General Assembly would:
(a) Commend the Working Group for its efforts to assist in ensuring the Agency's financial security;
(b) Take note with approval of the report of the Working Group;
(c) Request the Working Group to continue its efforts, in co-operation with the Secretary-General and the Commissioner-General of UNRWA, for the financing of the Agency for a further period of one year;
(d) Request the Secretary-General to provide the necessary services and assistance to the Working Group for the conduct of its work.
7. At its 19th meeting, the Committee adopted the draft resolution without a vote.
8. At its 95th plenary meeting, on 3 December 1986 the General Assembly considered the draft resolution regarding the Working Group, which had been recommended by the Special Political Committee, together with other draft resolutions under this item. The Assembly adopted the draft resolution without a vote as resolution 41/69 B on 3 December 1986.
10. At its meeting on 11 September 1987, the Working Group heard the Comptroller of UNRWA, who submitted an up-to-date report on the financial situation of the Agency (see sect. III below).
III. FINANCIAL SITUATION OF THE UNITED NATIONS RELIEF AND WORKS AGENCY FOR PALESTINE REFUGEES IN THE NEAR EAST
11. While UNRWA is still recovering from the financial difficulties it faced in 1984 and 1985, its present financial situation is not as acutely critical as it was in those years. In fact, in 1986, UNRWA managed for the first time in several years to end the year without spending more funds than it received. This was due mainly to additional contributions that were pledged close to the end of the year. Although sufficient resources were obtained to cover the costs of the regular programme of services in 1986, the budget for construction remained largely unfunded. This meant that much-needed construction had to be postponed once again leading to a further deterioration of the standard of the Agency's schools, clinics and other buildings.
12. The small excess of income over expenditure in 1986 enabled the Agency to begin to restore its much depleted working capital. This capital, however, is still only sufficient to cover current expenditure for a little more than one month, which is not regarded as adequate. Throughout the current year, the Commissioner-General and his staff have continued their efforts to secure the required resources to maintain the Agency's programmes. They have developed and maintained appropriate contacts with potential donors as well as with regular supporters. In many cases, these contacts have been followed up by personal visits. The results have been encouraging. The Commissioner-General believes that contributions already received, together with those which are expected, will be sufficient to cover the expenditures envisaged to maintain the core services to the end of 1987. There remains, however, the construction budget, which, as in 1986, is largely unfunded. In all, only $4.6 million out of a total of $16 million budgeted for 1986 and 1987 has been received. The Commissioner-General is seriously concerned about the state of many of the Agency's buildings and about the lack of funds to replace them. In recent years the Agency has had to give priority to using available resources for maintaining services and to rely on special additional contributions to meet construction needs. Insufficiency of special contributions and the impact of dilapidated and, in some cases, unsafe buildings on the quality of services has led the Commissioner-General to consider using regular budget funds for a limited number of the most urgent construction projects. Should this become necessary, it will place an additional burden on the Agency's finances for 1987 and may mean that a further much-needed consolidation of the Agency's financial basis may not be possible to achieve in 1987.
13. The outlook for 1988 is uncertain. The Agency's proposed programme and its estimated cost are set out in the medium-term plan of UNRWA for the period 1988-1990. The budget for 1988, which is under preparation, will be based on that plan. The plan envisages an increase of the Agency's regular expenditures (those financed from the general fund) of 4.2 per cent on average for the three years in question. This increase is necessary to enable the Agency to meet the growing requirements resulting from the steady growth in the refugee population and to improve slightly the quality of the services. The construction budget has been increased by 35 per cent over the level for 1987. Since the construction budgets for 1986 and 1987 have remained largely unfunded, it is clear that, if the increase envisaged is to be achieved, special fund-raising efforts will have to be made. Financing the regular programme will also call for continued fund-raising efforts and for generous responses by donors, especially by Governments. In this connection, the Commissioner-General has already convened a second meeting of major donors and host countries, which met at Vienna on 6 and 7 July 1987 and which was informed of the Agency's requirements for 1988.
