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EU Presidency Statement - Funding of UN activities

Mr. President,

I have the honor of speaking on behalf of the European Union on item 3(a)(i) and (ii) on the funding of the operational activities for development and the simplification and harmonization of procedures. The Central and Eastern European countries associated with the European Union (Bulgaria, Estonia, Hungary Latvia Lithuania, Poland, The Czech Republic, Romania, Slovakia and Slovenia), and the other associated countries (Cyprus, Malta and Turkey) endorse this statement.

Mr. President,

The European Union wishes to thank the Secretary-General for his report, which provides a complete picture of the state of the Funds and Programs and analyses, over a long period, the developing financial situation and the progress made in simplifying and harmonizing administrative procedures.

I. Resources

As far as resources are concerned, the European Union would restate its long-standing, steadfast commitment to international cooperation and development. The European Union, which between 1995 and 1998 accounted for 29,4% of world GNP, supplied 55% of the official aid allocated by donor countries to the development of the countries of the South. The European Union is the leading donor to United Nations operational development activities, providing over half the funding. This effort springs from our conviction that operational activities for development are one of the pillars of the United Nations' action to promote a more peaceful and more mutually supportive world.

Regarding the Secretary-General's observations on the financial situation of the Funds and Programs, the European Union would stress the following points:

Overall the trend is quite promising. Indeed, the total resources of the Funds and Programs increased in the 1990s from 3,43 billion US dollars in 1990 to 5,13 billion in 1999. It is also worth noting that the Funds and Programs seem to have benefited from the increase in total official development aid recorded in the last two years, since their total resources, which in 1997 stood at 4,42 billion US dollars, topped 5 billion in both 1998 and 1999 (5,26 billion in 1998 and 5,13 billion in 1999).

Mr. President,

This generally promising picture needs to be put into perspective, on account of three factors:

• the Funds and Programs show uneven patterns of improvement: it is a fact that the extent of improvement varies from Fund to Fund. For some the financial situation, core resources included, looks fairly healthy - this is the case, in particular, for WFP, UNICEF, UNCDF and, especially, for UNIFEM and the UNV, which have recorded large increases in recent years. However, the situation is more difficult for UNFPA, which peaked in 1995 in the wake of the Cairo Conference but has since seen its level of core resources return to between 250 and 270 million US dollars, the average for the decade. The situation of UNDP is special, showing both the strongest growth in non-core and the sharpest drop in core resources.
• Dependency on a limited number of donors. The European Union is concerned that the Funds and Programs are too heavily dependent on a few donor countries. It therefore urges the Funds and Programs to step up their efforts to widen their funding base, with both their current donors and their potential new donors.
• A radical change in the structure of the resources, marked by a sharp increase in non-core resources and stagnation or decline in core resources. In view of this development, the European Union would stress the need for absolute transparency in the use of those resources, in particular vis-à-vis the Executive Boards. It also considers it vital that resources be deployed according to Executive Board guidelines, particularly as regards targets and priority areas of intervention. The European Union notes that while 60% of UNDP core resources are concentrated on LDCs, the Secretary-General's report shows that that figure falls to 20% after all programs expenditures, including that funded from non-core resources, has been taken into account. The European Union urges the UNDP Executive Board to improve its targeting of LDCs, including the targeting of parts of programs paid for out of non-core resources.

The other important change is the significant development in private sector funding, which now represents a substantial proportion of total resources. The European Union welcomes the Funds and Programs' capacity increasingly to attract private sector resources, which can usefully supplement government contributions. However, in the European Union's view, private sector resources are not a substitute for official contributions; moreover, they have to be managed transparently. Private sector financing should be used to top up or to extend the programme adopted by the Executive Boards.

Mr. President,

We agree with the report's finding that one of the factors contributing to the erosion of core resources is the fierce competition that is brought to bear to raise funds. In this context, the ability of multilateral agencies to show results, the effectiveness of their programs, and accountability are all decisive factors and to a great extent determine whether agencies succeed in raising the necessary resources from much canvassed donor countries.

