Agenda item 138:  Improving the Financial Situation of the United Nations

CANZ statement on the Secretary-General’s proposals

June 4th, 2019

Madam Chair,

Thank you for giving me the floor, and thank you to Secretary-General Guterres and Chairperson Terzi for presenting the two reports.

 In its statement of May 16th, CANZ called for General Assembly action in response to the liquidity crisis.  We welcome the ACABQ’s acknowledgement of the problems set out by the Secretary-General and his senior management, and that Committee’s endorsement of a number of the proposals.

Madam Chair,

 The contributors of troops, police and equipment to peacekeeping operations are the most obvious victims of the Organization’s arrears and liquidity problems, and so it is appropriate that the GA begins taking corrective measures in this session.

 The pooling of peacekeeping cash and annual letters of assessment, subject to the constraints set out by the Secretary-General, have the full support of CANZ.

 The Secretary-General, in his March 1st presentation, described the perverse current situation in which credits are paid to Member States that have not earned them.  This not only harms liquidity, it offends basic notions of fairness and equity. 

 Credits to those in arrears act effectively as financial transfers from those Member States that have fulfilled their obligations to those that have not.  They are the very opposite of an “early-payer incentive.”

In most of the rest of the UN system with assessed contributions budgets, credits are automatically applied against a Member’s arrears.  In this area, as in too many others, the General Assembly needs to catch up with the good practice our same UN membership has established elsewhere.

 It is CANZ’s hope that GA approval of the SG proposals we have mentioned thus far this morning will suffice to put all peacekeeping missions on sounder footing and improve the UN’s respect for obligations set out in the MoUs it signs with troop, police and equipment contributors.

 There was a further proposal - regarding more flexible use of the Peacekeeping Reserve Fund - on which ACABQ has not pronounced, but which merits consideration.

Those actions the GA takes this session should be allowed time to improve liquidity and be assessed for effectiveness.  Thereafter, and only as a last resort, should we return to the question of a Peacekeeping Working Capital Fund. 

Madam Chair,

CANZ has difficulty with both Working Capital Fund proposals for the same reason:  moral hazard. 

There is the significant risk that a deeper buffer inadvertently leads to debtors falling further into debt to the Organization. 

There are, unfortunately, precedents.  Past increases to the Regular Budget’s WCF have been outpaced by increases in arrears.  Essentially that is why Fifth Committee is having today’s debate.

A small number of well-meaning donors additionally filled a Special Account aimed to supplement the WCF, only to see the GA draw down that liquidity to cover short-term budgetary needs in 2013 and in April 2015.

 At a minimum, the Special Account should be restored by the GA using Regular Budget unencumbered balances and the cancellation of prior-period obligations to the amount that was taken out:  $63.2 M.

 The ACABQ helpfully cited the precedents for suspension of Financial Regulations 5.3 and 5.4 that have been approved by the GA before. 

CANZ calls on all contributors to the Special Account to stand firm in demanding that the funds they contributed be restored by the GA and used exclusively for their intended purpose.

  Once the Special Account has been fully restored, Regular Budget credits should be applied to arrears and only returned to those current on their assessments.  Credit needs to be earned.

Madam Chair,

CANZ continues to support the Secretary-General’s request for budget flexibility.  He is seeking to allow managers to manage, and the flexibility sought is within budget sections.  This ensures that the funds appropriated would continue to be aligned with mandate delivery not only by budget part, but by budget section. 

The Secretary-General has reported that budget rigidities combined with serious liquidity problems have already resulted in the delay of mandated activities.   It is easy to see this getting worse unless the GA takes the necessary actions.

CANZ supports addressing both parts of the problem and freeing managers to manage, so as to maximize the effective delivery of all mandated activities.

Thank you