14. When assessing the Agency's financial position for the coming year, it should be borne in mind that the budget is expressed in United States dollars, that a large portion of contributions is paid in West European and other non-dollar currencies, and that expenditures are made mainly in Middle Eastern currencies and, only to a lesser extent, in various other Western currencies. It goes without saying that the Agency's financial position is very sensitive to changes in exchange rates. In some cases, such changes work to UNRWA's advantage in other cases, to its disadvantage. It is therefore most important to follow closely these developments and to assess continuously their effects on the Agency's financial situation. Adding further to the general lack of financial security is the fact that prices and salaries in the area of operations sometimes rise in a way that is difficult to foresee. Host Governments may, for instance, unexpectedly decide to raise the salary levels for government employees which, in principle, also leads to an increase in our own staff costs, as the policy of the Agency is to set our salaries in relation to those paid by Governments in our host countries.
15. As well as seeking additional contributions to meet the needs of the coming year, the Commissioner-General will continue to maintain the strictest economies and to seek to increase the efficiency of the operation in order to ensure that the funds placed at his disposal are used for the optimum benefit of the refugees.
17. The Working Group is also pleased to hear that the level of contributions is being maintained in 1987 and that this, together with the tighter controls the Commissioner-General continues to exercise over expenditure, leads him to believe that income will be sufficient to maintain services without interruption until the end of the year.
18. It is, however, a matter for regret that insufficient special contributions have been pledged to fund the Agency's construction programme. The Working Group is concerned that only $4.6 million has been pledged over the last two years for a construction programme budgeted at $16 million. It shares the Commissioner-General's concerns about the continued postponement of construction work and the effects of deteriorating facilities on the services being provided. The Working Group welcomes the Commissioner-General's initiative in presenting this problem to the meeting of major donors and host Governments, which was held at .Vienna in July 1987, and stands ready to support the Commissioner-General in this matter in whatever way may be most appropriate and effective.
19. The Working Group believes that, despite the relatively favourable financial Situation the Agency has enjoyed in 1986 and 1987, there is no room for complacency. It recognizes the special efforts made by the Commissioner-General in involving donor Governments more closely with the Agency and its operations and appreciates the positive responses by Governments. These efforts must continue and must be intensified, since expenditure in 1988 will be slightly higher than in 1987, mainly to take care of the natural increase in the refugee population, Moreover, as pointed out by the Comptroller in his statement to the Working Group, factors over which UNRWA has no control, such as changes in currency exchange rates and inflation, as reflected in salaries paid to comparable staff employed by host Governments, can seriously affect the Agency's financial situation.
20. The Working Group therefore strongly urges all Governments to recognize that UNRWA will need additional financial support in 1988. In particular, it urges that:
(a) Governments that have not contributed to UNRWA start to contribute;
(b) Governments that have so far made only relatively small contributions make more generous contributions;
(c) Governments that have in the past generously made special contributions to UNRWA do so again;
(d) Governments that in the past have made generous contributions to UNRWA continue to do so and strive to increase them;
(e) Governments should consider making special additional contributions for construction projects, without affecting their contributions to the regular fund;
(f) Governments pay their contributions as early as possible in the calendar year.
2/ Resolutions 2791 (XXVI) of 6 December 1971, 2964 (XXVII) of 13 December 1972, 3090 (XXVIII) of 7 December 1973, 3330 (XXIX) of 17 December 1974, 3419 (XXX) of 8 December 1975, 31/15 C of 23 November 1976, 32/90 D of 13 November 1977, 33/112 D of 18 December 1978, 34/52 D of 23 November 1979, 35/13 D of 3 November 1980, 36/146 E of 16 December 1981, 37/120 A of 16 December 1982, 38/83 B of 15 December 1983, 39/99 B of 14 December 1984 and 40/165 B of 16 December 1985.
3/ Official Records of the General Assembly, Forty-first Session, Annexes agenda item 75, document A/41/702.