From this point of view, the European Union supports the implementation of Multi-Year Funding Frameworks and a results-oriented approach. It shares the positive view of this point taken by the Secretary-General's report. At the initial pledging conferences in 1999 and 2000 within the framework of the UNDP, UNFPA and UNICEF Executive Boards many member states, and particularly donor countries, took the opportunity to pledge higher amounts. The reform is gradually taking root, and we consider it important that ECOSOC should express its full backing for the process, in particular in the Resolution in preparation.

Mr. President, the European Union is more circumspect when it comes to the role claimed for voluntary contributions in the erosion of the core resources of the Funds and Programs. It notes the view expressed in paragraph 101/A of the report, which should have been developed further and substantiated in more detail.

The stagnation or decline in core resources has gone hand in hand with strong growth in non-core resources, which are also funded out of voluntary contributions.

Mr. President,

Let me remind you that the total resources of the Funds and Programs have increased over the last ten years.

We must also bear in mind that although they are funded out of compulsory contributions, the UN'specializeded agencies also have difficulties, as does the United Nations Secretariat, because of the accumulated arrears on the Organization's ordinary budget.

Apart from the issue of the modalities of funding, the European Union considers that the crucial factor is member states' support for and confidence in the institutions' mandates and efficiency. This is why we support incorporating results-oriented budgets into Funds and Programs and why we believe that the implementation of Multi-Year Funding Frameworks (MYFFs) will improve the health of the core resources and enable the targets set in the relevant Executive Board decisions to be attained.

Mr. President,

Given the establishment of the MYFFs and the organization of pledging conferences within the Funds and Programs, the European Union believes that there is now much less point in organizing the pledging conference for operational development activities and it feels that the time has come to take a clear decision on this subject pursuant to General Assembly Resolution 50/227.

II. Simplification and harmonization of procedures

Mr. President,

This, too, is a very important aspect of improving the effectiveness of operational activities for development. Simplifying and harmonizing procedures should make it possible to cut the costs of managing and implementing the programs, thereby improving programme coordination and making it easier for recipient countries to assume ownership of their programs. Procedural simplification and harmonization should also increase programs' cost-effectiveness and enhance the global impact of the United Nations system on the ground. The European Union considers that the United Nations specialized agencies must also be involved in this harmonization process, in particular as regards deconcentration and financial management procedures. The European Union welcomes the WHO decision to join the UNDG and hopes that other specialized agencies will follow the example of WHO.

The European Union agrees, however, with the Secretary-General that progress has fallen short of expectations. That is and has always been a concern of Member States that has been repeatedly expressed in General Assembly Resolutions, especially on the occasion of triennial reviews. The European Union attaches the greatest importance to the fast and concrete implementation of measures that have been decided. The European Union, which supports the Secretary-General's recommendations and hopes that the specialized agencies will also be involved in this process, would like to make two methodological proposals:

• firstly, the forthcoming triennial review of operational activities for development - scheduled for next year - should be the opportunity for conducting a detailed assessment of the progress made and the difficulties encountered;
• secondly, we feel that the forthcoming triennial review should lead to preparation of a specific action plan, which identifies the measures that need to be taken most urgently. That action plan should be accompanied by a timetable. In order to ensure that the implementation of the plan is effectively monitored, the United Nations Development Group and the Executive Boards of the Funds and Programs should - each according to its own area of responsibility - be asked to submit annual reports on the measures taken to achieve the goals.

Mr. President,

With regard to substance, the European Union would like to stress the particular importance it attaches to three matters:

• the Executive Boards' approval procedures for country programs: at its annual session the UNFPA Executive Board adopted decision 2000/12 inviting UNDG members to set up a working group to harmonize the various Executive Board procedures. We think that ECOSOC could endorse that proposal and invite other Funds and Programs to endorse it, too;
• mid-term reviews and joint evaluations of country programs: the annual session of the UNICEF Executive Board saw examination of initial experiences of the mid-term reviews and joint evaluations of UNDP, UNFPA and UNICEF programs conducted at the recipient countries' request. Following harmonization of the programming cycles being carried out in many countries, the European Union would wish to see this procedure become widespread and systematic;
• joint programming: the European Union would like to refer back to the proposal made last Friday during the discussion of the triennial review of operational development activities that consideration be given to setting up joint programs across Funds and Programs, or indeed specialized agencies, and to the need for independent assessment of the UNDAF process.

Mr. President, Thank you.

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