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**Submission of the report was delayed owing to consultations.
II. Progress on implementation
2. The Executive Director of the United Nations Human Settlements Programme (UN-Habitat) has written to all Member States requesting that they increase their contributions to the United Nations Habitat and Human Settlements Foundation. On the whole, Governments have responded quite positively to calls for increased contributions. General-purpose funds from Governments rose from US$6 million in 2002 to US$8.3 million in 2003, while special-purpose contributions from Governments and other donors increased to US$37.8 million during the 2002-2003 biennium. The main concern is that special-purpose contributions remain considerably higher than general-purpose contributions, making it difficult for UN-Habitat to plan its financial commitments and implement its work programme around strategically focused goals.
3. As 60 per cent of the general-purpose contributions come from four Governments, a vigorous campaign has been launched to widen the donor base. The Executive Director has also appealed to member States for multi-year funding to enable more effective support of programme implementation. There are promising signs, with commitments of 15 million Canadian dollars from the Government of Canada and 10 million Norwegian kroner from the Government of Norway towards the Water and Sanitation Trust Fund to support developing countries in achieving goal 7 (targets 10 and 11) of the Millennium Development Goals. In addition, UN-Habitat and the Asian Development Bank signed a memorandum of understanding in March 2003 under which they will provide US$ 10 million in capacity-building grants to Asian cities, to be followed by US$ 500 million in loans for pro-poor investments in water and sanitation through the water for Asian cities programme. UN-Habitat is also developing a slum upgrading facility as an innovative way of raising funds for upgrading slums and for other human settlements activities, while also strengthening the United Nations Habitat and Human Settlements Foundation.
4. In its resolution 2003/62, the Economic and Social Council welcomed decision 19/18 of the Governing Council of UN-Habitat, in which the Governing Council endorsed the establishment of the Special Human Settlements Programme for the Palestinian people and the Technical Cooperation Trust Fund of $5 million for an initial period of two years. The Council also urged the international donor community and all financial institutions to support UN-Habitat in the immediate mobilization of financial resources for the establishment and operation of the Programme and the Fund. The Programme Coordinator assumed his duties on 1 March 2004 and began implementation of the Programme with a programme definition phase (March 2004 to December 2004), which involved consultations with the Palestinian Authority, bilateral donors and inter-agency consultations, fund-raising for the Fund, assessment of existing conditions in the Occupied Palestinian Territory and formulation of programme elements. Steps are being taken to appoint a chief technical adviser in Jerusalem and a UN-Habitat programme manager in Gaza to assist the Coordinator in implementing the Programme. To date, contributions to the Fund have been made by the United States of America ($500,000) and Sweden ($275,000).
25. The international donor community and all financial institutions are encouraged to contribute generously to the Technical Cooperation Trust Fund and the Special Human Settlements Programme for the Palestinian people to enable UN-Habitat to assist in resolving the long-term deterioration in human settlement conditions in the Occupied Palestine Territory and in fully realizing the objectives of the Programme.